Agents note uptick in office activity

Source: The Business Journal
Written by Chuck Harvey

After a sluggish summer, office market sales and leases have picked up slightly as corporate buyers — mostly from outside the area — take advantage of low pricing and rock-bottom interest rates. “There’s been a little surge of activity on the corporate side,” said Craig “Cap” Capriotti, vice president of the office division, commercial real estate, for Fortune & Associates in Fresno. “They are looking for deals and paying cash.” Scott Buchanan, vice president of the Central California Office Properties Group for Colliers International in Fresno, agreed. “We’ve been busier than we’ve been in a while,” Buchanan said. “Activity seems to be getting a little stronger.” Still, major office building purchases have been few and far between, Buchanan said. Buyers are seeking office buildings in the 5,000 square-foot to 10,000 square-foot range. “They take advantage of low interest rates that are very available below 5 percent,” Capriotti said. However, the market has been somewhat limited by pricing, he said. “There is still a gap between the seller’s pricing and what buyers are willing to pay,” Capriotti said. Most of the sales and lease activity has been in north Fresno and Clovis, especially in Palm Bluffs, along Palm Bluffs Avenue and around Woodward Park and N. Fresno Street and Nees Avenue. (For the Valley’s largest office complexes, see our top-20 list on page 10). One prime location example, listed by Fortune & Associates, is class A office space for lease at 7111 N. Fresno St. in the Woodward Park market sector. Class A means that the office building was constructed using steel framing. The offices for lease range from 1,860 square feet to 8,199 square feet. Lease rate is $2.30 per square foot per month. West Shaw Avenue has also seen some office demand, Capriotti said. East Shaw Avenue has remained slow in terms of office sales and leases. However, Starpoint Towers at 1314 E. Shaw Ave. has been remodeled and is starting to generate interest, Buchanan said. Colliers International has the 6,021 square-foot Starpoint Towers office building listed for sale for an undisclosed price. It was originally built in 1970. CB Richard Ellis listed an office building for sale at 3434 W. Shaw Ave. in the Home Depot shopping area, just north of Valentine Avenue. The 4,245 square-foot building is priced at $636,000 or $149.59 per square foot. The brick building is described as ideal for an insurance, law, real estate, financial institution or accounting office. Meanwhile, opportunities exist in downtown Fresno, including the Rowell Building where Grubb & Ellis Pearson Commercial have listed the large office structure up for sale or lease. Various brokers have listed the Rowell Building for sale for the past five to six years. Its size and need for refurbishing have been limiting factors so far, brokers report. “It needs a lot of work,” said Tony Cortopassi, associate and office specialist for CB Richard Ellis in Fresno. Located at Tulare Street and Van Ness Avenue, the 60,000 square foot building built in 1916 can be purchased for $2.25 million or $37.50 a square foot. It has 49,475 square feet of office space that can be leased for $15 per square foot per year. Because of its close proximity to city, state and federal courthouses, it is advertised as ideal for law firms and practicing attorneys. Also downtown, CalWest Commercial Inc. in Fresno has listed for sale a three-story 21,060 square-foot office building at 2000 Fresno St., west of Van Ness Avenue. Built in 1983, the building is priced at $1.89 million or $90 per square foot. Although downtown remains viable, especially for attorney and government offices, most of the interest has been in newer buildings, Capriotti said. However, it is important to absorb existing buildings before building new ones, he said. He added that once the county and state government comes back from restrictive economic conditions, than the downtown office market would be OK. For now, much of the office activity has been on the north side of Fresno where doctors and surgeons need offices near hospitals, Capriotti said. He said the need for office space exists around major hospitals including Fresno Surgical Hospital at 6143 North Fresno St., Saint Agnes Medical Center at 1303 E. Herndon Ave., Clovis Community Medical Center at 2755 Herndon Ave., Fresno Heart & Surgical Hospital at 15 E. Audubon Drive and Community Regional Medical Center in downtown Fresno. Capriotti said he has seen a surge in purchases of medical office space, especially around hospitals with the newest technology. Doctors and surgeons generally seek offices ranging from 1,800 square feet to 2,200 square feet, Capriotti said. Attorneys have also sought out office space in north Fresno, including McCormick Barstow Attorneys at Law, which plans to move from 5 River Park Place East in Fresno to the northwest corner of El Paso and Fresno streets. McCormick Barstow broke ground in June for a 68,000 square-foot three-story office building that will house 105 attorneys. Once the structure is completed, McCormick Barstow will lease the building from Zinkin Development. Completion is expected the late fall of 2013. Although much of the office activity is in north Fresno near the 41 freeway, some office investors are looking more toward northwest Fresno and close proximity to State Route 99. One office complex of interest is The Grove Fig Garden on the Fig Garden Loop near Figarden Drive and Brawley Avenue. CB Richard Ellis put the bank-foreclosed office property, which includes three 8,868 square-foot buildings on 5.04 acres, up for sale. Initial asking price was $4.12 million for the entire project. Pads and buildings were also put up for sale individually.

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