Shorenstein to Sell Two Major Properties
By Michael Hironimus
It has been recently reported that Shorenstein Properties is courting buyers through Jones Lang Lasalle for their two office/life science buildings located at the prestigious Pacific Shores Center in Redwood City. Combined, the buildings total over 447,000 square feet and are currently leased to Abbott Laboratories and Dreamworks Animation. Shorenstein bought the buildings in 2007 and must think that the time is right considering the super hot office market on the mid-Peninsula. Or is something else going on?
Interestingly, talk of this potential sale comes after shortly hearing they are also liquidating another industrial property in South San Francisco which they own with SKS Development Company. As reported in the San Francisco Business Times, they recently entitled the 82-acre property about 6 months ago to build some office/biotech campus with about 2.25 Million square feet of space. This is now quietly being marketed to some select buyers.
So what’s going on? To be honest, it looks like a smart move as larger REITs and equity funds are looking to move money into these asset classes. Rents are on the uptick and the Peninsula office market has seen seven consecutive quarters of positive net absorption, so as the mantra goes: “Buy low, sell high.” It will be interesting to see where Shorenstein takes this cash windfall and moves next.
Now, as far as the industrial piece is concerned, the City of South San Francisco must be salivating at the idea of another biotech company generating huge tax revenues. This would most likely put further pressure on the Industrial sector as the city would lose over 300,000 square feet of industrial space, including some freight forwarding. South City has already re-zoned that neighborhood in the Eccles, Eccles, Forbes triangle to biotech uses, so freight forwarding and wholesale distribution are going the way of the dinosaurs in that portion of the city. Should North County lose that amount of space, you could see an increase in rental rates with an increase in demand on the industrial side, although that may still take some time with manufacturing and shipping still stagnant at best.
The Peninsula Industrial Pros 