WALNUT CREEK — A high-profile Walnut Creek office complex has been bought for a top-dollar price that tops $150 million in a deal that defies the forbidding trends in the Bay Area commercial property market.
The Plaza at Walnut Creek has been bought for $162 million, according to Newmark, a commercial real estate firm that arranged the deal.
The office building is deemed to be a trophy property in downtown Walnut Creek, according to Newmark commercial real estate executives Steven Golubchik, Edmund Najera, Darren Hollak, Francesca Zappula, Breck Lutz, Alex Grell and Danny Bartz, the brokers who arranged the transaction.
“This property presented investors with a once-in-a-generation opportunity to acquire a top-performing asset in the region,” said Golubchik, a Newmark executive vice chairman.
The price works out to $477 a square foot, which is deemed a high-level value for a Bay Area office building, commercial real estate experts say.
“This is a top-dollar price for a trophy office property, maybe the best in the East Bay,” said Jeffrey Weil, an executive vice president with Colliers, a commercial real estate firm.
In sharp contrast, office buildings in San Francisco, a one-time office market crown jewel whose luster has faded, have been selling for $250 a square foot, according to Weil.
Office buildings in San Francisco, downtown Oakland and the South Bay are being bought for a fraction of their prior values or are being haunted by foreclosures. Office vacancy levels are at record heights in those markets, with San Francisco the worst of the group at a 37% vacancy rate.
That isn’t the case with The Plaza at Walnut Creek, which was 93% leased at the time of the deal to purchase the two-building office center.
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“Despite general pullbacks in occupancy and rental rates in the office sector, The Plaza at Walnut Creek has bucked the trend and recorded meaningful occupancy and rental rate gains since 2019,” Golubchik said.
The Plaza at Walnut Creek is also in a prime Bay Area site, experts noted.
“This office property has an A-plus location,” Weil said. “You can walk to the downtown stores and restaurants and to Broadway Plaza from there.”
San Francisco-based PSAI Realty Partners bought the office complex from New York City-based Clarion Partners, Newmark stated.
Plenty of buyers lined up with offers to purchase the office complex, Newmark brokers said.
“The marketing processes generated some of the strongest investor interest we have seen in the last three years,” Golubchik said.
While this deal offers hope for the Bay Area office market, the sector remains in the doldrums.
“The office market in the Bay Area will be down and out for years,” Weil said.
