3/2/2015
Basin Street buys 11 more Petaluma buildings
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BASIN STREET NEWS
February 26, 2015 By Lucie Hale
‘Petaluma is more
active today than it
has been in 16 years’
PETALUMA — Basin Street Properties, a
major builder of the Telecom Valley cluster
of startups in Petaluma around the dawn
of the 21st century, has invested in that
market with even greater vigor, buying 11
office buildings totaling more than a halfmillion square feet.
In the second-largest transaction in its
four-decade history, the Reno-based real
estate developer, investor and manager
on Wednesday bought 568,722 square
feet in three projects for an undisclosed
price. The properties were the remainder
of the 14-building, 842,000-square-foot
portfolio a joint venture of New Yorkbased Investcorp International and Napabased PB&J Acquisitions had purchased in
February 2012 for $65 million.
The properties Basin Street just purchased
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Basin Street buys 11 more Petaluma buildings
are 87 percent leased to 24 companies,
namely Amy’s Kitchen, Camelbak, The
Gap’s Athleta brand headquarters, Calix
Networks, Clover-Stornetta Farms and
Wells Fargo. About $1 million in capital
improvements are planned for the
properties, including landscaping and
upgrades to the climate-control systems.
“Petaluma is more active today than it has
been in 16 years, from the late 1990s,” said
Matt White, Basin Street Properties CEO.
That amount of tenant interest from
within Petaluma as well as from Marin
County and San Francisco, together with
little new office space makes such deals
attractive for investors, he said.
Basin Street now has a more than 4
million-square-foot portfolio of office,
light-industrial, retail, multifamily and
hospitality properties in the North Bay,
Sacramento area and Reno, Nev., and
more than 2 million square feet in the
North Bay alone. The company has
become the largest office landlord in the
“Biggest Little City in the World,” according
to Mr. White.
At more than 2 million square feet, the
North Bay portfolio now is as much as
twice the size as it was when Basin Street
sold much of its office holdings — 1.4
million square feet in 44 buildings in
Sonoma and Marin counties — for $263
million in 2005.
“Now the North Bay [portfolio] is twice as
big as it was in 2005, but it is much more
diversified in tenant sizes and types,” Mr.
White said. “We were much more techheavy in 2005, and today we have a real
cross-section of the economy.”
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In the late 1990s, as the emergence of the
Internet economy was super-heating
investment in high-technology companies,
especially in telecommunications
equipment, demand for space along the
Highway 101 corridor from Novato to
Santa Rosa was primarily for 20,000–
70,000 square feet, but now space
requirements largely are for 5,000–15,000
square feet from tenants in a variety of
industries in Sonoma and Marin counties,
he observed.
“In a lot of ways, in the 1990s we became a
one-trick pony in telecom and rode it to
the top and got beat up by it,” Mr. White
said. “It’s exciting that we’re back to
economic growth of the 1970s to 1990s —
slow, diversified growth.”
Basin Street started reinvesting the 2005
portfolio sale money in purchases and
projects in Sacramento and Reno then
relocated its headquarters to the latter in
2009.
After selling at the high point in the office
market, Basin Street returned to the North
Bay at the depth of the market, starting in
2011 by re-acquiring eight Petaluma
buildings it had sold in 2005 then buying
back 17 Santa Rosa area buildings in 2012.
The latter was Basin Street’s largest single
deal, Mr. White said.
While Basin Street has reached beyond
office space to hospitality, multifamily and
retail projects and properties in the North
Bay and the other markets, office space
likely again will be the focus for the
company going forward, he said. Yet, this
year Basin Street plans to move forward
on apartment and hotel projects in
Sonoma County, but they will be ancillary
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Basin Street buys 11 more Petaluma buildings
to office projects, the way a Marriott
Courtyard hotel the company has started
building in Reno is meant to support Basin
Street’s three surrounding office towers.
Demand for office space in Petaluma likely
will limit options in the submarket to the
point that new office projects will emerge,
Mr. White predicted.
“I think that by the end of 2015 the
majority of the vacant space in the market
will be taken by new tenants, and by 2016–
2017 I think there will be building of new
office space in the marketplace,” he said.
That’s quite a change from the aftermath
of the bursting of the tech bubble in 2001
that saw the dispersion of the Telecom
Valley cluster and as much as one-quarter
of Petaluma’s office space being available
for lease by the mid-part of the last
decade.
Steve Leonard, Brian Foster and Trevor
Buck of DTZ are marketing the new
properties for Basin Street.
Properties at a
glance
Lakeville Business Park
Location: South Petaluma
Properties: 205,777 square feet in three
single-story office–flex space buildings and
two two-story class A office buildings
South Petaluma Business
Center
Location: 1800 and 2000 S. McDowell Blvd.
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Properties: 149,735 square feet in two
two-story class A office buildings in
Lakeville Business Center, fronting on
Shollenberger Park and the Petaluma
River. Formerly known as South McDowell
Landing.
Petaluma Business
Center
Location: 1031, 1035, 1039 and 1125 N.
McDowell Blvd.
Properties: 213,210 square feet in four
single-story office and flex buildings
fronting Highway 101
Filed Under: Press Releases
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