Kaiser Permanente, a prominent name in American healthcare, has discreetly offloaded an office building steeped in over 20 years of history located at 1950 Franklin St., near Lake Merritt in Oakland. This 21-story structure has been largely empty since the onset of the pandemic. A spokesperson for Kaiser confirmed that the sale also encompassed a parking lot at 1901 Franklin St., which offers 635 parking spaces. Both properties are linked by a pedestrian bridge that crosses Franklin St.
The buyer, Behring Companies, already owns a nearby 39-story luxury apartment building at 1900 Broadway. Neither Kaiser nor Behring has disclosed the sale price.
According to The San Francisco Business Times, the reported total for both properties is $14.35 million. Behring mentioned that the combined area of the office building and parking lot is roughly 702,000 square feet. If this figure holds true, it translates to an astonishing $20 per square foot overall, with the office building alone averaging about $32 per square foot.
In today’s challenging market, this valuation seems particularly low. For instance, a 276,000 square-foot office building at 180 Grand, boasting an occupancy rate of around 72%, recently sold for $105 per square foot, amounting to approximately $28 million. Notably, that building was appraised at $119 million back in 2017.
In 2019, Kaiser announced plans to consolidate its East Bay employees from seven locations into a new 29-story building at 2100 Telegraph, the Kaiser Permanente Thrive Center, which was projected to be worth $900 million. This ambitious project was to be developed by Lane Partners, with Kaiser anticipated to purchase the site from them and their development partners, Strategic Urban Development Alliance LLC.
However, the initiative was scrapped shortly after the pandemic struck in March 2020. While Kaiser cited delays and rising costs as reasons for the cancellation, they maintained that the pandemic was not the primary factor.
As the new owner of the properties at 1950 and 1901 Franklin St., Behring plans to redevelop the parking lot at 1901 Franklin St. and seamlessly integrate it into their existing ecosystem at 1900 Broadway, which features a mix of apartments, office spaces, collaborative work environments, and amenities, including a fitness center and a Stak GO Tesla fleet available for residents.
Colin Behring, CEO of Behring Companies, emphasized that this acquisition enables them to create a vibrant urban campus, thereby transforming downtown Oakland. He views this as an outstanding opportunity to bring the Stak Site vision to life, allowing residents to live, work, and play within a cohesive environment.
