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More eye-popping deals in San Francisco Bay area Investors continue to flock to the Bay area hoping to cash in on one of the hottest real estate markets in the world, while developers - overcome by the same sentiment - are itching to build and lease as fast as possible.

Leading the way, Atlanta-based Lend Lease Real Estate Investments' Value Enhancement Fund I (VEF I) has sold 303 Second St. in San Francisco to locally based Ellis Partners Inc. for $211 million. Built in 1988, 303 Second St. is a two-tower complex totaling 700,890 sq. ft. Located in the South of Market district between Harrison and Folsom streets, the Class-A development is 98% leased.

VEF I acquired a 50% interest in the property in 1995 as part of a three-building package, and acquired the remaining interest in 1996 for a total of $71.5 million.

Also in the South of Market submarket, Atlanta-based pension fund adviser TMW Realty has acquired 100 First Plaza from 100 First Plaza Partners, a locally based investment partnership advised by Sonnenblick-Goldman Co. and Merrill Lynch, Pierce, Fenner, & Smith, both of New York. The 27-story, 451,000 sq. ft. building sold for $135 million, according to the San Francisco Business Times. Built in 1988, 100 First Plaza is the headquarters of Delta Dental Plan of California, which was also part of the previous ownership.

Across the Bay in Oakland, The Shorenstein Co., San Francisco, has received approval from the City Council to build 555 City Center, a $100 million, 472,000 sq. ft. development. Construction began in May, and is slated for completion in the fall of 2001. The 20-story structure will include 457,000 sq. ft. of office space and 15,000 sq. ft. of retail. Emeryville, Calif.-based Ask Jeeves Inc. has preleased 159,000 sq. ft. at 555 City Center.

Also in the Bay area, Chicago-based real estate investment banker HIGroup has arranged the sale of California Plaza in Walnut Creek, Calif., on behalf of a limited partnership sponsored by Chicago-based JMB Realty Corp. Chicago-based Heitman Capital Management paid $71.5 million for the 10-story, 368,290 sq. ft. property.

Hines, Wellsford, Mack-Cali heat up Tri-state suburbs Meanwhile, on the other side of the continent, New York's Westchester County and the New Jersey suburbs continue to draw investor and developer interest as rental rates escalate in the city and developable land becomes more scarce.

Chatham, N.J.-based Wellsford Commercial Properties Trust has preleased the entire 257,000 sq. ft. Morris Technology Center in Parsippany, N.J., to New York Life. The aggregate value of the 15-year lease is $110 million. New York-based Cushman & Wakefield represented both parties.

In Bridgewater, N.J., Houston-based Hines has purchased a 20-acre site located at the junction of Routes 287, 22 and 202-206 from The Rouse Co., Columbia, Md. Hines will develop Bridgewater Crossing, a $120 million, Class-A office campus that will include two eight-story buildings totaling 500,000 sq. ft. Bridgewater Crossings will be adjacent to a 350-room Marriott Hotel currently under construction and the Bridgewater Commons Mall, which is undergoing a 750,000 sq. ft. expansion. Construction of Bridgewater Commons is expected to begin this fall with completion slated for the fourth quarter of 2001.

A New Jersey - and national - stalwart, Cranford, N.J.-based Mack-Cali Realty Corp. has sold a Morris Township office building and acquired an office park in Elmsford, N.Y. Mack-Cali sold Kemble Plaza II in Morris Township, N.J., to an undisclosed buyer for $82.7 million. Kemble Plaza II is a single-tenant, fully occupied building totaling 475,000 sq. ft. The Class-A development sold at a 7.9% cap rate.

Mack-Cali acquired Taxter Corporate Park in Elmsford from an undisclosed seller for $42.7 million. The 341,000 sq. ft. complex is 90% leased to 22 tenants, and consists of 555 and 565 Taxter Road. The development is adjacent to another Mack-Cali property, 570 Taxter Road. The acquisition was funded by proceeds from Mack-Cali's recent $152.5 million sale of 95 Christopher Columbus Drive in Jersey City, N.J.

Moving on to Connecticut, Stamford, Conn.-based Louis Dreyfus Property Group has leased 113,000 sq. ft. at Twenty Westport Road in Wilton to its parent company, locally based Louis Dreyfus Corp. Louis Dreyfus Corp. is consolidating from office space it currently occupies at 187 Danbury Road and Ten Westport Road in Wilton. The company plans to move into the 335,000 sq. ft. building upon its summer 2001 completion.

Equity, New York Common form JV for Seattle acquisition Chicago-based Equity Office Properties Trust and Albany, N.Y.-based New York State Common Retirement Fund (CRF) have formed a joint venture for CRF to acquire 49.9% interest in Seattle's Bank of America Tower for $210 million. The joint venture includes $195 million in debt, with Equity Office and CRF each assuming its proportional share of the debt.

The venture also provides for additional equity investments by CRF of up to $200 million in other Equity Office assets during the next two years. Cities targeted by the venture include Chicago, Boston, New York, San Francisco, Seattle and Houston.

