Bloomberg News

Tishman Said to Plan Sale of Bay Area Office Buildings

January 18, 2013

Tishman Speyer Properties LP plans to sell three office complexes in the San Francisco area, seeking to capitalize on demand from real estate investors amid rising rents, a person with knowledge of the matter said.

Tishman Speyer intends to offer for sale 350 Rhode Island St. in San Francisco; Dublin Corporate Center in Alameda County; and Sunnyvale Office Park in Sunnyvale, part of Silicon Valley, said the person, who asked not to be identified because the information is private. The New York-based company is seeking a combined $430 million for the properties, after paying about $295 million for them in transactions dating to 2005, according to the person.

San Francisco office rents soared 27 percent in the fourth quarter from a year earlier to an average $48.83 a square foot, propelled by rapidly expanding technology companies such as Salesforce.com Inc. and Square Inc., according to brokerage CBRE Group Inc. (CBG:US) Citywide office costs including rent, taxes and service charges jumped 36 percent last year, the biggest gain of any global office market, CBRE said in a separate report.

Commercial-property sales in San Francisco have also surged, climbing 93 percent to $6.37 billion in 2012, according to preliminary data from Real Capital Analytics Inc. Deal volume in the San Jose area, the center of Silicon Valley, advanced 38 percent to $1.85 billion, while office sales in the East Bay soared 148 percent to $959 million, data from New York-based Real Capital show.

Office sales in the San Francisco metropolitan area, including North Bay cities such as Santa Rosa, increased 81 percent to $9.35 billion, according to the research firm. It was the highest total since $21 billion of deals in 2007.

Tishman Speyer bought the Rhode Island Street offices for $42 million in 2011, and expects to sell the property for about $60 million, according to the person. The Sunnyvale center, fully leased by Juniper Networks Inc., was acquired in 2005 for $174 million, with Tishman seeking a sale price of $260 million.

The Dublin offices, where Oracle Corp. is lead tenant, is expected to bring $110 million, the person said.

To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net


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