PG&E bought its 29-story headquarters in Oakland and has emerged from a century of fog in San Francisco. Estimated cost: Up to nearly $900 million.
The investor-owned utility purchased the 910,000-square-foot hub center at 300 Lakeside Drive after announcing its 2020 relocation to the East Bay, According to the San Francisco Business Times. The seller is TMG Partners in San Francisco.
Financial terms of the deal, expected to close this month, were not disclosed.
When the company, formally known as Pacific Gas & Electric, announced its move to the East Bay, it had an option to buy new Lake Merritt homes this year for $892 million, or $980 per square foot. The negotiated price “may be subject to certain adjustments,” the company said in its most recent filing with the U.S. Securities and Exchange Commission.
The price is a windfall for both TMG and the Auckland market. By comparison, Wells Fargo recently sold an office building in San Francisco for $2. $120 and $130 per square foot.
TMG acquired the former Caesars headquarters in 2020 for $450 million and then entered into a purchase agreement with PG&E. The crescent-shaped building incorporates a parking garage with a roof garden and a 130,000-square-foot office and retail building.
In February, TMG subdivided the property, creating a separate parcel for the PG&E office building, which the utility began filling last year. As part of the deal, TMG retained ownership of the garage and smaller commercial buildings.
The agreement states that TMG also reserves the right to transfer “various redevelopment sites to new owners”.
When PG&E signed a 35-year lease on 300 Lakeside, it was the largest lease ever in Oakland or San Francisco. Buying the headquarters building could also break real estate records.
The acquisition could also boost Auckland’s office market, which, according to CBRE, had an overall vacancy rate of almost 20 per cent in the first quarter, including nearly 28 per cent in the city center as staff worked from home.
PG&E said moving its long-term operations center out of San Francisco will help it cut real estate costs. In late 2021, the company sold its 1.5 million-square-foot, two-building complex at 245 Market Street and 77 Beale Street to Houston-based Hines. $800 million.
Hines submitted plans to rebuild one high-rise and add another, but has stalled in getting the required approvals.
— Dana Bartholomew
