7th Gate Center, a prominent office/retail project totaling 43,426 square feet, sold last month for $4,025,000 ($103.64/SF). The sale was inclusive of the office component and all common areas of the building, which totaled 38,838 square feet. The building was constructed in 1985 with renovations made in 2010 and 2015, which included a remodel of the lobby and common corridor, new HVAC units in select suites, and new landscaping. Situated on a hard corner of one of the most highly trafficked intersections in the state, the building has excellent visibility and easy ingress/egress. The Center was 98% occupied at close of escrow.
Cole Valley Partners (CVP) completed the sale of the 7th Gate Center office transaction on December 21, 2015. The sale represented the final step of CVP’s value-add vision for the property, initiated in 2014.
In June of 2014, CVP closed on the purchase of 7th Gate Center, with the Chase branch and office component consolidated in a single offering, which ORION marketed on behalf of prior ownership. CVP closed on the offering with an explicit strategy of bifurcating the two very disparate income streams attributable to a long term net-leased bank branch, and multi-tenant, full-service office product. After closing, CVP converted the project into a two parcel association, consisting of the Chase branch on one parcel and the office component on the other. CVP exited the Chase branch in June 2015 for $2.75MM, achieved full occupancy on the office portion of the project shortly thereafter, with the assistance of Michael Chrystal, Managing Director at Newmark Grubb Knight Frank, and retained ORION to market and negotiate the sale of the now fully performing office parcel.
“This was a very exciting project to work on from start to finish,” said Braxton Glass, Vice President at ORION. “The 2014 offering was challenging, due to the highly divergent income profiles that were inherent to the mixed-use nature of the project. It took a very entrepreneurial sponsor, in CVP, and unprecedented creativity with the capital stack to get the deal across the finish line. Especially in that light, I was honored to assist CVP with the final step of their strategy,” continued Glass.
Zach Bonsall, Managing Partner at CVP, noted, “We were proud to partner with ORION and Newmark on an innovative transaction to add value to the property and deliver strong returns on behalf of our investors. From the initial strategy to split the income streams, to the large crowd-sourced funding of the 2014 capital, and building improvements to help achieve full occupancy in the building, this was an innovative project executed with strong teamwork.”