California Selling Twenty-Four Office Buildings To Close Budget Gap

Michael Santo's picture

California, having to deal with still another budgetary crisis, has put 24 state office buildings on 11 sites up for sale. The buildings involved include the San Francisco Civic Center and the Ronald Reagan State Building (shown above) in Los Angeles.

The sales are being conducted by real estate firm CB Richard Ellis. The firm packaged the properties together into a portfolio called the Golden State Portfolio.

The state, struggling in the recession and looking for ways to bolster its budget, hopes to rake in as much as $2 billion with the sales. CB Richard Ellis notes that despite the economy, the sale should be a safe investment.

The reason it makes that statement is because the state has promised to lease back the office space, for 20 years. The state legislature and Governor Arnold Schwarzenegger approved the sale last June.

Of course, these sales come at possibly the worst possible time for commercial real estate. Commercial property values have fallen as much as 40 percent from their 2007 peak. However, at the same time, rents are depressed as well, which may also help as California negotiates rent when it leases back the buildings.

Written by Michael Santo

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