Top 10 Office Deals in California for 2020
- Mar 04, 2021
Despite economic hardship, strict stay-at-home orders and prolonged lockdowns, California managed to stay afloat amid uncertainty. The state is home to some of the nation’s top-performing office markets, with total sales volume amounting to close to $14.9 billion in 2020 when 36.2 million square feet changed hands. That represents a 43 percent decline from the $26.6 billion recorded in 2019 when 67 million square feet of office space sold.
The bulk of last year’s transaction volume was concentrated in the Bay Area ($4.3 billion) and San Francisco ($3.9 billion). Despite the record-high cost of living in these markets, they continued to attract investor interest thanks to their dynamic corporate location and hotbed status for the high-tech industry. The list below highlights the largest deals closed in California in 2020, based on data provided by CommercialEdge. The top 10 office transactions amounted to more than $3.7 billion, equal to 25 percent of 2020’s total transaction volume.
|Rank||Market||Property||Sale Price (MM)|
|1||San Francisco – Peninsula||Genesis – North Tower||$542.4|
|2||San Francisco – Peninsula||Transamerica Pyramid Center – The Transamerica Pyramid||$489.97|
|3||Metro Los Angeles||U.S. Bank Tower||$430|
|4||San Francisco – Peninsula||Genesis – South Tower||$419.1|
|5||San Francisco – Peninsula||3000 Sand Hill Road||$366.9|
|6||San Francisco – Peninsula||510 Townsend St.||$363.6|
|7||Orange County||Five Point Gateway – 15101 & 15191 Alton Parkway||$355|
|8||Metro Los Angeles||5900 Wilshire||$303.4|
|9||San Francisco – Peninsula||2700 – 2770 Sand Hill Road||$243.1|
|10||San Francisco – Peninsula||505 Brannan||$196.5|
10. 505 Brannan, San Francisco
The 137,446-square-foot low-rise property changed hands in a $560.2 million portfolio transaction along with the 294,580-square-foot building located at 510 Townsend St., also included on our list. Ascendas Reit’s acquisition represents the Singapore-based fund’s first foray into the San Francisco market. Alexandria Real Estate Equities sold the 2018-completed buildings.
Serving as one of Pinterest’s headquarters, the TMG-designed 505 Brannan is LEED Platinum certified and features a two-story lobby with a cafe/sandwich shop and a rooftop deck. The six-story SoMa building was developed on the former surface parking lot of a bank and is near the CalTrain Station.
9. 2700 – 2770 Sand Hill Road, Menlo Park
In early 2020, DivcoWest paid Ford Land Co. $243.1 million for 2700 – 2770 Sand Hill Road, a Class A office campus in Menlo Park, Calif. The sale was part of a $610 million portfolio transaction that included a larger office building covered later in our list. Bank of America provided the buyer with a $320 million acquisition loan.
Built in 1993, the 115,220-square-foot asset traded for the first time since its completion. The property encompasses seven two-story buildings located halfway between San Francisco and San Jose. The complex is home to KPCB, JPMorgan Chase and Silicon Valley Bank, as well as various venture capital firms and health-care tenants.
9. 5900 Wilshire, Los Angeles
At 433 feet, 5900 Wilshire is the tallest building in Los Angeles’ Miracle Mile district and the second-tallest in the Wilshire area. The 31-story skyscraper changed hands in the first quarter of 2020 when Rockpoint Group purchased it from a partnership of PGIM Real Estate, The Ratkovich Co. and AXA Capital. The $303.4 million sale was subject to a $163.5 million loan held by Metropolitan Life Insurance Co.
The 452,764 square-foot building, located in the Wilshire corridor, across from the Los Angeles County Museum of Art, includes first- and second-floor retail totaling 22,000 square feet. Constructed between 1968 and 1971, the building underwent a $34 million renovation spearheaded by architectural firm Johnson Fain in 2008. In 2014, the building became the official West Coast headquarters for SBE Entertainment Group.
8. Miracle Mile Tower, Los Angeles
Last March, Rockpoint Group acquired 5455 Wilshire Blvd., another landmark building in the Miracle Mile neighborhood. The 225,000-square-foot Miracle Mile Tower changed hands in a $312 million deal. The seller was Jamison Services, which purchased the asset from Mackinac Partners in 2002 for $19.9 million.
The 1960-built asset rises 22 stories and includes a 3,000-square-foot first-floor retail component, as well as five levels of parking. The tenant roster includes Gnet, Velocity Entertainment Partners, Black Box Management, alongside various architecture and law firms. Rockpoint owns multiple office towers in the area, including the 27-story 5670 Wilshire Blvd., purchased in 2017 from Blackstone Group.
