DivcoWest Buys San Francisco Office Property in Redwood City

Vertically integrated real estate owner, operator, and developer DivcoWest (a DivCore Capital company) recently announced the acquisition of a boutique office building in the heart of Silicon Valley, while simultaneously signing a long-term anchor tenant for the property.

Purchased in an off-market transaction, the property at 1991 Broadway in Redwood City, Calif., encompasses 56,000 square feet of rentable San Francisco office space and represents the firm’s second off-market property purchase in the last three months, following the acquisition of a 137-apartment community in San Francisco from a local developer.

Situated on downtown Redwood City’s pedestrian-friendly retail corridor, 1991 Broadway is a short walk from the Caltrain station; served by city, county, and regional transit; and has immediate vehicle access to Highway 101.

Completed in 1999, the property is a steel-frame construction with a glass and masonry exterior that rises three stories and includes subterranean parking, offers controlled access, and has major main street exposure.

Suburban San Francisco office space at 1991 Broadway in Redwood City, Calif.

At the same time as it closed the property acquisition, DivcoWest also inked a long-term lease with multinational law firm Paul Hastings, which will occupy 45,000 square feet and serve as the anchor tenant for the building.

As a result of this arrangement, the property was 82% leased to three tenants at closing. Ham Southworth, Ken Rapp, and Morgan Griffith of CBRE represented Paul Hastings in the lease negotiations, while Ben Paul of Cushman worked on behalf of DivcoWest.

“Office tenants are back and letting us know that they are looking for future-forward workspaces for their employees and are willing to make long-term lease commitments,” said Gregg Walker, president of DivcoWest Real Estate Asset Management. “1991 Broadway is uniquely positioned within a downtown market where leasing momentum has strengthened significantly year-to-date as dynamic companies take advantage of the opportunity to scale in a transit-friendly submarket complete with high-quality housing options and a wide range of amenities.”

Office space in Redwood City, Calif., at 1991 Broadway.

According to data analysis for CommercialCafe’s monthly national office report, San Francisco has been a bright spot among challenges facing the U.S. office sector and has experienced significant increases in demand year-over-year. In particular, the AI sector has been driving recent demand and office recovery in San Francisco and the Bay Area, where office space commanded some of the country’s highest average asking rates and sale prices per square foot: Office sales since the start of the year through November approached $1.3 billion in San Francisco and surpassed $4.4 billion in the Bay Area (the second-largest year-to-date sales total in the U.S. at the time).