Also: Rowland Plaza to be refinanced; corporate center gets medical office rezoning
Denver-based Apartment Investment and Management Co. (NYSE: AIV) is betting about $65 million on the renovation of the 126-unit vacant apartment complex in Corte Madera, amounting to $516,000 a unit.
The real estate investment trust purchased Madera Vista for $43.6 million, or $346,000 per dwelling, on Aug. 17 from affiliates of Boston-based The Rockpoint Group and New York-based Stellar Management and plans to spend another $21.4 million in renovations.
“Madera Vista is in an irreplaceable location in a target market where we are working to increase our capital allocation,” said Terry Considine, chairman and chief executive officer of Aimco. “Redevelopment is a core business activity for Aimco, which makes this an opportunity well-suited to Aimco.”
One of the seven Madera Vista buildings was destroyed in a 2008 fire, according to real estate trade publication The Registry. The previous owners fixed up the property and converted to condominiums, but no units were sold.
Barker Pacific Group and Rockwood Capital had been marketing the 168,000-square-foot Rowland Plaza office and retail property in Novato for sale but have decided to retain the property and refinance it.
A prospective buyer walked away before the deal closed, according to Brian Eisberg, one of the Cornish & Carey Commercial Newmark Knight Frank agents marketing the property.
The property was purchased in 2009, reportedly for $250 a square foot. At that time, the retail space was full, but only three-quarters of the office space was leased, Mr. Eisberg said. Now, all of the larger 75 Rowland Way building is leased, and only 3,500 square feet remains to lease in the 60,000-square-foot 88 Rowland building.
That success is chalked up to a change in zoning secured for the property to allow medical offices, according to Mr. Eisberg.
Speaking of rezoning for medical uses, the San Rafael City Council approved a change in zoning for 68,000 square feet of San Rafael Corporate Center to allow medical offices or a small clinic.
Owners of the development, San Rafael-based Seagate Properties and the asset-management division of New York-based JPMorgan Chase & Co., don’t have a specific tenant in mind for this change, but this is a prudent move to fill the office space, according to Wick Polite, Seagate president.
“Job growth is key to the economy, and one of the growing sectors is medical use in Marin,” he said.
After Lowe’s Home Improvement last month backed out as anchor tenant of the 36.5-acre Deer Creek Village mixed-use project in Petaluma, developer Merlone Geier Partners of San Francisco has been in talks with similar retailers to fill the same proposed footprint.
“We’re in discussion with all home-improvement uses,” said Greg Geertsen, a managing partner of Merlone Geier.
Key prospects are Santa Rosa-based Friedman’s Home Improvement and The Home Depot, he said.
The Petaluma Planning Commission in early January is set to consider the latest round of comments on the environmental impact report for the 346,000-square-foot project. Any recommendation from the commission would go to the City Council potentially in February.
Fortuitously, an empty 36,000-square-foot southwest Santa Rosa call center building will house another call center function, because the sale of the building enabled the new tenant to afford all of it versus balking at the rental rate for less than half of it before the sale, according to Sean Heaton of Cushman & Wakefield and Jeff Negri of Cassidy Turley BT Commercial, who represented the tenant and seller, respectively.
“It all worked out quite well,” Mr. Heaton said.
A year ago, Syme Venture Partners was negotiating with First American Home Buyer Protection to lease 12,000 to 15,000 square feet of the former American Home Shield call center at 1244 Apollo Way. The home warranty provider was scouting the greater Santa Rosa area to expand its 7,000-square-foot call center three doors down at 2250 Apollo — overflowing with 80 employees — to something that would accommodate at least double that, according to Mr. Heaton.
Problem was, First American didn’t want to lease enough of the building to justify the tenant-improvement allowance and cover financing payments, according to Mr. Negri, who was part of a marketing team that included Ryan Snow, Dennis Brisken and Clarke Funkhouser. It’s been a common theme in commercial real estate in the past few years.
“There was so much debt on the property they couldn’t make competitive deals,” Mr. Negri said.
Locally based Chiyoda Investors LLC negotiated to purchase the building in a short sale, which closed on Aug. 26 for $3.4 million, or $94 a square foot. Under the lower cost basis, First American leased the entire building, accommodating the current workforce of 100 with room to grow.
Twenty-two-year multifamily real estate veteran Scott Gerber joined Cassidy Turley BT Commercial‘s Multi-Family Group (www.ctbtapartments.com) and is based in the brokerage’s San Rafael office.
He started multifamily brokerage NorCal Commercial in Larkspur in 2006.
He was a longtime member of the North Coast Rental Housing Association board of directors and served as president in 2007 and 2008.
The Marin County Board of Supervisors on Tuesday approved an $81.9 million plan to purchase a328,000-square-foot mostly vacant office building in the Marin Commons complex in north San Rafael and renovate up to 110,000 square feet to accommodate a new county Emergency Operations Facility.
The action allows county staff to execute an agreement with building owner CORAC, LLC, an affiliate of Connecticut-based Cigna Real Estate, to purchase 1600 Los Gamos Dr. for $28.43 million, according to documents presented to the board. The sale is set to close next month.
Then the county intends to spend another $53.1 million through early to mid-2014 on improvements to the building and nearly 24-acre parcel, furniture, fixtures and equipment. The facility will accommodate the Sheriff’s, Information Services and Technology and Public Works departments in 100,000 to 110,000 square feet of the vacant north part of the building.
Three major tenants — Bright Horizons, the IRS and THX — will continue to occupy about 55,000 square feet of the building. Cigna will continue to manage the building through the end of 2014. Sares Regis Group of Northern California will be managing construction and both Marin Commons buildings.
Over the next three years, the county plans to use 80,000 square feet of vacant space for temporary operations, such storage for the Registrar of Voters and during renovation of 20 N. Pedro Rd., which houses a number of Health & Human Services Department offices.
By 2015, the county will be moving several departments in 30,000 square feet of leased space in four buildings in the area into space vacated in the Civic Center, according to David Spear, head of county real estate. Remaining to lease in 1600 Los Gamos will be 63,000 square feet of office space and 20,000 square feet.
Local commercial property experts have been eagerly anticipating the county’s action on Marin Commons, one of the largest office properties in the county. The space has inflated the Marin office vacancy rate, at 18.1 percent in the third quarter, according to Cassidy Turley BT Commercial. Of the 1.78 million square feet of available office space in the county, 986,000 square feet are in San Rafael, mostly in a few large-tenant properties.
Marin Commons was designed for one or a few large tenants, making it functionally obsolete for most of the tenants scouting for Marin offices, according to real estate agents.
“North San Rafael been slow for several years,” said Trevor Buck of Cassidy Turley BT Commercial.
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