[caption id="attachment_17579" align="alignright" width="313" caption="Basin Street Properties' Fountaingrove Executive Center office building at 3562 Round Barn Circle in Santa Rosa. (Keegan & Coppin photo)"][/caption]
SANTA ROSA -- Morgan Stanley Smith Barney LLC plans to consolidate its Santa Rosa offices to a new 23,000-square-foot location in the northeast part of the city early next year.
The wealth management company signed a 10-year lease with Basin Street Properties for the space, located at 3562 Round Barn Circle, a 63,000-square-foot, three-story office building in Fountaingrove Executive Center. The relocation is set for February 2011.
Announced in January 2009, Morgan Stanley Smith Barney is a joint venture between Morgan Stanley & Co.'s Wealth Management Group and Citi's retail brokerage units Smith Barney, Quilter in the United Kingdom and Smith Barney Australia. The venture took effect in June 2009.
Since before the joint venture, Morgan Stanley has been occupying 13,000-square-foot office at 3558 Round Barn Blvd. in Equity Office Properties' Fountaingrove Center and Smith Barney, 16,000-square-foot at 111 Santa Rosa Ave. in downtown Santa Rosa.
The Morgan Stanley deal is the third in the past year Basin Street has attracted to 3562 Round Barn Circle from other Fountaingrove and downtown Santa Rosa office buildings, leaving about 11,000 square feet on two floors to fill, according to Shawn Johnson, managing partner of Keegan & Coppin, who represented Basin Street in the lease negotiations. Pisenti & Brinker moved from another of Equity Office's three Fountaingrove Center buildings. RBC Wealth Management moved from 100 B St.
“It’s invigorating to see this level of activity in the region and a great way to top off 2010 and begin 2011,” said Scott Stranzl, Basin Street Properties vice president of leasing, in a statement. “The Fountaingrove Executive Center continues to attract prestigious companies because there is still a demand for class A office space in premier locations."
There have been a number of recent leases of large office spaces in the Santa Rosa area for tenants such as County of Sonoma's Employment and Training Division and Winzler & Kelly Consulting Engineers. Those two leases were both consolidations with minor expansions.
But most of the larger deals involve companies moving within the local commercial real estate market for similar amounts of space, according to Mr. Johnson.
"There have been a lot of companies on the sideline trying to determine whether they need additional space and what the needs of their businesses are," he said. "Companies are taking advantage of the marketplace and doing deals. There are a few larger deals out there, but they are hard to get completed."
Some of the recent activity has been from tenants consolidating their offices or amount of space and taking advantage of deals on newer office space at better rates and terms than their existing leases, Mr. Johnson said.
"Whoever got those leases did so with the thought in mind of their debt or refinancing obligations or what they wanted in returns," he said.
Those include requirements from lenders to keep the net operating income for a property above a certain level, usually called a debt-service coverage ratio.