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BERKELEY, CA-A locally based family trust recently acquired the retail and office components of Berkeley Center, a Downtown retail development that includes a hotel component not included in the sale, according to the Marcus & Millichap brokers who had the disposition assignment. The retail and office portion of the project totals 92,500 sf and was sold by Moroga, CA-based Mackenzie, Patterson, Fuller Inc. for $17.2 million.
The Berkeley Center covers an entire city block in Downtown Berkeley at 2200 Shattuck Ave. and 2070 Allston Way, one block from the UC Berkeley campus. The center was constructed in 1910 and is known as the redevelopment that began the "renaissance" of Downtown Berkeley. The upper floors are the hotel. The lower floors, consisting largely of retail space, include a 10-screen theater complex, a Wolfgang Puck Tacone restaurant, Starbuck's, Cold Stone Creamery and a number of other unique retailers and eateries. Occupancy is about 95%.
Martin Cohan and Joshua Levy, investment brokers in Marcus & Millichap's West Los Angeles office had the disposition assignment and secured the buyer. Cohan tells GlobeSt.com the sale price was about $800,000 below the asking price and that the new owner's going-in capitalization rate is about 7.83%, based on the price paid and current net operating income of $1.38 million. He declined to name the new owner, describing him only as a hands-on local Berkeley investor completing a 1031 Exchange.
"It was complicated, involving two or three condo interests and the assumption of a recently refinanced conduit mortgage," says Cohan. "We had to find a buyer that could assume the existing mortgage and put cash down."
The challenge for the new owner will be keeping leased up the office component of the project, which is located mainly in the backside and basement portions of the building, says Cohan. "The office is leased to a lot of different nonprofits and other types of users who wanted less expensive space in order to keep their operating expenses low," he says. "A lot of these nonprofits are in trouble from a funding standpoint, so the new owner's challenge will be to maintain good relationships and backfill where necessary."
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