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Investor Swoops in to Buy Former Bay Area Air Force Base That Became an Office Park

hamilton-landingby Cory Weinberg
San Francisco Business Times

A Portland-based equity fund paid about $85 million this week for a part of a former United States Air Force base in Novato that transformed airplane hangars into office space.

ScanlanKemperBard bought Hamilton Landing, a 406,355- square-foot office campus, from Los Angeles-based Barker Pacific Group, which poured $100 million into the major rehabilitation project with Prudential Real Estate Investors 16 years ago. Sources with knowledge of the deal said SKB paid about $85 million, or $209 a square foot. The complex is 93 percent full. Prominent video game developer Visual Concepts best known for making Take-Two Interactive’s 2K series of sports games – is its anchor tenant with lease of about 95,000 square feet. It’s also home to Raptor Pharmaceutical Corp and quickly bounced back five years ago after Disney ditched 120,000 square feet there.

The seven buildings, which retained their airplane hangar-style facades, have large floor plates of about 25,000 square feet to appeal to large tenants that have typically avoided Marin County.

“As Marin grows up as an office market, it really doesn’t have the space that caters to the larger tenancy. I think we get competitive advantage from that,” said Todd Gooding, president and chief investment officer at SKB.

The Novato market, in particular, is starting to heat up with office sales, indicating investors see more high-profile tenants filling up space there. Barker Pacific Group also sold a 143,000-square-foot office complex on Rowland Way in Novato last month.

Novato and San Rafael have the largest office markets in the county, but Novato’s 18 percent vacancy rate lags six percentage points behind San Rafael’s, according to DTZ. Most of Novato’s holes are due to space available at Fireman’s Fund half-vacant campus.

At Hamilton Landing, Gooding said “consistent lease rollover” over the next three to five years meant that several below-market rents would boost revenue going to the new landlord. Rents at Hamilton Landing are now between $2.50 to $2.85 a square foot, already higher than the city’s Class A average of $2.30 a square foot.

The complex is also walking distance from a SMART rail stop, which links Santa Rosa to the ferry terminal that goes to San Francisco. The rail is expected to be operational by next year. Gooding added that high home prices in Marin County would push companies north who are looking to relocate. “That whole area is only going to get better over time. There’s a confluence of things happening to make Novato a more desirable area and we happen to have the best product,” he said.