Real estate investing giant: bullish on S.F., wary of East Bay office deals

334f9 sab8524%2A304xx2772 1848 6 0 Real estate investing giant: bullish on S.F., wary of East Bay office deals

Salesforce bought 50 Fremont from TIAA-CREF in one of the largest deals of 2014.

334f9 lirolandps Real estate investing giant: bullish on S.F., wary of East Bay office deals
Roland Li
Reporter- San Francisco Business Times


TIAA-CREF, the giant pension fund manager, is one of the biggest players in Bay Area real estate, but it has stayed away from one sector during the current boom: East Bay offices.

The Teachers Insurance and Annuity Association – College Retirement Equities Fund, headquartered in New York, made some of the largest transactions in the Bay Area last year. It has multifamily and industrial holdings in the East Bay. But when it comes to office, the company is still focusing on properties in primary markets, said Rich Kimble, head of northwest acquisitions at TIAA-CREF.

Last year, TIAA-CREF, which had $851 billion in assets under management at the end of 2014, bought two office buildings, 55 Second St. and 405 Howard St., in San Francisco. It also acquired a retail space at 856 Market St. that is occupied by sports apparel company Puma. It purchased a 42,000-square-foot office building in Menlo Park for $50 million and an apartment building in Redwood City.

On the West Coast, TIAA-CREF is also active in Seattle, Los Angeles and Orange County. But the Bay Area’s strong job growth has outpaced other West Coast cities. The presence of strong academic centers, including Stanford and Berkeley is also a draw to the region.

“We want technology tenants in our funds,” said Kimble. “We see San Francisco as a long-term complement.”

TIAA-CREF and Equity Office Properties previously owned two office towers in Walnut Creek, but sold them in 2012 to MetLife. TIAA-CREF hasn’t made any office deals in the East Bay since that transaction.

Part of the trend is because the East Bay’s office market lags behind San Francisco. San Francisco’s Class A office market was 5.2 percent vacant in the first quarter, with asking rents at $64 per square foot, according to commercial brokerage Avison Young. The East Bay cities of Oakland, Emeryville, Alameda and Richmond have a 12.9 percent vacancy rate, and Class A office space is around $33 per square foot, said Avison Young.

Roland Li covers real estate and economic development

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