Notable north Marin commercial real estate deals inked, office market strong before virus

Editor's note: This story appeared in the March 16 print edition and reflects economic conditions before the lockdowns of a number of local businesses to slow the new coronavirus.

There are have been several notable deals completed, during both 2019 and 2020 to date, that speak to the vitality of the north Marin County office market. Not only have there been sizeable new leases signed but also several large renewals that speak to the commitment of large companies to the North Bay.

The strength of the office market in north Marin has also caught the eye of major institutional investors, which have made further investments into its submarkets.

Pricing for these properties has continued to appreciate over previous sales that occurred during a very active sales period between 2014 and 2016.

New medical office leasing

At 4000 Civic Center Drive in north San Rafael, ownership sought and obtained medical entitlements for the first floor, consisting of 38,000 square feet. Upon approvals, CorticaCare leased 10,805 square feet.

It provides services and care for children with autism and other developmental differences. In the same year, Marin PET/CT Imaging also signed a lease for 4,261 square feet on the first floor.

Meanwhile, MarinHealth has made strides toward moving into the 35,909-square-foot second floor leased in 2018.

Further medical office leasing was seen across the freeway at 1 Thorndale Drive, where Marin Health Ventures leased 17,280 square feet, a space which they intend to use as a surgery center.

In regard to general office users, Computershare leased 13,545 square feet on the second floor of 1 McInnis Parkway, while Perotti & Carade leased 5,816 square feet on a different portion of the same floor. Computershare is moving north from 3301 Kerner Blvd. in central San Rafael, while Perotti & Carade is moving north from 1100 Larkspur Landing Circle in Larkspur.

There were several significant renewals of sizeable office users in north San Rafael. Autodesk renewed its full-building leases of 44,990 square feet at 3950 Civic Center Drive and 115,514 square feet at 111 McInnis Parkway.

At 200 Smith Ranch Road, Fair Isaac Corporation also renewed its lease of 43,000 square feet on the third floor.

Birkenstock signs new lease

One of the largest lease transactions seen in Marin County in the last decade took place at 100 Wood Hollow Drive in Novato, where Birkenstock leased 47,728 square feet. They are moving from the nearby campus at 8171 Redwood Highway, a nearly 89-acre site that has been on the market for sale and has been eyed as a future redevelopment site.

At Hamilton Landing, several significant lease transactions took place over the last year. In Hangar 3 and Hangar 4, QT Ultrasound renewed and expanded, now occupying 21,480 square feet. Another sizeable transaction in the complex included the renewal of Marin Individual Practice Association, for 22,266 square feet in Hangar 4.

Major properties sell

In Novato, the 406,468-square-foot Hamilton Landing office complex sold for $115 million, or $283 per square foot. The buyer, Los Angeles-based Kennedy Wilson, has plans to further improve the property, which has been a destination for creative and digital companies and is the home to such firms as Marin Community Foundation, Activision, QT Ultrasound and others.

This is the second time in four years the property has sold, the last time being in 2015 for $84 million, or $207 per square foot.

In north San Rafael, New York based Innovatus Capital Partners purchased the 135,849-square-foot office building at 4040 Civic Center Drive for $52.9 million, or $389 per square foot. The building was leased to tenants such as The Pasha Group, Regus Executive Centers and the Vionic Group, among others.

The seller had purchased the building in 2014 for $34.9 million, or $257 per square foot.

While vacancy rates remain relatively high in San Rafael and Novato compared with the rest of Marin, there are signs of stabilization that should result in rent growth in 2020. Major employers including Autodesk, Birkenstock and Fair Isaac all committed to stay in northern Marin. There were several medical deals completed, which continues a trend of medical growth in northern Marin.

The sales of Hamilton Landing in Novato and 4040 Civic Center at significant increases over sales four years ago show a continued appetitive by institutional buyers for the area.