Distribution Facility industrial parkway west hesperian blvd California State Lottery Building 2489 Industrial Parkway West | Hayward, CA 94545
Jul 20, 2020
Distribution Facility
industrial parkway west
hesperian blvd
California State Lottery Building2489 Industrial Parkway West | Hayward, CA 94545
ContentsInvestment Summary ........................... 3
Investment Highlights ........................... 3
Property Overview............................... 5
Lease Abstract ...................................10
Valuation ...........................................12
Tenant Overview ................................13
Location Overview ..............................14
Demographics ....................................16
Purchase Price:
$1,850,000
NOI:
$94,552
Price/SF:
$288 (not including ±4,000 sq. ft. of fenced-in yard space)
CAP Rate:
5.11% (6.6% average Cap rate over lease term)
Rentable Sq. Ft.:
6,406 (±4,000 sq. ft. yard space)
The Lottery has no competition and has been at this location for nearly 18 years.
EXCLUSIVELY OFFERED BY:
Capital Markets | Colliers Investment Services Group
COLLIERS INTERNATIONAL101 Second Street, 11th FloorSan Francisco, CA 94105
BRYAN WEBBSenior Vice President
415.288.7873
Lic. 01826546
P. 3
CALIFORNIA STATE LOTTERY BUILDING
P. 3
1-Mile 3-Mile 5-Mile
2016 Population 19,486 152,560 338,539
2016 Households 5,323 43,294 101,259
2016 Median HH Income $79,254 $72,855 $77,943
Demographics
Location Traffic Count
Hesperian Blvd & Industrial Pkwy W 34,392
Industrial Pkwy W & Satellite St 21,030
Traffic Counts
Property InformationAddress 2489 Industrial Parkway West, Hayward, CA
Offering Price $1,850,000
Cap Rate 5.11% (6.6% average Cap rate over lease term)
Price/SF $288 (not including ±4,000 sq. ft. fenced-in yard)
Net Operating Income $94,552
Rentable Square Feet 6,406 (±4,000 sq. ft. yard space)
Land Area 12,158 sq. ft.
Original Lease Term 10 years
Lease Expiration 9/30/2027
Renewal Options None
Lease Type Full Service
Year Built 1987
Investment Summary Investment HighlightsColliers International, as Exclusive Advisor, is pleased to present the opportunity to
acquire the fee-simple interest in a single-tenant building occupied by the California
State Lottery, (the “Property”) in Hayward, California. The Property is located in the
Pacific Business Park, which encompasses 31 separately owned buildings and maintains
the grounds and landscaping.
The Property consists of an approximate 6,406 square foot building on 12,158 square
feet of land. There is an additional + 4,000 sq. ft. of secured yard with a grade-level roll
up door on the first floor. The tenant, California State Lottery, currently occupies the
entire building and has been a tenant since November 2000. In 2010 they extended
their lease for an additional seven years, and recently renewed for an additional ten
years.
■ 4% ANNUAL INCREASES
■ 100% occupied by the California State Lottery
■ Zero competition; at current location for 17+ years
■ Current lease is below current market net rents within similar business parks
■ The only district office serving the East Bay
■ Lease guarantor is the California State Lottery (Moody’s A1 credit rating)
■ Well maintained by Pacific Business Park and current ownership
Tenant / Lease ■ For FY2015-16 lottery sales were nearly $6.3B
■ Tenant has option to cancel the lease with 180 days prior written notice
■ After 2019, Landlord can cancel the lease with 180 days prior written notice
■ Lease guarantor is the California State Lottery
P. 4
CALIFORNIA STATE LOTTERY BUILDING
P. 4
P. 5
CALIFORNIA STATE LOTTERY BUILDING
Property Overview
The Offering
The California State Lottery building is a 6,406 sq. ft. two-story building located within
the Pacific Business Park, which maintains the grounds and landscaping. There is an
additional ±4,000 square feet of secured yard with a grade level roll-up door on the
first floor. The California State Lottery currently occupies the entire building and has
been a tenant since November 2000. The building is well maintained, and the owner
has recently completed interior renovations. This location serves as the California State
Lottery East Bay District Office, and houses the scratcher machines and lottery kiosks
for the several nearby retailers within the East Bay.
Location 2489 Industrial Parkway West, Hayward, CA
Year Built 1987
Assessor’s Parcel Number 463-0097-019
Rentable Square Feet 6,406
Site Area 12,158 sq. ft.
