Kern's tallest building gives glimpse of commercial real estate market
| Saturday, Jun 20 2009 12:00 PM
Last Updated Saturday, Jun 20 2009 12:00 PM
Images
Henry A. Barrios / The Californian Jennifer Spink greats guest at the Petroleum Club of Bakersfield located in the Stockdale Tower building.
Henry A. Barrios / The Californian The view from the 12th story of the Stockdale Tower building shows a part of Bakersfield many people have not seen.
Henry A. Barrios / The Californian Stockdale Tower, Bakersfield's tallest building is for sale. The building is known for being the home of the Petroleum Club of Bakersfield on its top floor where one can get a panoramic view of Bakersfield.
For a good overall view of local business activity, look no further than the tallest building in Kern County, Bakersfield's landmark Stockdale Tower.
The 12-story office tower along California Avenue had until recently been marketed for sale. It boasts enviable assets, including a diverse list of quality tenants, a swanky top-floor restaurant and a gym.
At least two offers came in over a period of more than a year -- but they were well below the asking price of $45 million. So the owner took it off the market, sort of.
"I'm not saying if somebody brought an offer that was acceptable that we wouldn't entertain it, but it's not being offered right now," said owner Terry Moreland, the local real estate developer.
Bakersfield commercial real estate brokers say the situation is emblematic not only of what's happening in local business, but what's going on across the country as would-be investors deal with the tight credit market.
Stockdale Tower's 176,000 square feet of retail and office space is 10 to 12 percent vacant -- roughly the same as the city's office market as a whole.
That level of vacancies is considered decent for office markets in average times. It certainly beats a number of larger cities like Los Angeles (14 percent vacancy rate in the first part of this year) and San Francisco (12 percent), according to the CB Richard Ellis commercial real estate brokerage and Torto Wheaton Research.
As often happens, brokers credit Bakersfield's good fortune to the local oil and agriculture industries, which tend to have a steadying effect on the local economy.
The tower is outperforming many other office properties around town. CB Richard Ellis reported that in the second quarter of this year, the northwest corridor's office and medical space was 35 percent vacant, and the southwest corridor was 27 percent vacant (around Cal State Bakersfield the rate was a sterling 5 percent vacant.)
And in any case, the building's vacancy rate is far better than when Moreland bought the building about five years ago, when it was left with just one tenant, a bank, after two successive oil companies had pulled out.
(Moreland, for the record, denies that his efforts to sell the building are in any way related to troubles facing some of his residential development projects. His Barcelona II LLC 40-acre Wasco residential development recently filed for Chapter 11 bankruptcy protection. "They're two separate projects altogether," he said.)
Even if investors were interested in buying Stockdale Tower, several factors weigh against such a purchase.
The tight credit market has slowed such investments everywhere, said Fred Wilkerson, the CB Richard Ellis broker who was marketing the building.
"It's this way all over," he said. "It's this way nationwide."
But beyond that, there has been less demand for investment-quality buildings, said Mark Smith, a principal partner at the commercial real estate brokerage of Grubb & Ellis / ASU & Associates
"I think institutional buyers are not very abundant, and they are certainly being very, very selective on the assets they buy," Smith said. He added that investors these days are more interested in lower-price buys, in the $12 million to $20 million range.
Smith also suggested that investors may still be assessing demand for office space in Bakersfield.
"I think investors are being very, very cautious," he said.
None of this apparently bothers Moreland or Wilkerson, who said the property continues to generate a good level of income.
"Cash flow is good," he said, "so we're just going to take our time."
