Hines Interests L.P. and Oaktree Capital Management have started negotiations to buy the 526,155-square-foot Ygnacio Center in Walnut Creek, Calif., for $221 million, according to San Francisco Business Times.
The seller is LaSalle Investment Management.
Class A rents remain historically high in Downtown Walnut Creek, ranging from $3.50 to $4.95 per square foot but almost all leasing activity has been achieved below $4.00 per square foot; while class B rents have increased to $2.75 to $3.25 per square foot, according to Colliers International’s first quarter 2018 report. With the recent increase in vacancy, new owners are remeasuring to increase the building square footage rather than push pro forma rents.
The North I-680 Corridor continued its increase in vacancy, registering an overall vacancy rate of 14.5 percent, an increase from 14 percent the previous quarter, resulting in a negative net absorption of 98,883 square feet there. The reason for the sudden increase is due to roughly 200,000 square feet being made available at 2001 Clayton Road. Absorption in the region continues to decrease, making it five consecutive quarters of negative absorption. Despite this, investors have remained eager to acquire core office properties.
Although the North I-680 Corridor has experienced increases in rents for the past several years, the trend seems to have stalled in early 2018. For the past year, vacancy has increased, from 11.1 percent to 14.5 percent currently.
