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Birkenstock leads Hamilton Landing deals

NOVATO – A dozen fourth-quarter leases in the former Hamilton Air Force Base hangars brought occupancy of the 286,000 square feet renovated so far as class A office space to 96 percent.

The recent activity at Barker Pacific Group's Hamilton Landing redevelopment project and in Marin County in general has Barker Pacific planning renovations for at least one of the two remaining 64,000-square-foot hangars this year.

The 46,800 square feet of late-year leases at Hamilton Landing capped a year that had 370,000 square feet of office deals in Novato, with 120,000 more square feet leased than put back on the market, according to Haden Ongaro, one of the Orion Partners brokers for the property.

The recent Hamilton Landing deals included expansions for Smith & Hawken, Nihilistic Software and Cytograft Tissue Engineering. Newcomers were Birkenstock Distribution USA, Sony ImageWorks, Oracle, Halcyon Investment Partners, Morre & Company CPAs, Rothken Law Firm, Munson/Dutra Construction and the U.S. Army Corps of Engineers. DeSantis Capital Management renewed its lease.

The largest of those was a five-year lease for 15,000 square feet of Hangar 6 for Birkenstock Distribution USA. The Novato-based distributor of the German-made sandals and footwear plans to move its 65-employee headquarters from its landmark freeway-frontage facility at the north end of Novato in February as part of ongoing restructuring in the company. [See story p. 17.]

Smith & Hawken helped launch the Hamilton Landing project in 2000 with a lease of 35,000 square feet in one hangar for its headquarters. Now the "outdoor living" retailer has added 5,700 square feet to that to handle the growth of the company. For video-game maker Nihilistic, this is the second expansion at Hamilton Landing, starting first with 11,000 square feet and adding 7,000 late last year. Bioengineering startup Cytograft expanded to Hamilton Landing in 2003 and expanded again.

The fourth-quarter Hamilton Landing leases plus a 64,000-square-foot mid-year deal with Visual Concepts Entertainment, a division of video-game maker Take-Two Interactive Software, for an entire hangar gave Hamilton Landing nearly half the 241,500 square feet of class A leases in the city last year, according to Orion.

On top of those Novato deals, BioMarin Pharmaceutical signed a late-year lease for an 85,000-square-foot expansion in long-vacant Harris Digital Telephone space at 300 Bel Marin Keys, and earlier in the year Bank of Marin leased 30,000 square feet for headquarters at Pell Plaza.

"It shows there is velocity in the market again, where it had been slow for the last few years," Mr. Ongaro said.

True to historical trends during the recovery part of a business cycle, decreasing vacancy and increasing rents in southern and central Marin are prompting companies to look into San Rafael, Novato and then Petaluma for expansion space, according to Orion.

Southern and central Marin office vacancy slipped to 5.5 percent at year end, with owners of top-class space getting $4-a-square-foot monthly triple-net rents and some central San Rafael properties garnering $3 rents for the first time in several years, according to Orion.

That activity is generating multiple offers on the remaining refurbished space at Hamilton Landing, even at even at top-of-market triple-net rents of around $2.50 a square foot. The new 64,000-square-foot hangar Barker Pacific plans to renovate would be available around the end of this year.

Barker Pacific has entitlements for up to 465,000 square feet of office space on the 22-acre Hamilton Landing property, including a build-to-suit site for a 68,000-square-foot building along the front of the property.

"The park is coming into its own," said Michael Barker, managing director of Los Angeles-based Barker Pacific. "I've done projects in Texas and Los Angeles, and this one is one of the most unique I've ever worked on."

The firm purchased the property in 1998 with the vision of keeping the look of the hangars virtually the same, including high ceilings and glass fronts at each end of the structures.

Although the architecture proved to be challenging, the solutions to the problems turned into selling points. The foundations of the hangars were built in 1935 thick enough to support aircraft, but that much concrete made drilling for utilities an expensive option.

So Barker Pacific borrowed from the design of The Gap's San Bruno offices and put the electrical and data conduits plus climate-control ducts below raised floors. The raised floors allow tenants to position vents and outlets where needed.

To keep the heating and air-conditioning systems from marring the hangar roofline, they were put into the four corners of the hangars and configured to serve quadrants of the building. The subfloor design earned the project national awards.

That and the residential setting that has been built up around the business park with the redevelopment of the air force base plus nearby access to Sonoma County via Highway 101 and Napa County via Highway 37 has helped attract an eclectic mix of 37 tenants, including a YMCA club, library branch, Leela’s Deli Express and A&J Cleaners.

"It fit in with the values we have as a company with being a good citizen and concerned about the environment, plus the fact that space is being reused fit our feeling about good use of real estate," said Gene Kunde, CEO of Birkenstock Distribution USA.

It's also a bit of like-it-or-don't property, according to Steven Leonard of Meridian Commercial.

"Take-Two, Smith & Hawken and Birkenstock are cool companies looking for cool space," he said.

Yet "cool" is catching of for such employers in Marin, according to Brian Eisberg, another Orion agent marketing the property.

"Hamilton Landing over the last two to three years has metamorphosed from a slightly back-water office location ... driven totally by many of Marin County’s more visionary employers that have discovered that highly functional space can also be 'cool' space that helps attract and retain their employees and their clients," he said.

Mr. Ongaro, Mr. Eisberg and Mark Carrington of Orion also represented most of the dozen recent deals at Hamilton Landing. Meade Boutwell of CB Richard Ellis represented Birkenstock, Shap Roder of CB Richard Ellis represented Sony ImageWorks along with Meridian Commercial, and Phil Arnautou of Colliers International brokered the leased for Oracle.

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