7. Five Point Gateway – 15101 & 15191 Alton Parkway, Irvine
PRP Real Estate Investment Management’s acquisition of the two largest buildings at the Five Point Gateway office complex in Irvine represents the only office deal closed in Orange County on this list. The company paid $355 million for 15101 & 15191 Alton Parkway in Irvine. Santander Bank provided a $228.5 million acquisition loan.
Completed in 2017, the five-story buildings total 660,893 square feet and will be fully occupied by Broadcom until October 2027. Located on 26 acres at the corner of the Great Park Neighborhoods planned community, the property is less than 3 miles from interstates 5 and 405.
6. 510 Townsend St., San Francisco
Ascendas Reit paid $363.7 million for 510 Townsend St., the second asset sold by Alexandria Real Estate Equities as part of its strategy to focus on the life sciences sector. The seven-story building features a landscaped mini-plaza and a roof deck with a large urban garden.
The 2018-completed property was a built-to-suit project for Stripe, deemed Silicon Valley’s most valuable startup in April 2020. Although its lease runs through 2027, the fintech company announced its plans to relocate this year to Kilroy Realty’s Oyster Point development in South San Francisco—one of the largest upcoming office buildings in the metro—and subsequently sublease its space at 510 Townsend St.
5. 3000 Sand Hill Road, Menlo Park
The fifth office transaction on our list involves the larger property DivcoWest acquired from Ford Land Co. back in January 2020. Encompassing 182,606 square feet across two stories, the 1971-built asset changed hands in a deal valued at $366.9 million. Tenants include GGV Capital, Hightower and The Sobrato Organization, among others.
The above-mentioned portfolio, alongside the nearby Quadrus campus DivcoWest purchased in 2011, is known as The Sand Hill Collection, a 550,000-square-foot corporate campus adjacent to Interstate 280 and strategically located close to Stanford University’s talent pool.
4. Genesis – South Tower, South San Francisco
At the beginning of 2020, Ventas formed its own life sciences and health-care fund, and later that year, the REIT acquired Genesis South San Francisco from a joint venture between Bain Capital Real Estate and Phase 3 Real Estate Partners. The three-building life sciences campus comprises Genesis – South Tower, Genesis – North Tower and Genesis 4000 Shoreline. The property traded for $1 billion, with Citibank and JPMorgan Chase providing $415 million in acquisition funding.
The 324,986-square-foot Genesis – South Tower is located on 15 acres at 1 Tower Place in South San Francisco and includes 13,900 square feet of retail on the first floor. The 12-story midrise was completed in 2009, underwent a complete revamp in 2016 and traded for nearly $420 million, almost double the amount the Phase 3 Real Estate Partners joint venture paid for it in 2015.
3. U.S. Bank Tower, Los Angeles
California’s third-largest office transaction was Silverstein Properties’ $430 million acquisition of the third-tallest building in the state—the iconic U.S. Bank Tower in downtown Los Angeles. The transaction was subject to a $274.9 million loan held by Athene USA. The seller, Singapore-based Overseas Union Enterprise, purchased the building in 2013 for $367.5 million from MPG Office Trust.
Built between 1987 and 1990, the 75-story skyscraper was previously known as Library Tower, then as First Interstate World Center. The high-rise encompasses 1.4 million square feet of office space and includes an 82,524-square-foot retail component.
2. Transamerica Pyramid Center – The Transamerica Pyramid, San Francisco
After owning The Transamerica Pyramid building since its completion in 1981, Transamerica Corp., a division of Dutch insurer Aegon, sold the asset to New York-based SHVO. The 501,456-square-foot, Class A property changed hands last October for nearly $490 million as part of a $650 million transaction involving the other two office buildings within The Transamerica Pyramid Center, 505 Sansome St. and 545 Sansome St. Aegon funded the sale with $495 million in acquisition financing.
The 48-story asset is located at 600 Montgomery St. in the city’s Financial District and was San Francisco’s tallest skyscraper until the 1,070-foot Salesforce Tower topped out in 2018. Notable tenants include JMP Group and Northwestern Mutual.
1. Genesis – North Tower, South San Francisco
Genesis – North Tower—the 381,523-square-foot component of Ventas’s $1 billion Genesis life science campus acquisition—places the $542.4 million deal at the top of the list. Completed in 2018 at 2 Tower Place, the 21-story building is home to a wide array of biotech tenants such as SmartLab and Fluidigm. In addition to office and lab space, the Skidmore, Owings & Merrill-designed asset includes a high-end gym and cardio area, ground-floor retail, as well as conference room space.