OAKLAND — A downtown Oakland office tower has been seized through a foreclosure that points to a huge plunge in real estate values and a feeble Bay Area commercial property market.
1700 Broadway, a 10-story highrise in downtown Oakland’s bustling Uptown district, is now owned by its lender following the foreclosure, documents filed on June 7 with the Alameda County Record’s office show.
1700 Broadway, a 10-story office tower in downtown Oakland, street-level view, April 2023. (Google Maps)
Bank of the Sierra seized the Oakland tower during a public property auction.
Since no buyer emerged for the highrise, Bank of the Sierra took ownership of the building through a proceeding that placed a $4 million value on the building.
That amount is a jaw-dropping 69.9% less than the $13.3 million the prior owner, an affiliate controlled by HP Investors, paid in 2017 to buy the building. HP Investors is a real estate firm based in the San Diego County city of Solana Beach.
In 2020, the HP Investors affiliate landed a $9.1 million loan for the 1700 Broadway building that flopped into delinquency in February 2024. The building is located at the corner of 17th Street and Broadway.
The downtown Oakland foreclosure suggests the post-coronavirus economic maladies that have infected the commercial property markets in the Bay Area have yet to run their course.
Some experts believe lenders could seize more office and retail buildings in the wake of loan delinquencies.
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Sharply rising vacancy rates and softening rents now plague numerous office markets in the Bay Area as companies curb their appetites for workplace spaces.
At the end of March 2024, downtown Oakland’s office vacancy rate was 19.7%, slightly worse than the vacancy level of 19.6% at the end of December 2023, reported Colliers, a commercial real estate firm.
The slender Oakland highrise seized this month through the foreclosure totals 31,500 square feet. The building also has 3,500 square feet of ground-floor retail.
Since lenders are typically reluctant to own foreclosed real estate, potential next steps would be for Bank of the Sierra to put the Oakland tower up for sale and scout for a buyer.