San Mateo firm pledges to bring unique terms for startups; 'we want to grow'
[caption id="attachment_17630" align="alignleft" width="313" caption="Cornerstone Properties' North Bay team includes acquisitions specialist Alon Adani (left); Rod Giles, leasing director; and Jennifer McKinzy, space planning and property management, who are standing in front of the 1435 N. McDowell Blvd. building. (Jeff Quackenbush photos)"][/caption]
PETALUMA -- A San Mateo-based commercial real estate investment company acquired the 170,000-square-foot former Cisco Systems campus in north Petaluma.
Cornerstone Properties beat out about a dozen other interested parties to purchase the five vacant Cisco buildings, according to Cornerstone acquisitions specialist Alon Adani. Specific details of the cash deal weren't disclosed, but the price was between the rumored $5 million to $7 million figure, he said.
"We buy at times like this, when times are rough," Mr. Adani said.
Getting a well-below-market deal allows Cornerstone to have the flexibility to help innovative new companies get started and prepare for growth. That's what the company has done in the more than 1 million square feet of office and industrial space it controls in the Bay Area, including Silicon Valley and two properties in the Santa Rosa area.
"Long term, we want to grow in the community, work with chambers of commerce and investor groups and buy more buildings," Mr. Adani said. "We will not just be a landlord, but we will help where we can."
Flexibility in lease terms includes accepting company stock for some rent, locking a tenant into a larger space with a cost basis that allows a tenant to grow into it over time and options to purchase.
Such tactics have been employed by some North Bay commercial property icons, such as Basin Street Properties co-founder Bill White when fostering telecommunications startups in a cluster that came to be known as Telecom Valley.
Cornerstone first invested in North Bay property in 2006. The first purchase was a small retail center with Pier 1 Imports and OfficeMax stores on Santa Rosa Avenue in Santa Rosa. Later that year, the company acquired a 156,000-square-foot former Weigh-Tronix complex at 2320 Airport Blvd., located at the entrance to Charles M. Schulz -- Sonoma County Airport.
The company invested a few million dollars in the three-decade-old complex, called Airport Gateway Center, to add office common areas such as a 14-person conference room and break room that tenants could use without increasing rent. One tenant Cornerstone has worked with to foster its growth is medical records software startup i2i Systems.
A newcomer to the warehouse space is TastingRoom, which has developed special technology to transfer wine from full-sized bottles to samples without exposure to air.
For the challenge posed by the Cisco buildings in Petaluma, located in a submarket with 42 percent office space vacancy, according to brokerage Keegan & Coppin, Mr. Adani has brought from the Cornerstone headquarters an in-house architect and property manager for space planning and a leasing director. The goal is to be able to act on prospective deals quickly.
"We're going to be aggressive," Mr. Adani said.