Co-lenders for the Bank of America Tower loan were New York-based Goldman Sachs, which led the deal with 60% of the loan, and The Chase Manhattan Bank, New York, which provided the balance. Chicago-based Heitman Capital Management LLC acted as investment adviser to CRF.

Located in Seattle's CBD, Bank of America Tower is a 76-story, 1.5 million sq. ft. tower that is 98% leased.

Cassidy & Pinkard closes two of D.C.'s biggest deals Washington, D.C.-based Cassidy & Pinkard has arranged the sale of two prominent D.C.-area properties. In partnership with Sonnenblick-Goldman and New York-based Victor Capital Group, Cassidy & Pinkard brokered the sale of 1801 K St. in the capital's CBD for $140.2 million. The 12-story building totals 561,686 sq. ft.

In the Rosslyn submarket of Arlington, Va., Cassidy & Pinkard arranged the sale of 1525 Wilson Blvd. on behalf of Lend Lease. New York-based Blackstone Real Estate Acquisitions III paid $57.75 million for the 12-story, 300,000 sq. ft. Class-A building.

Studley says anchors aweigh in Birmingham Represented by New York-based Julien J. Studley, local law firm Bradley Arant Roe & White LLP has preleased 160,000 sq. ft. at 1900 Fifth Ave. in downtown Birmingham, Ala., at the Federal Reserve site. A partnership between locally based Sloss Real Estate Group and Atlanta-based Barry Real Estate Cos. is developing the 11-story, 286,000 office building, the second major office development announced for downtown Birmingham in the past few months.

Bradley Arant also has an option to lease the majority of the balance of the building. Construction will begin later this year, and completion is expected by fall 2002.

CMD buys Mile High building Chicago-based CMD Realty Investors Inc. has acquired 1875 Lawrence St. from Dallas-based Crescent Real Estate Equities for $17.5 million. The acquisition brings CMD's Denver holdings to 1.3 million sq. ft.

Located in the Denver CBD, 1875 Lawrence is a 15-story office building totaling 185,737 sq. ft. with an attached 208-space parking garage. The development is 91% leased.

Summer comes early for Spaulding & Slye Boston-based Spaulding & Slye Colliers has arranged the sale of 100% of the shares in a single-asset REIT of which 99 Summer St. is the sole holding. Boston-based Paradigm Properties acquired the 20-story, Class-A building for $66 million from Dallas-based Archon Group. Paradigm acquired the property through a joint venture with The Carlyle Group, Washington, D.C. Built in 1987, 99 Summer St. is 94% leased.

Not a Mickey Mouse operation in Orlando While Orlando, Fla.'s absorption rate during the next few years will probably weaken due to about 5 million sq. ft. of new office inventory in the pipeline, a nice, fat prelease eases such worries for The Alter Group of Chicago. Alter will develop a 225,000 sq. ft. build-to-suit for Siemens Westinghouse Power Corp. adjacent to the company's Orlando headquarters in the Quadrangle Corporate Park office campus in the city's University submarket. Siemens Westinghouse plans to occupy the space in spring 2001.

The Siemens Westinghouse development is part of the first phase at Quadrangle, which also includes 100,000 sq. ft. of single-story, double-loaded (multiple entry points) office space. The development's second phase will consist of 200,000 sq. ft. of office space that may be either mid-rise or single-story.

According to Cushman & Wakefield's Orlando office report, the central Florida city's vacancy rate increased 1.4% in the first quarter to 14.1%, with direct average rental rates of $22.68 per sq. ft. Nearly 700,000 sq. ft. of new office space was delivered in the first quarter, and another 1.5 million sq. ft. is under construction, 36% of which is in the Lake Mary submarket. Cushman & Wakefield also reports 3.3 million sq. ft. of announced projects in a market that has added 5 million sq. ft. in the past three years.

On the other hand, the University submarket's vacancy rate is less than 10%, says Todd Yates, senior vice president of national development for The Alter Group. A leader in private and federal laser research, the University of Central Florida is an integral part of the submarket and has been the impetus for a great deal of growth.

"You can't find large blocks of space," says Yates of the University submarket. "That's really why we chose to enter the Orlando market in that area. We felt it was the up- and-coming market.

"Between the transportation situation, the amount of growth that's occurred due to the laser technology there and the labor base connected to the college, the University area has really come into its own over the past couple of years," Yates adds.

When the spec portions of the first phase are 50% leased, Alter will proceed with the second phase and build mid-rise or single-story product depending on demand. Quadrangle may be Alter's first Orlando project, but the developer has completed 275,000 sq. ft. of office space and has another 150,000 sq. ft. under construction in south Florida in Broward County.

"We'll evaluate what's going on in the single-story market as well as the mid-rise market [in Orlando]," says Yates. "We have some other land opportunities that we're looking at, and, depending on which one of those comes to fruition, we might decide to do one product type in one place and one in the other."

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