A Walnut Creek office building has sold at a loss, as vacancy rates rise in the East Bay.
Due to high vacancy rates for office space in the area, the seller of the Station Plaza office building at 3100 Oak Road had to take a loss on the sale, the East Bay Times reported.
The building is located in the 680 corridor that connects Concord, Pleasant Hill, Walnut Creek, Danville, San Ramon, Dublin and Pleasanton and is only a few blocks away from the Pleasant Hill BART station, making it an ideal location for transit-oriented offices.
Lane Partners acquired the 49,500-square-foot property through an affiliate for $15.35 million in 2017. In the summer of 2020, the real estate developer, which has more than nine million square feet under development — mostly in the Bay Area, listed the three-story Oak Road building for $14.5 million — 5.5 percent less than what it paid three years earlier.
However, that lower price was still too high for the office vacancy rates in the area. A Ridge Capital Partners affiliate paid $9.5 million for the building in November, signifying a 38.1 percent drop in value over four years.
Office vacancy rates in Walnut Creek, Pleasant Hill and Concord average at about 25 percent according to Edward Del Beccaro, executive vice president and regional manager with TRI Commercial Real Estate Services.
“There is a systemic suburban office vacancy,” Del Beccaro said. “Employees who were working in back-office spaces for finance, insurance, and real estate companies have migrated to Sacramento and out of state. The spaces that were designed for them in the suburbs are now becoming vacant.”
Station Plaza was 94 percent occupied, with only 6 percent vacancy when Lane Partners purchased the building in 2017. The occupancy has dropped to only 55 percent, marking a 45 percent vacancy for the property.
“Lane is being smart,” Del Beccaro told the East Bay Times. “Rather than hang on to a loser, they are taking the immediate loss. They can now redeploy capital and move to other sectors. In real estate, you don’t go down with the ship.”
[EBT] — Victoria Pruitt