Bay Area Economic Staying Power Pulls in Investors
Central Park Plaza was attractive to prospective buyers due to its connectivity to the entire Bay Area by way of multiple major thoroughfares and convenient access to the VTA light rail on North First Street.
SAN JOSE—The economic outlook for the greater Bay Area remains one of the strongest in the country, however, job growth continues to slow in the third quarter adding just 4,000 jobs year-over-year, a 0.72% increase. The unemployment rate increased 30 basis points since the second quarter to 2.4%, but is still ahead of the third quarter 2017 figure of 3.2%, perhaps a sign of the market’s bottoming out, according to a third-quarter office report by Transwestern.
In the Bay Area, unemployment rates increased 30 to 50 basis points in every county, with San Mateo County (2.3%) and Marin County (2.4%) remaining the top performing counties in California. Santa Clara County (2.6%), Alameda County (3.1%) and Contra Costa County (3.2%) are all below the national average of 3.9% and California’s average of 4.3% unemployment. The US economic outlook shows similar strength with the unemployment rate near its lowest point in almost 20 years and more job openings than available workers, however, there is a real concern that a labor shortage may slow further expansion.
At any rate, the Bay Area economic boom continues to bode well for office investment interest. One recent example is Central Park Plaza, which recently sold for an undisclosed price. This continues the successful value creation and subsequent monetization of TIG’s initial TSP Value and Income Fund I.
The 300,000-square-foot office park is located at 2833–2841 Junction Ave. and 2860–2890 Zanker Rd. Constructed in 1986, Central Park Plaza consists of six class-A two-story office buildings. The multi-tenant project is leased to 56 tenants.
During the hold period, ownership completed several capital renovation projects, including updating the courtyard and deli, building a new conference center, and creating several high-tech speculative suites. The capital renovation projects were instrumental in the success of this investment, as these amenities allowed the leasing team to lease more than 160,000 square feet at rates that supported the disposition price.
“We are pleased to continue building on the successful value creation of the TSP Value and Income Fund through this sale,” Paul Garancis, Transwestern Investment Group senior managing director, tells GlobeSt.com. “This asset was attractive to prospective buyers due to its excellent connectivity to the entire Bay Area by way of multiple major thoroughfares. It also provides convenient access to the VTA light rail on North First Street.”
HFF represented the seller in the transaction.