The lease likely means a good return on investment for building owner DJM Capital Partners Inc. The San Jose-based private real estate investment company acquired the building vacant in October 2006 from American Financial Realty Trust, which had previously positioned the property for sale as a residential development. The buildings previously were occupied by Bank of America.
DJM paid $22 million for the building and says its total renovation expense will be $16.5 million, for a total investment of about $40 million. The county will start out paying slightly more than $2.8 million per year under the lease and will pay a total of $57 million over the life of its lease, not including operating expenses, according to county officials.
As for the renovations, DJM says it previously completed exterior work on the structures and landscaping including the creation of dramatic two-story stone entrances for each building. It will begin interior renovations immediately. The planned improvements include reconfiguring and rebuilding all interior spaces as well as upgrading building systems.
Dennis Randall, vice president of acquisition and development for DJM Capital Partners says the "recognized the opportunity to keep Ellinwood as an office property in a strengthening office market" and says the deal with the county "is among the most significant lease transactions ever executed in the 'North 680 Corridor' office market."
The building addresses are 300, 400 and 500 Ellinwood Way. The 9.5-acre development is part of a master-planned community that includes restaurants, retail and housing, hiking trails, parks and JFK University. The lease deal is apparently a good one for the county as well.
Michael Lango, the county's general services director said during a Board of Supervisors meeting last week that the complex will be used to consolidate 386 staff scattered over seven different locations. One of those location is 30-40 Muir Rd., a county-owned property that "is so far beyond its useful shelf life" that it is estimated to cost $14 to $15 million just to rehab, not including the cost of moving the staff out and back in again, Lango said.
Moreover, Lango says the new location is closer to the majority of its clients and that between 60% and 80% of the cost can be claimed against state and federal grants, such that the net cost to the county will be between 20% and 30% of the total cost of the lease. "It helps the county maximize the use of state and federal grants to support a better integrated operation that is more accessible to clients," he concluded.
Ed Del Beccaro, Scott Ellis and Trigger Reital of Colliers International Walnut Creek represented DJM in the lease transaction. The County represented itself. Ware Malcomb Architects designed the renovation. DPR Construction is the general contractor. The work is expected to take five months to complete.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
