Cornerstone Properties plans to spend millions sprucing up dated site
SANTA ROSA — A San Mateo-based commercial real estate turnaround specialist acquired a 156,500-square-foot complex at the entrance to Charles M. Schulz — Sonoma County Airport and plans to spend several million dollars upgrading, sprucing up and filling up the dated property.
The acquisition comes at a time when the County of Sonoma is spending millions of dollars on improvements and enhancements to the airport terminal and grounds in anticipation of the return of commercial airline service next year.
Cornerstone Properties purchased the four industrial, office and manufacturing buildings at 2320 Airport Blvd. on Tuesday from New York-based American Real Estate Holdings for an undisclosed amount.
On Aug. 22, the Sonoma County Board of Supervisors agreed to American Real Estate’s assignment of the ground lease of 13.5 acres of county-owned airport land on which the complex sits to Cornerstone and extended the term to December 2036 to allow Cornerstone to complete a real estate exchange.
The county originally inked the ground lease in November 1977 when the buildings were completed, and the buildings were set to revert to county ownership in December 2027.
The needed ground-lease extension allowed the county to negotiate a clause that would have at least $2 million in work done on the property in the first two years, according to county Real Estate Manager Mike Wagner.
In a report to the Board of Supervisors on the ground lease assignment, David Knight and David Kronberg, heads of the Transportation & Public Works and General Services departments wrote, “The improvements will have an indirect benefit to the airport, since the property is clearly visible to airport passengers and visitors. Presently, the property’s curb appeal is less than desirable.”
About 70,000 square feet of office and warehouse space has remained vacant since Weigh-Tronix, which occupied the whole complex, consolidated to newer space elsewhere in the airport business parks a half dozen years ago. Since then, AT&T, Icore and Sid Kurlander & Sons have moved into the rest.
Cornerstone won’t wait two years to complete the planned work on the complex, which is now called Airport Gateway Center, according to acquisitions agent Alon Adani. Construction on the interior of the vacant space is set to start this week or next, and the space will be ready for tenants to install their improvements in 90 days.
Santa Rosa-based Del Starrett Architect is designing a new facade for the complex to work with the structurally significant but dated buttress look to the exterior.
“The reaction I get from everyone is that it’s about time someone does something with that property,” Mr. Adani said.
The property has room to expand the 470-space parking lot by several hundred spaces to appeal to some call center tenants who are scouting the Santa Rosa area, according to leasing agent Paul Schwartz of Orion Partners.
In fact, tired properties are what Cornerstone looks for, and Mr. Adani liked what he saw at 2320 Airport when touring Santa Rosa-area properties last October with Mr. Schwartz and Preston Smith, also of Orion. Mr. Adani said he’s looking for more North Bay prospects.
Cornerstone invested in a small Santa Rosa retail center anchored by Pier 1 Imports and OfficeMax on Santa Rosa Avenue in May, but industrial-flex properties are the firm’s specialty. Since Steve Kaufman and John Jacques started Cornerstone in 1985, the firm has acquired, overhauled and leased nearly 2 million square feet of space in San Mateo and Santa Clara counties, Mr. Adani said.
By picking up properties that need rejuvenation, Cornerstone aims to offer the lowest priced space, even with millions of dollars in upgrades, he said. Quoted per-square-foot triple-net monthly rents are $1.05 for the 21,000-square-foot, two-story office building and 65 cents for the 48,600-square foot research-and-development building.
For more information, call 650-574-2104 or visit www.cornerstone-prop.com.
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