California Capital & Investment Group has closed its deal to buy a 15-story office tower in Downtown Concord for $40.5 million.
The Pleasant Hill-based investment firm led by Phil Tagami and Leonard Epstein bought the 369,000-square-foot One Concord Center at 2300 Clayton Road, the San Jose Mercury News reported. The seller was Utah-based Bridge Investment Group.
The July sale was previously reported by the San Francisco Business Times, but without a price. The newly revealed price tag comes out to $110 per square foot.
Bridge bought the office building in 2017 for $70.5 million, or $196 per square foot. It then sank $20 million into revamping its offices, according to a marketing brochure obtained by the Business Times. The sale represents a 42.6 percent loss on its investment.
The office building, among the tallest in Concord, is two blocks from the city’s BART station and has a deli, plus locker rooms and showers. It was “the focus” of Downtown Concord redevelopment when it broke ground in 1985, the Los Angeles Times reported.
Now it’s a casualty of a rough-and-tumble office market during the era of remote work. The office vacancy rate in the East Bay city in the first quarter was 17.4 percent, with little demand for office leases.
“Office building prices are at the bottom and they are going to stay that way for a couple of years,” Jeffrey Weil, an executive vice president with Colliers, told the Mercury News.
The $40.5 million paid by California Capital includes a core price of $38.2 million plus an assumption by the buyer of between $2 million and $3 million in liabilities and debts. The firm received a discount because it assumed certain liabilities, according to Epstein, its chief investment officer.
At the time of sale, the buyer landed a $35.5 million loan from Delphi CRE Funding, managed by Acore Capital, based in Larkspur. The building is 54 percent leased.
“We feel it’s an opportunistic time to buy office properties based on current market conditions,” Epstein told the Mercury News. “We will renovate it as needed and will lease it up.”
California Capital has spent three decades redeveloping properties in Downtown Oakland. It’s also managing multiple funds for investors who seek commercial real estate opportunities in Contra Costa County, according to Epstein.
A year ago, it spent more than $90 million on a pair of office properties in Contra Costa County.
They include The Terraces, a 134,000-square-foot building in Pleasant Hill, where the formerly Oakland-based firm moved its headquarters. The purchase also includes the Walnut Creek Executive Park, a 27-acre office campus in nearby Walnut Creek, which the city and California Capital view as ripe for redevelopment.
— Dana Bartholomew