Number of Floors 2
Occupancy 100%
Parking 12 spaces
Ownership Fee Simple
1 San Francisco 820 Dubuque Ave, South San Francisco
2 Sacramento 4106 E. Commerce Way, Sacramento
3 East Bay 2489 Industrial Pkwy W, Hayward
4 Fresno 7620 N Del Mar Ave, Fresno
5 Van Nuys 16525 Sherman Way, #C10, Van Nuys
6 Inland Empire 1840 Commercenter Cir, San Bernardino
7 Santa Fe Springs 9807 Bell Ranch Dr, Santa Fe Springs
8 Santa Ana 3400 W Warner Ave, Ste F, Santa Ana
9 San Diego 5656 Ruffin Rd, San Diego
Site Description California Lottery District Offices
P. 6
CALIFORNIA STATE LOTTERY BUILDING
Property Photos
P. 7
CALIFORNIA STATE LOTTERY BUILDING
FENCED-IN YARD
Floorplans
P. 8
CALIFORNIA STATE LOTTERY BUILDING
Pacific Business Park
Average Sales Price for Vacant Buildings
Median Months Vacant
Vacancy Rate for Pacific Business Park
Average Rents per Square Foot (NNN) Lottery Rent
This information is comprised for all ±24 buildings within the Pacific Business Park
•
•
P. 9
CALIFORNIA STATE LOTTERY BUILDING
Parcel Map
P. 10
CALIFORNIA STATE LOTTERY BUILDING
EARLY TERMINATION CLAUSE
Tenant California State Lottery
Type Full Service
Commencement Date 10/1/2017
Base Lease Term 10 Years
Lease Expiration 9/30/2027
Options None
Current Annual Gross Rent $165,750
Taxes, Utilities & Insurance Landlord Obligation
Annual Increase 4% Annual Rent increase
Roof & Structure Landlord Obligation
HOA ResponsibilitiesExterior Paint, Irrigation, Parking Lot Repairs,
Landscaping, Common Area, Cleaning, Sewer
Lines, Liability Coverage
Credit Rating Moody’s A1
Lease Abstract Cap Rate Growth Chart
A) The Lessee may terminate this lease at any time by giving written notice to the Lessor at least 180
days prior to the date when such termination shall become effective. (Most state leases have this clause)
B) The Lessor may terminate this lease at any time after April 1, 2019 by giving written noice to the
Lessee at least 180 days prior to the date when such termination shall become effective.
5.1%5.4%
5.6%5.9%
6.2%6.4%
6.7%7.1%
7.4%7.7%
8.1%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10/1/2017 10/1/2018 10/1/2019 10/1/2020 10/1/2021 10/1/2022 10/1/2023 10/1/2024 10/1/2025 10/1/2026 10/1/2027
NOI growth assumes 3% increase in expenses.
P. 11
CALIFORNIA STATE LOTTERY BUILDING
hesperian blvdindustrial parkway
distribution center
P. 12
CALIFORNIA STATE LOTTERY BUILDING
TENANT SF $/Mo $/SF/Mo Annual Rent
California State Lottery 6,406 $13,812 $2.16 $165,744
Effective Gross Income $165,744
Operating Expenses Total Amount
Property Tax (1.332% +640) $5.29 $27,213
Management (2%) $0.86 $3,314
Repairs and Maintanace $0.86 $1,250
Insurance $0.29 $871
PG&E $0.42 $14,051
HVAC Maintenance $0.17 $650
Park Maintenance Dues $0.38 $3,264
Elevator $0.38 $800
Janitorial $0.30 $9,960
Alhambra Water Service + Janitorial Supplies $0.30 $1,924
Water $0.44 $1,133
Waste Mgmt $1.58 $6,372
Pest Control $0.31 $390
Total Operating Expenses $0.97 $71,192
Current NOI $94,552
Current Cap Rate 5.11%
Purchase Price $288 $1,850,000
Valuation
P. 13
CALIFORNIA STATE LOTTERY BUILDING
P. 13
California State Lottery
FY 2015-2016 Total Sales $6.3 Billion
Total to Education $1.59 Billion
Number of Retailers 22,000
Formation November 6, 1984
Type Lottery System
Headquarters Sacramento, California
District Offices 9
Website www.calottery.com
Tenant OverviewThe California State Lottery began on November 6, 1984, when
a majority (58%) of California voters passed Proposition 37, the
California State Lottery Act of 1984, authorizing the creation
of a lottery. The Lottery Act mandated an extremely tight time
line for establishing the Lottery and bringing it to operational
status. To comply, the state government immediately built the
Lottery’s original headquarters in only three months in the Richards neighborhood of
Sacramento (just north of downtown), where it has been located ever since. The first
lottery games were Scratchers; sales began on October 3, 1985. A weekly Lotto game
began on October 14, 1986.
