CONSTRUCTION UPDATE: $40 million Marin Offices under way

At 116,400 square feet, Bay-front development biggest for area since '01

BY JEFF QUACKENBUSH
STAFF REPORTER

SAN RAFAEL – The developer of the landmark Belvedere Place office complex in San Rafael is at it again, erecting the first large Marin office project in four years.

GateCapital Properties has broken ground on two class A office buildings at 2350 and 2370 Kerner Blvd. along San Rafael's bay front by the Richmond-San Rafael Bridge. Totaling 116,400 square feet, it's the largest office project in Marin since Petaluma-based Basin Street Properties finished the 90,000-square-foot Woodside Office Center in Novato in late 2001.

Backed by Fasken family

Backed by the Fasken family, the $40 million speculative project includes two floors of office space in each building over a floor of parking partly below ground on the six-acre site with an adjoining 1.4-acre park and helipad. The design by San Francisco-based Hannum & Associates, the same firm behind the design that tucked the 100,000-square-foot Belvedere Place complex in a Mill Valley hillside overlooking Strawberry Shopping Center.

The new project comes at a time when southern Marin office vacancy rate is in single digits and when its first tenant must move in a year and a half early. The Dutra Group, which operates San Rafael Quarry, will be leasing 10,000 square feet in the building when it is completed in mid-2007, but it will be relocating its administrative offices from the quarry to mobile offices at the project site in the next two months under a recent order from the county Planning Commission.

GateCapital principal Bruce Jones said the Fasken family's interest in putting high-end finishes in the building while quoting rent of nearly $3 a square foot per month and offering aggressive tenant-improvement allowances reflects the family's interest to hold onto the property for a long time.

Conversely, the Lehman Bros./GateCapital project at Belvedere Place was intended for leaseup and sale, which it did two years after completion for $38 million, the highest per-square-foot price for a building of that size.

"The supply of office space in Marin is highly constrained," Mr. Jones said. "This Kerner project was approved in 2003, but we held off a couple of years when the market was in a deteriorating mode."

Some real estate experts have wondered whether the more than 160,000 square feet of office space Lucasfilm companies vacated last year near the new project and elsewhere in San Rafael will limit the pool of prospective tenants.

But Orion Partners' Brian Eisberg, who is marketing the Kerner project with Jerry Angel, said the high-tech improvements Lucasfilm made to the space it occupied can't compare.

"It doesn't compete with the ILM space in the Canal area because it is really industrial space over-improved to office space and will need to be stripped back," Mr. Eisberg said.

For more information, call GateCapital at 415-362-8900.