North Bay Business Journal

Monday, May 14, 2012, 7:00 am

Large Marin, Sonoma office properties for sale

20 office buildings, 951,000 square feet from Equity, Berg Holdings


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    Equity Office’s Marin portfolio

    Square footage: 710,736

    Buildings: 15

    Drakes Landing Office Park

    100A, 100B, 300A, 300B & 500 Drake’s Landing Rd., Greenbrae

    Square footage: 126,338

    Harbor Drive Executive Park

    One and Three Harbor Dr., Sausalito

    Square footage: 112,343

    Larkspur Landing Office Park

    700, 900 and 1100 Larkspur Landing Cir., Larkspur

    Square footage: 199,761

    Shoreline Office Center

    100 Shoreline Hwy., Mill Valley

    Square footage: 101,615

    Wood Island Office Complex

    60 and 80 E. Sir Francis Drake Blvd., Larkspur

    Square footage: 80,465

    Woodside Office Center

    7250 Redwood Blvd., Novato

    Square footage: 90,214

    Berg Holdings portfolio sale

    Square footage: 248,123

    Buildings: Six

    One Thorndale Drive, San Rafael

    Type: Office and medical

    Square footage: 78,843

    130 and 140 Stony Point Rd., Santa Rosa

    Type: Retail and office

    Square footage: 38,507

    141 and 149 Stony Cir., Santa Rosa

    Type: Office

    Square footage: 83,934

    100 B St., Santa Rosa

    Type: Office

    Square footage: 46,839

    Two major owners of commercial property in Marin and Sonoma counties have put 20 office buildings with 951,000 square feet on the market for sale in recent weeks in what some market watchers are anticipating will test institutional investor views of the long-term outlook for the North Bay economy and business.

    Chicago-based Equity Office, one of the largest owners of commercial real estate in the U.S. and in the North Bay, in April quietly started marketing for sale its affiliates’ 15 Marin County office buildings totaling nearly 711,000 square feet through Eastdil Secured’s San Francisco office, according to real estate experts.

    A spokesman for the Equity Office’s Northern California operations declined to comment.

    Equity Office, among Marin’s largest commercial property owners, has six of the county’s better-quality office complexes, which have attracted attention from a number of prospective buyers, according to Whitney Strotz, who runs Cassidy Turley’s San Rafael office and has brokered a number of leases in Equity Office’s Marin buildings. American Assets’ three-building headquarters complex in Novato for Fireman’s Fund Insurance Co. is as large.

    “Many of these buildings have not been marketed for quite a while, so it’s an opportunity to own some of the most significant office space in Marin,” he said. “The buildings seem to be performing quite well and are in demand from the business community.”

    Occupancy and the net rent income are key factors for commercial property sale pricing, and Equity Office’s Marin properties have been enjoying healthy doses of both, according to Mr. Strotz.

    “There is a constant of ebb and flow of (rent) pricing, but (Equity Office is) experiencing an increase in rents in the portfolio,” he said.

    Equity Office affiliates also own 15 office buildings with nearly 700,000 square feet in the Santa Rosa area. Those aren’t currently for sale.

    Also in April, Sausalito-based Berg Holdings Corp., led by Marin property investor Skip Berg, started offering for sale six office buildings in San Rafael and Santa Rosa with 248,000 total square feet of mostly office space, according to Alan Maciel of Berg Holdings.

    The one building in San Rafael is the nearly 79,000-square-foot One Thorndale Drive perched upon a hilltop overlooking Northgate regional shopping mall. Built in the early 1970s as the headquarters for a publisher, the building has been vacant since Take-Two Interactive, formerly Sega Visual Concepts, and then Disney’s ImageMovers Digital animation studio moved to Hamilton Landing in Novato several years ago.

    On the flip side, five buildings in Santa Rosa are two-thirds occupied.

    “It’s been a tough market all around,” Mr. Maciel said.

    The Equity Office and Berg Holdings portfolio opportunities follow the sale of all 14 of RNM Properties’ existing commercial buildings in Petaluma and Rohnert Park, totaling 842,000 square feet for more than $65 million, or in excess of $77 a square foot.

    Though much less than the replacement cost of such buildings of more than $200 a square foot, that was higher than the range of sales — $50 to $60 a square foot — of foreclosed Equity Office buildings in Petaluma and Santa Rosa in the preceding two years.

    “I do not think we’ll see the fire sales of Petaluma because the ownership is more stable,” said Jeff Negri, who manages Cassidy Turley’s Santa Rosa office, about the current portfolio offerings and bigger ones that could be coming.

    Berg Holdings' One Thorndale Drive, Santa Rosa

    Berg Holdings’ One Thorndale Drive, Santa Rosa

    Berg Holdings’ Santa Rosa buildings were designed by notable Santa Rosa architect Larry Simons then developed and managed by what is now Simons & Woodard.

    Not included in the Berg Holdings sale are Marina Plaza, two three-story class A office buildings at 2320 and 2330 Marinship Way in Sausalito, and more than 500 acres at Port Sonoma east of Novato.

    Jones Lang LaSalle’s San Francisco office is marketing the Berg Holdings buildings using local agents Brian Eisberg of Cornish & Carey Commercial Newmark Knight Frank for One Thorndale and Shawn Johnson of Keegan & Coppin/ONCOR International for the Santa Rosa properties.

    CORRECTION, May 14, 2012: The print version of this story didn’t include Equity Office’s Shoreline Office Center in the Marin County portfolio.

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