Oakland’s Graceful Tribune Clock Tower Set to Sell
Submitted November 19, 2011, 11:17 AM
Downtown Oakland’s signature office building, the 23-floor Tribune Tower, is poised for sale after spending much of the last year in receivership.
John A. Dolby, a senior vice president for Grubb & Ellis Co. in downtown Oakland, said he has expected a sale after he worked to relocate nonprofit Fair Trade USA from Emeryville into one of the tower’s floors several months ago. “It will be good to get the building into new ownership,” he said. “It is a unique building and needs some tender, loving care.”
Commercial real estate services company CBRE is representing the buyer, Dolby said, and his understanding is that the sale is to close Dec. 1. CBRE declined comment. The building is in escrow, according to several sources.
John Protopappas, who owned Tribune Tower from 1995 until January 2006 and managed it until the middle of this year, said the property’s best attributes are the 360-degree views from the seventh through the 20th floors in the tower. Protopappas is the founder, president and chief executive of Oakland’s Madison Park Financial Corp., which has specialized in live-work redevelopment projects.
Oakland’s central business district has 11.7 million square feet of offices, roughly half each of Class A and Class B space. At the end of the third quarter, more than 18.5 percent were available and just more than 15 percent were vacant, according to Grubb.
The tower’s floors range from 1,200 square feet at the top to 3,200 square feet at the tower’s base, he said, making each floor a natural suite. He put the property’s value at $4 million to $5 million and the cost to re-tenant it at those sums again, noting improvement costs, commissions and holding costs. That assumes it continues to be used for offices. Even then, it won’t be worth more than $100 a square foot based on current rents and the cost to run and maintain it, he said. The property is more than two-thirds vacant, according to Grubb.
He still believes the highest and best use would be residential, which is what he initially proposed when he bought the building in the mid-1990s, Protopappas said. According to published reports, he paid $300,000, but Protopappas said he also undertook to pay more than $1 million in past-due property taxes. “Our plan was to convert the tower and the adjoining parcel, the press building, into one complex of live-work spaces with retail on the first floor,” he said.
His housing plan did not survive after Protopappas learned that the Oakland Tribune was a potential candidate to lease the building. Leasing to an office user reduced the requirements for structural upgrade. The newspaper wound up leasing two-thirds of the property for a decade though it did not occupy for the entire time. Protopappas sold the building in January 2006 for $15 million, or $182 a square foot.
Converting the property to housing would dramatically reduce its current value because the cost of conversion would push present value down, Protopappas said.
He learned that Tribune Tower was in escrow after speaking to a tenant. A property manager for the building also confirmed it is in escrow but did not know when the sale was scheduled to close.
“The Tribune Tower is Oakland’s Empire State Building,” Protopappas said, “Oakland’s TransAmerica Tower.”
Finance and professional services company Jones Lang LaSalle says the the Oakland and East Bay economies are bottoming now with few net new jobs created in the current year and slow recovery expected in 2012. The Oakland central business district is nosing into landlord-favorable conditions as is Emeryville, according to JLL. Other East Bay submarkets are a year behind.
