PG&E buys Oakland Headquarters for Up to $900M

PG&E has moved past a century of fog in San Francisco with the purchase of its 29-story headquarters in Oakland. The expected cost: up to nearly $900 million.

The investor-owned utility, after announcing its move in 2020 to the East Bay, bought its 910,000-square-foot hub at 300 Lakeside Drive, the San Francisco Business Times reported. The seller was TMG Partners, based in San Francisco.

Financial terms of the deal, expected to close this month, were not disclosed.

When the utility, officially named Pacific Gas & Electric, announced its move to the East Bay, it received an option to buy its new Lake Merritt home this year for $892 million, or $980 a square foot. The company said in a recent SEC filing the agreed-upon price was “subject to certain adjustments.”

The price represents a windfall for TMG and the Oakland market. For comparison, Well Fargo recently sold a San Francisco office building for between $120 and $130 per square foot.

TMG bought the former Kaiser headquarters in 2020 for $450 million, then cut the purchase deal with PG&E. The crescent-shaped building had been mated to a parking garage with a rooftop garden, plus a 130,000-square-foot office and retail building.

In February, TMG subdivided the property to create a separate parcel for the PG&E office tower, which the utility began filling up last year. As part of the deal, TMG has retained ownership of the garage and the smaller commercial building.

TMG also reserves the right to transfer the “various redevelopment parcels to new owners,” the agreement states.

When PG&E signed a 35-year-lease at 300 Lakeside, it was the largest lease ever in Oakland or San Francisco. The purchase of the headquarters building may also puncture real estate records.

The purchase could also boost the Oakland office market, where overall vacancy was nearly 20 percent in the first quarter — with the vacancy in the Downtown core at nearly 28 percent as employees work from home, according to CBRE.

PG&E said moving its long-time hub from San Francisco would help it cut real estate costs. In late 2021, it sold its 1.5 million-square-foot, two-building complex at 245 Market and 77 Beale streets to Houston-based Hines for $800 million.

Hines, which filed plans to redevelop one high-rise and add another, has stalled on obtaining the needed approvals.

— Dana Bartholomew