SC Properties has placed a bet on offices, paying $37.5 million for a 235,000-square-foot campus in San Mateo, $50 million less than it traded for five years ago.
The locally based brokerage and investor bought the San Mateo Gateway, a trio of three-story buildings at 1800, 1810 and 1820 Gateway Drive, the San Francisco Business Times reported, citing unidentified sources.
The seller was Kennedy Wilson, based in Beverly Hills. The deal works out to $160 per square foot.
Kennedy Wilson bought the Class A campus in 2019 for $87.5 million, or $372 per square foot. The sale SC Properties amounts to a 57 percent reduction from the price five years ago.
The Peninsula campus was 60 percent occupied at the time of sale.
“We feel fortunate to be selected as the buyer of this wonderful property. The previous owner did an excellent job maintaining the asset, and we look forward to adding additional value,” SC Properties Partner Kevin Phillips, who led the sale alongside SC Managing Director Chris Giotinis, told the Business Times.
Brokers Gary Boitano of Cushman & Wakefield and Clarke Funkhouser of JLL consulted on the deal and were retained to lead office leasing.
The San Mateo Gateway campus, built in 1986 south of Highway 92, has a fitness center, on-site cafe and upgraded common areas, which Boitano said are well-suited to the “flight to quality” workplace trend.
San Mateo’s 8.4 million square foot office market had a vacancy of 20.1 percent in the second quarter ending in June, up from 18.3 percent in the prior period, according to CBRE.
Preliminary third quarter data from CBRE shows San Francisco’s office market vacancy ticked up to a record 37.3 percent in the third quarter ending this month. The city’s availability rate went unchanged, a signal that the beleaguered market may be stabilizing.
SC Properties, founded as a brokerage in 1996, has $800 million in commercial and residential assets under management, according to its website.
— Dana Bartholomew
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