"Alameda County and the City of Oakland decided in the late 1990s to start moving county and city tenancies to the property because of the availability of space and a desire to stabilize the East Oakland neighborhood," the listing broker, Suharski tells GlobeSt.com. "What's happening is the mall itself is gradually being taken over by the County of Alameda."
A portion of the JC Penney department store is now Alameda County Health Department's Wellness Center, which provides 40 different primary and medical specialty services. The Oakland Police Department opened a substation in what used to be Mervyns. Elsewhere in the mall, Alameda County Social Services Agency has offices for adult and aging services as well as a center for food stamps and other safety net programs.
The county has been taking down an average of about 60,000 sf per year, Suharski says. As things now stand, the government occupies 60% of the mall, but the expectation is they will ultimately occupy the entire enclosed mall portion of the property.
The mall is owned by Eastmont Properties Co., whose principals include Jack (chairman) and Bill Sumski (CFO and general counsel), Robert Bridwell (president) and Greg Garrett (Eastmont Town Center GM and project manager). They reportedly spent $60-million turning the decaying mall into the town center it is today.
"They owned it when it went dark and they devised this plan with the county and the City of Oakland to convert 80% of the property to offices for government operations," Suharski says. "It's got a lot of great long-term stability; a lot of the leases are 10 and 20 years and the county's spaces have on average $100 per sf in tenant finishes."
The asking price, which equates to $135 per sf, translates to a first-year capitalization rate of about 7% based on in-place income, Suharski says. "It's a stabilized cash flow play with a value-add component," he says. "We think that within 24 months it could be a double-digit cap [rate]."
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