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McClatchy-Tribune  06/09/2014 10:16 PM ET
Pleasanton office complex totaling 1 million square feet sells for about $155 million [Contra Costa Times :: ]

June 09--PLEASANTON -- California Center, a prominent 1-million-square-foot office complex in Hacienda Business Park in Pleasanton, has sold for about $155 million, in one of the largest office sales this year in the East Bay.

San Francisco-based Swift Realty bought the complex from RREEF, a real estate investment trust. The deal was arranged through JLL, a commercial real estate brokerage. The campus consists of six office buildings near the corner of Rosewood Drive and Owens Drive.

The purchase suggests that realty investors believe more companies may seek large blocks of office space to rent in the East Bay as they run out of leasing options in San Francisco, where a tech boom has caused rents to skyrocket.

"We think we can get some spillover from San Francisco," said Brett Miles, asset manager for Swift Realty. "We will re-position it, re-brand it, put some money into improving it, and hopefully that will speak to the market."

According to industry sources, the price for the office center ranged form roughly $150 million to $160 million. The complex totals 1.03 million square feet.

"Swift Real Estate Partners was able to obtain a Class A office property in a tightening market," said Rob Hielscher, managing director with JLL.

The new owners face a significant leasing challenge. The office complex is nearly empty after Ross Stores moved its corporate headquarters to Dublin and vacated California Center.

Still, recently, PG&E moved some operations out of San Francisco and other locations to create a gas control "nerve center" in San Ramon's Bishop Ranch office complex, and a few years ago, Callidus Software moved to Pleasanton from the South Bay.

Plus, Workday has been expanding steadily in Pleasanton. And while not a relocation from another city, General Electric created a brand new software and research center in Bishop Ranch where the company is employing several hundred tech engineers and other employees.

"What the market is hoping for to some extent is the more traditional businesses such as banking, insurance, finance, even real estate, that don't have to be in San Francisco for their operations," said Marshall Snover, an executive managing director with Colliers International, a commercial realty firm. "They are companies that aren't hiring tech engineers."

Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos.

 

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