TMG Partners has won awards for many projects
including honors for “Best Mixed Use,”
“Best Office,” and “Best Historic Rehabilitation”.
Oakland’s office development boom is surging into 2018 with another big project in the works. TMG Partners wants to build a 760,000-square-foot office tower in Oakland’s Uptown neighborhood at the corner of West Grand and Telegraph avenues.
The proposal comes at a time when more than 1.5 million square feet of new office space is under construction in Oakland including new towers and renovations. Other projects are going through the entitlement process including CIM Group’s proposal for up to 1.1 million square feet of office at 2 Kaiser Plaza and Lane Partners and Strategic Urban Development Alliance LLC’s Eastline project that could include 1.57 million square feet of offices.
The site, at 2201 Valley St., would be TMG’s first ground-up development in Oakland and its third office property in the city. The project, designed by Solomon Cordwell Buenz, will rise about 420 feet, consisting of 27 floors averaging 32,000 square feet and 15-foot ceilings.
“This building will have high ceilings and open floorplans, which is hard to find in a new building,” said Denise Pinkston, a partner with TMG. “That’s what tenants want.”
TMG made a foray into Oakland in 2015 when it bought 1330 Broadway for $80 million. The firm then pumped $30 million into renovating the 328,427 square-foot building that has since attracted several new tenants including software giant Oracle, engineering firm Arup and cancer drugmaker Clovis. In 2016, the developer paid $65 million for the 198,000-square-foot 2201 Broadway and is working on a $14 million overhaul.
The San Francisco-based developer acquired a parking lot as part of its purchase of 2201 Broadway and then secured an option to buy an adjacent gas station to assemble a 38,000-square-foot site for the tower.
While zoning allows for residential or office development, a BART tunnel running below the site would have made it far more challenging to build a residential building, Pinkston said.
“Office makes more sense,” she said. The location sits within three major Oakland corridors — West Grand Avenue, Telegraph Avenue and Broadway — is close to the 19th Street BART station as well as the restaurant, bars, concert venues and art galleries that have made Uptown a hotspot. Besides all of the office development, thousands of homes are under way in Oakland with more than 2,000 units under construction within a mile radius of TMG’s development site.
“Oakland has a great feeling as a city that is very attractive to people looking to live and work in urban areas,” Pinkston said.
Oakland’s office market is perhaps stronger than ever with vacancy below 6 percent during the third quarter, according to CBRE. Class A rents have jumped by nearly 30 percent in two years to about $53 per square foot during the third quarter of 2017.
The demand started swelling around 2010 when San Francisco office rents ballooned and priced out many tenants. In recent years, much of the leasing activity is coming from companies expanding within Oakland and from other cities to be closer to where employees live.
TMG has had success leasing up 1330 Broadway and is seeing robust interest in 2201 Broadway, said David Cropper, another partner with TMG. More importantly, the firm considers Oakland a great market to invest long term. The new office building could take a minimum of three or four years to build.
Pinkston and Cropper declined to estimate how much the building could cost, but with construction costs ranging from about $650 to $850 per square foot to build new office, the cost could be $500 million to $650 million.
“We want to create options for tenants who want larger floor plates,” Cropper said.
Now is a good time to move forward with new projects in Oakland. “There don’t appear to be any dark clouds on the horizon,” he said.