Hudson Pacific sells Skyway Landing at loss

REIT disposes of office building for $102M

Hudson Pacific's Victor Coleman and Skyway Landing, 959 Skyway Road in San Carlos
Hudson Pacific's Victor Coleman and Skyway Landing, 959 Skyway Road in San Carlos (Hudson Pacific, LoopNet)

Los Angeles-based Hudson Pacific has sold Skyway Landing, a two-building office property in San Carlos, according to documents filed with the Securities & Exchange Commission. The nearly 250,000-square-foot building traded for $102 million, or $412 per square foot, to an undisclosed buyer. 

The property was “subsequently sold” on Feb. 6 before certain credits, prorations and closing costs, according to the filings. The company called the property “non-strategic” to its portfolio. 

Hudson Pacific placed the property on the market last year after acquiring it in 2015 for $104.4 million, meaning it took a slight loss on the sale. The property is located at 959 and 999 Skyway Road and located three miles from downtown Redwood City. Skyway has a shuttle to the San Carlos and Hillsdale Caltrain stations and features Class A offices. 

“As we head into 2023, with $1 billion of liquidity and the majority of our debt fixed or capped, we are focused on prudent capital management and are well positioned to fund our under-construction projects and aggressive leasing efforts,” CEO Victor Coleman said in a statement. “We remain confident in our business’ long-term fundamentals, as we effectively navigate today’s market and prepare for the next cycle, all with an eye towards unlocking value for shareholders.”

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This deal goes against the downward trend in the Peninsula in terms of office sales. Sales were down by 94 percent in the fourth quarter of last year, according to a report by Kidder Mathews. The largest deal last quarter was also in San Carlos with a price of $22 million for a 22,000-square-foot office complex. 

The decline in office sales were due to recession concerns, employee preference to work from home and rising interest rates. Quality office space may be hard to come by going forward, according to the report. Any new office building will most likely need pre-leasing agreements in place before completion. 

Another transaction this year signaling an active South Bay commercial market was Morgan Stanley acquiring a medical building in Silicon Valley for $68 million. The 48,000-square-foot building went for $1,405 per square foot, or $68 million. 

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