Sacramento’s tallest building and arguably most premier office tower has sold for $175.5 million.
Escrow closed last week on the sale of Wells Fargo Center, at 400 Capitol Mall, to real estate investment firm Starwood Capital, according to several sources. Representatives from Starwood did not immediately respond to a request for comment.
At 30 stories and 502,365 square feet, Wells Fargo Center is considered among the top office properties in the region. Its tenants include Morgan Stanley, Pacific Ethanol Inc., PricewaterhouseCoopers, the Greater Sacramento Economic Council and Wells Fargo Advisors. The building is currently 85 percent occupied.
Starwood, a firm with a global reach, sent a message of support for the Sacramento market in the deal, said Jason Goff, managing director at JLL Sacramento.
“It’s very encouraging that an institutional investor such as Starwood recognizes the value of a top tier Sacramento asset and is willing to invest in the market,” Goff said in an email. “400 Capitol Mall is a marquee building and address, and should continue to benefit from an improving Sacramento economy and revitalized downtown.”
Goff, whose firm was not involved in the transaction, said he expects the new owners to focus on basic ownership goals, such as retaining tenants, seeking new ones and maximizing parking revenue.
Brokers with Eastdil Secured in San Francisco and the Cushman & Wakefield office in Sacramento worked on the sale.
Like other downtown buildings with their own parking, Wells Fargo Center got a boost recently with the opening of Golden 1 Center about a block away. The building’s garage of nearly 1,100 spaces can provide additional off-hours revenue when there are events at the arena.
Hines Interests LP was the building’s previous owner, acquiring it for an undisclosed price in 2007. The company’s site confirms selling the property this year and states that Hines continues to manage it. A member of Hines’s Sacramento office said he had no comment on the sale.
Built in 1992, Wells Fargo Center is the tallest building in the region at 423 feet. Two blocks away, another office building, 520 Capitol Mall, sold last month to local investors for $28 million.
Experts on Sacramento’s downtown office market said with leasing at its best level since the recession, investors who own trophy buildings see a good time to get returns, particularly if they had to hold onto them during the downturn. Rents are still well below what would be needed to justify new construction downtown, however.
Article provided by: Sacramento Business Journal