TMG’s 300 Lakeside Buy for PGE HQ Further Propels Oakland

OAKLAND, CA—Rockpoint Group and The Swig Company completed the sale of 300 Lakeside, a class-A office complex of more than 1 million square feet in the Uptown District. The buyer is a venture led by San Francisco-based TMG Partners.

TMG entered into a long-term lease with Pacific Gas & Electric Company to relocate the utility’s headquarters from the existing San Francisco location. The lease includes a purchase option for PG&E to acquire the property from TMG Partners.

Rockpoint and Swig will retain an interest in the property on a go-forward basis. Terms of the transaction were not disclosed, however, the purchase price was estimated by real estate experts to be in the $450 million range, GlobeSt.com learns.

“The purchase of 300 Lakeside by TMG Partners is good news for the vitality of downtown Oakland, and particularly while our city begins to rebuild from the economic downturn caused by the pandemic,” says mayor Libby Schaaf. “We welcome PG&E and their employees to our community and look forward to sharing our Oakland values with our new neighbors. We also look forward to working with TMG Partners as they realize the long-term potential of the property as this significant transaction illustrates Oakland’s continued central role in the broader Bay Area economy.”

The University of California and BART are 300 Lakeside’s principal tenants. But the public agencies previously inked separate leases to relocate to other downtown Oakland locations.

“We recognized that 300 Lakeside could provide an opportunity for PG&E to optimize its footprint, phase into the new space in a compact timeline in a location that is easily accessible to a majority of their headquarters employees and the transaction is structured to provide PG&E the flexibility to elect whether to own or lease their completed headquarters,” said Matt Field, president of TMG Partners.  “This was a very complicated transaction executed in a time of unprecedented economic disruption involving a headquarters lease and purchase option, a complex joint venture with the seller, a significant scope of building renovation and a large-scale financing.”

In recent years, PG&E determined it was becoming too costly to operate out of its San Francisco headquarters complex. PG&E intends to shift operations to Oakland in phases, the company stated in a recent regulatory filing.

“PG&E intends to use the Lakeside building as its new corporate headquarters, where it can consolidate approximately 4,500 employees currently spread across the San Francisco general offices and at least two satellite offices (both in San Ramon),” it said in a Public Utilities Commission filing.

The Oakland move may allow PG&E to make a fresh start after numerous disasters that began with a fatal gas explosion in San Bruno in September 2010, followed by a string of deadly and destructive wildfires throughout Northern California.

“Relocating our headquarters to Oakland is a clear example of our broader commitment to demonstrate real and lasting change at PG&E that will result in long-term benefits for our customers,” said Bill Smith, PG&E Corporation interim chief executive officer. “The move will reduce our real estate costs, both short and long term, and we will pass along those significant savings to customers. We’re also excited that the move will bring our employees together in new and better ways that encourage innovation in service to our customers.”

The well-known 300 Lakeside property was designed by architecture firm Welton Beckett Associates, originally developed as the headquarters for Kaiser Industries in 1960. The complex sits within one block of BART, offers parking for more than 1,400 cars, and has views overlooking Lake Merritt, the East Bay Hills and Bay.

TMG will undertake significant renovations to the 300 Lakeside building including a voluntary seismic upgrade, facade cleaning, and significant upgrades to the mechanical plant and the building’s fire and life safety systems. This work will complete the total renovation of the property following improvements completed by the seller.

TMG has retained Gensler as the project architect, MKA as the structural engineer and Plant Construction as the general contractor. TMG will also oversee the design, engineering and construction teams working to produce the new headquarters building and workspace to PG&E standards.

The property also includes a 1,339-stall parking garage with a rooftop landscaped garden and approximately 130,000 square feet of retail and office space in a two-story building at 344 Thomas L. Berkeley Way that are not part of the PG&E transaction. Together this space is entitled for 1.4 million square feet of office and/or residential development. TMG Partners will continue owning and managing the garage and Thomas L. Berkeley Way properties. After completing the buildout of 300 Lakeside for PG&E, TMG Partners will finalize the development plans for the new buildings and market the development properties for lease.

“The transaction provides benefits to the greater Bay Area region,” said Michael Covarrubias, TMG Partners chairman and CEO. “As Oakland gains a new company with PG&E occupying the former 1960s-era Kaiser corporate headquarters building, significant annual property, payroll and other tax revenue will be added to the city of Oakland. When PG&E’s existing headquarters is sold and occupied by another company, the city of San Francisco will realize significant additional annual property tax and commercial rents tax revenue as PG&E has been an owner-occupant of the property since the construction of the buildings 50 and 115 years ago, respectively. San Francisco will thus also receive other increases in tax revenues from the sale and re-tenanting of the property.”

Swig originally acquired the property in 2005 and in 2016, formed a joint venture with Rockpoint Group to recapitalize the asset. During the last four years, Rockpoint and Swig have partnered as active stewards of the historically significant asset, completing a transformative renovation of the lobby, common areas, elevator modernization and a conference center while retaining the property’s mid-century modern aesthetic.

“The Swig Company has had a long and enjoyable association with this asset and Uptown Oakland, and we’re happy that will continue as part of this deal. 300 Lakeside and Uptown is well positioned for future success and we’re proud of the improvements we made to put the building and the neighborhood on that path,” Connor Kidd, EVP and director of asset management, The Swig Company, tells GlobeSt.com.

The partnership also expanded key tenant amenities including shower and locker facilities, a café and a dedicated food truck zone. In addition, the partnership preserved and enhanced the rooftop park and secured development rights which will allow for future expansion of the complex, including a potential new high-rise office or residential tower. In addition, during the Swig/Rockpoint tenure, the partners enhanced the sustainable features of the asset, achieving LEED Platinum certification.

“We are excited to have participated in Oakland’s recent revitalization and feel that PG&E’s substantial commitment to 300 Lakeside speaks to the East Bay’s increasing desirability as an attractive place to work and live,” says Aric Shalev, managing member at Rockpoint. “We are confident in the project’s long-term success given Oakland’s continued appeal and are pleased to maintain an ownership interest through our new partnership with TMG.”

Eastdil Secured represented the seller in the sales process and the buyer in arranging financing which is being led by KKR.