[caption id="attachment_34371" align="alignright" width="292" caption="5401 Old Redwood Highway in Petaluma"][/caption]
PETALUMA -- Cornerstone Properties SA LLC has expanded its North Bay commercial real estate holdings with the purchase of two former Equity Office buildings in Petaluma with a total of 93,000 square feet.
The San Mateo-based real estate investment company acquired 5401 Old Redwood Highway, one of Petaluma's newer top-class office buildings, and 1372 N. McDowell Blvd. on May 9 from servicers for CSFB 2002-CKS4 Redwood Way LP, one of the lenders that have been taken back a dozen and a half buildings in Petaluma and Santa Rosa from Equity Office in the past 12 months.
Already, Cornerstone is enjoying interest from tenants in those two buildings, according to Alon Adoni, head of acquisitions.
"We reduced rents from what the servicers were asking," he said.
The sale price wasn't disclosed, but is estimated to be in the $40-to-$50-a-square-foot range in which many of the other buildings have sold. That's roughly one-third the cost to build similar structures now and nearly as much of a discount from what Equity Office paid for the two buildings as part of a 44-building North Bay portfolio purchase in 2005.
Cornerstone charged into the Petaluma commercial property market with the purchase of the Cisco Systems' former 170,000-square-foot, five-building campus in December 2009. Cornerstone filled up one building -- 1435 N. McDowell -- partly by attracting First California Mortgage from its lead-tenant space in the 57,000-square-foot 5301 Old Redwood building. CrossCheck is filling up another building.
Gluing Machinery & Systems, currently occupying about 6,000 square feet in 1372 N. McDowell, recently signed a lease for 10,000-square-feet in another former Equity Office building, one recently reacquired by Basin Street Properties.
Cornerstone and Basin Street, which have acquired property at values well below prices of the past several years, have been competing with long-standing commercial property owners with lower cost bases for significant tenants eager for lease bargains in Petaluma.
Cornerstone in 2006 acquired a 156,000-square-foot light-industrial complex at the entrance to Charles M. Schulz – Sonoma County Airport. So far this year, Thermal Technology expanded to 25,000 square feet there, and existing tenant TastingRoom.com is expanding from 16,000 to 25,000 square feet.
Tony Sarno of Keegan & Coppin and Kathy Kelleher of CB Richard Ellis represented the seller of 5301 Old Redwood and 1372 N. McDowell.