OAKLAND — A historic downtown Oakland office tower known as the East Bay city’s “original high-rise” has been returned to its lender, a fresh indicator of the worsening weakness in the Bay Area office market.
The Syndicate Building, an office tower at 1440 Broadway, is now in the hands of its lender, a disquieting hint that economic maladies linger for the region’s feeble office sector in the wake of the coronavirus pandemic.
Brightspire Capital, a real estate investment firm and lender, has taken ownership of the 10-story high-rise through a special deed that shows the property’s unpaid debt was $25.5 million at the time of the transaction, according to documents filed on July 28 with the Alameda County Recorder’s Office.
The office building, which totals about 89,500 square feet, was sold by a Tidewater Capital-led affiliate that had owned the property for about five years and landed the loan from Brightspire Capital two years ago.
The transaction indicates that the value of the building, constructed between 1903 and 1911, has shriveled in recent years.
Tidewater Capital bought the building in 2018, paying $43.5 million for the 1440 Broadway tower, county real estate records show. In 2021, Tidewater obtained a $28.4 million loan from a Brightspire Capital affiliate, with the tower as the collateral.
At the time of the purchase, the pandemic was still ongoing. Even so, real estate players gambled that companies would return to their workplaces after government-mandated business shutdowns emptied out office spaces.
But the unexpected occurred. Countless companies — primarily tech firms — determined they didn’t need nearly as much office space as they had occupied prior to the outbreak of the deadly virus.
As a result, many office buildings continued to suffer brutally high vacancy levels and flat rental rates, which helped to erode the value of the properties in numerous instances.
The slump in property values appears to be the case with the 1440 Broadway building that’s been taken back by its lender.
Brightspire Capital purchased the building for the unpaid debt of $25.5 million on the office tower. That amount is 41.4% below what Tidewater paid in 2018.
The debt amount also is 45.3% below the building’s property value of $46.6 million, as estimated by the Alameda County Assessor’s Office. Brightspire took ownership through a deed in lieu of foreclosure, county documents show.
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