OAKLAND — Kaiser Permanente is warning it plans to slash its downtown Oakland headquarters footprint, an ominous choice that offers a recent blow to a reeling Bay Space workplace market.
The disclosure was contained in a Fitch Rankings report about a number of industrial actual property properties, with a particular deal with the Oakland tower at 1 Kaiser Plaza.
The 28-story Ordway Constructing totals 537,800 sq. ft and at 404 ft is the tallest Bay Space skyscraper exterior of San Francisco.
Kaiser Basis Well being Plan is the first tenant within the constructing. Kaiser occupies an estimated 69.4% of the constructing, the Fitch Rankings report states. That will equate to a Kaiser occupancy totaling 373,200 sq. ft.
CIM Group, by way of an affiliate, owns the constructing, which the actual property agency purchased in 2008 for $82.1 million, paperwork on file in Alameda County present. In January 2024, the constructing’s estimated worth was $161 million, the County Assessor’s Workplace stories.
Now, nonetheless, the workplace tower, perched on a outstanding spot subsequent to Lake Merritt in downtown Oakland, faces an unsure destiny as a result of prospect that Kaiser will drastically downsize its presence within the constructing.
The present mortgage on the constructing totals $97.1 million, in response to a carefully watched Trepp Experiences property weblog that was posted in 2019.
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That mortgage, deemed to be in misery, has been transferred to a particular mortgage servicer, in response to the Fitch Rankings report, which was issued in September. Particular mortgage servicing is an indication that the borrower would possibly change into delinquent on a mortgage.
Making issues worse, Kaiser has notified its landlord that it intends to shrink its footprint within the Ordway Constructing, Fitch reported.
“According to the servicer, Kaiser has exercised an option to downsize by 130,085 square feet, which would result in a decline of the building occupancy to 59%,” Fitch Rankings reported.
The 130,100 sq. ft is about one-fourth of the workplace area in all the tower.
Kaiser this 12 months is orchestrating downsizing efforts on a number of fronts in downtown Oakland. These efforts embrace lease terminations and property gross sales within the East Bay metropolis.
In current months, Kaiser bought two workplace properties in downtown Oakland:
— In August 2024, Kaiser Basis Well being Plan bought an workplace constructing at 2000 Broadway to BART for the transit company’s police headquarters. The acquisition worth was $25.5 million.
— In September 2024, Kaiser Basis Well being Plan bought an workplace constructing and related storage to an affiliate headed up by residential developer Behring Cos. for $14.4 million.
5 years in the past, Kaiser had a distinct mindset about its presence in downtown Oakland.
With a lot fanfare, Kaiser unveiled plans in 2019 for an attention grabbing new headquarters advanced in Oakland’s Uptown district. The $900 million, 29-story tower within the Uptown district would have served as Kaiser’s new headquarters.
The healthcare group was planning to consolidate all of its administrative workplace operations right into a single tower that will have accommodated 7,200 staff.
The financial maladies unleashed by the coronavirus finally prompted Kaiser to scuttle its plans fro the brand new skyscraper.
