The building is owned by a joint venture of Sterling American Property and Hines. As reported in GlobeSt.com late last month, Parkside Towers is under contract to be sold to a joint venture of Harvest Properties and Invesco Realty Advisors of Dallas for approximately $180 million or $452 per sf, according to an industry source. The sale is expected to close this month.
The Sterling-Hines JV acquired Parkside Towers in mid-2005 as part of an unstable five-building, 1.7-million-sf portfolio from Equity Office Properties for which it paid approximately $397 million, of which $83 million was allocated to Parkside Towers. The other properties were 405 Howard St., 301 Howard and 120 Montgomery, all in San Francisco, and San Rafael Corporate Center. The JV has since sold three of the properties (San Rafael Corporate Center, 405 Howard and 301 Howard) for $466 million.
With several floors that had been in shell condition since the building was completed in 2002, Parkside Towers was the least stable asset in the portfolio. The two-building development in the 1000 block of East Hillside Boulevard was just 16% leased two years ago. Thanks to a busy 2006 and early 2007, the property is now full. New tenants include IBM, which leased 60,000 sf in July, and Acxiom, which leased 52,000 sf in May.
Parkside Towers was master leased before its 2002 completion by Inktomi, a data retrieval company. Inktomi never even began space planning before agreeing to pay $54 million to terminate the $315-million lease obligation. Shortly thereafter, it agreed to be acquired by Yahoo Inc. for $235 million.
The value of the Rearden expansion was not released by the parties involved. As of mid-year 2006, just before the IBM lease being signed, the asking triple-net lease rate for space in Parkside Towers was $2.95 per sf. The rate assumed a lease term of at least a five years and a $50-per-sf tenant improvement allowance.
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