Real estate investor Ethan Conrad has bought nearly a quarter-million square feet of office space in one transaction in Arden-Arcade.
On Thursday, Conrad closed escrow on three buildings formerly occupied by AT&T Inc., totaling about 232,000 square feet. The three buildings are the two-story, 133,362-square-foot building at 3600 Marconi Ave.; the 57,368-square-foot building at 3707 Kings Way; and the three-story, 41,160-square-foot building at 3540 Kings Way.
In an email, Conrad said a notable lack of office space in a central area like Arden-Arcade made the purchase a sound one.
“There’s still demand for office in central locations like this one and again, there’s not very much available space that’s larger size and therefore, larger tenants have a pretty limited selection of available office space,” he said.
According to Colliers International Sacramento’s office report for the second quarter of this year, the Watt Avenue submarket where the three buildings are located had about 242,000 square feet of vacancy. It wasn’t clear if that included the buildings formerly occupied by AT&T. The direct vacancy rate of 15.3% was slightly higher than the overall 13.1% vacancy rate among secondary submarkets in the region.
A spokesman for AT&T (NYSE: T), which sold the three buildings, said in an email the company determined the buildings were among several non-core assets and chose to sell them.
“This should have no impact on the service provided to our customers,” said spokesman Ryan Oliver. “The employees that were at this building have been relocated to the three remaining campus buildings.”
Oliver said the company didn’t want to comment on any future business plans concerning its employees or real estate holdings in the region.
Conrad said AT&T will sign a short-term lease to occupy 3707 Kings Way for four or five months, and had vacated the other two buildings within the last year.
Conrad said he bought the three buildings for about $7 million, or about $30 per square foot, a price he said was very favorable. Conrad said he plans to make a substantial investment into all three buildings to improve their aesthetics and then lease them. Mechanical, HVAC and other building systems will also get new investment, he said.
“In fact, all of these buildings are good properties, they just need some remodeling work and to be freshened up a bit,” he said.
All three buildings date to the 1980s. Records with real estate data site Reonomy show AT&T, under the name Pacific Bell, acquired 3707 and 3540 Kings Way in December 1988 for an undisclosed price. Also under the Pacific Bell name, AT&T bought 3600 Marconi Ave. in April 1988 for an undisclosed price, though the building sold in early 1988 for $8 million, according to Reonomy.