Basin Street Properties announced an $8 million deal Friday to reacquire part of Redwood Business Park, a complex of office buildings that became the hub of Sonoma County's Telecom Valley during the tech boom of the late 1990s.
The sales price is the latest evidence of how far commercial real estate values have fallen in the county. Basin Street reacquired five buildings in the Petaluma business park for about 20 percent less than what they sold for six years ago, said Matt White, the firm's president.
“If you combine the price with a market that I view as recovering and seeing some pretty good job growth in a couple of industries, I think there's a great opportunity for us to fill them back up with businesses and with cars and with people that are going to have an economic impact on the community,” White said.
Basin Street sold the business park to Equity Office Partners in 2005 when it divested most of its office buildings, part of a $265 million package that was the largest commercial real estate deal in county history. A longtime presence in the Petaluma business community, Basin Street moved to Nevada in 2009 and is now based in Reno.
The office park, located at the northern edge of Petaluma, was the birthplace of some of the biggest names in Telecom Valley, including Optilink, Advanced Fibre Communications and Cerent.
But the economic downturn took a toll on Petaluma businesses. Today, the five buildings are only 40 percent occupied, according to White.
“It was hard to watch them struggle over the last few years and to watch the lack of success that the prior owner had, so we're excited to own them again,” White said. “They represent an important part of our history.”
The company's goal is to fill the office space to capacity over the next 18 to 24 months. The five buildings hold about 158,000 square feet of commercial space, with units ranging from 1,000 to 20,000 square feet.
The current tenants include Force 10, the U.S. Department of Agriculture and Wells Fargo Bank.
Basin Street plans immediate upgrades, including improvements to lobbies and parking lots. Tenants will receive discounts at Club One, the Sheraton Petaluma and the Theatre District apartments.
White said he has already had interest from companies in Petaluma that are looking to expand, and he expects commercial rents there to climb as vacancies decline.
“I think the market is going to see a shift in the next few months as some of the deals that are in the works right now are announced,” White said.