California joined Mega Millions on June 22, 2005; it became the 12th jurisdiction to offer
the game, and the last to join before the 2010 cross-sell expansion with MUSL. A Mega
Millions drawing was held in Hollywood to commemorate the event.
In September 2011, the California Lottery moved into a new $58 million headquarters at
700 North 10th Street across the street from the old one, which it promptly demolished.
Because it was built in a frantic 90-day rush to comply with the Lottery Act, the original
headquarters had numerous construction defects in the roof, foundation, and elevator,
as well as a mold problem.
In February 2012 the California Lottery initiated an impact analysis of the Powerball
game, in preparation for a recommendation in July 2012. Subsequently, the Fiscal Year
2012–2013 Business Plan included funding for a launch of Powerball within the fiscal
year, with Powerball launching in California on April 8, 2013. As a result of the California
Supreme Court’s decision, California is the only state with variable payouts for both
games.
P. 14
CALIFORNIA STATE LOTTERY BUILDING
P. 14
EAST BAY OVERVIEW
The East Bay is located on the eastern shore of the San Francisco Bay and covers approximately 1,540 square miles. The East Bay encompasses 33 cities or towns and nearly 2.5 million residents, about 34.8% of the Bay Area’s population and labor force, 34.6% of its employed workers and 29% of the Bay Area’s jobs.
The East Bay is connected by eight bridges to San Francisco; the Peninsula and the venture capital center of the nation; Sacramento, the State Capital, 45 minutes to the North East; and the Napa Valley “Wine Country” just to the north. The Central Valley lies to the east and San Jose to the South.
The East Bay has been the fastest growing region in the San Francisco Bay Area since the mid-1980’s. It will continue to do this for the next decade and beyond because of its key location and available land for new residential, commercial and industrial uses. But it is the diversity of the East Bay cities – economic base, ethnicity, climate, lifestyles, housing and business location opportunities that provide the region’s exceptional strength.
THE CITY OF HAYWARD
The City of Hayward was incorporated in 1876 and is centrally located in Alameda County about 25 miles southeast of San Francisco, 14 miles south of Oakland, 26 miles north of San Jose and 10 miles west of the Tri-Valley communities surrounding Pleasanton. Hayward covers approximately 61 square miles and is bordered to the north by the City of San Leandro and unincorporated are of Castro Valley, to the south by the cities of Fremont and Union City, to the west by the City of Pleasanton and the Hayward Mountain Ridge and to the west by the San Francisco Bay shoreline.
Hayward is generally considered a “bedroom community” for the larger metropolitan areas of Oakland and San Francisco. Hayward is centrally located within Alameda County and transportation network adjoining communities, recreational areas and employment centers are good.
California State University East Bay
Location Overview
P. 15
CALIFORNIA STATE LOTTERY BUILDING
Hayward is served by Interstate 880 (also known as the Nimitz Freeway), State Route 92 (Jackson Street) and State Route 238 (Mission Boulevard/Foothill Boulevard). State Route 92 continues west as the San Mateo-Hayward Bridge. The intersection of 880 and 92 was reconstructed over a four-year period, with completion of the project in October 2011. Mission Boulevard has been long known for chronic traffic congestion. Past proposals to convert Mission Boulevard to a freeway or build a 238 bypass have been controversial. One proposal, to build a freeway parallel to Mission Boulevard, extending a freeway south from 580 where it turns east towards Castro Valley, and connecting to Industrial Boulevard, had land purchased, but was cancelled after years of debate. The land is now scheduled for sale and zoning. Mission, Jackson, and Foothill all converge at one congested intersection south of downtown, known historically as “Five Flags” for a line of flagpoles located there. To alleviate congestion in the downtown area, the city has converted the A Street, Mission and Foothill triangle to one-way thoroughfares (counterclockwise), and is adding road improvements, landscaping, and telephone/ cable underground to Mission Boulevard south to Industrial Boulevard, and to Foothill Boulevard north to 580. The plan, the Route 238 Corridor Improvement Project, broke ground July 2010, completed rerouting in 2013, and was completed in 2013.
Bay Area Rapid Transit (BART), the regional rapid transit system, has two stations in Hayward: the Hayward station, in downtown; and the South Hayward station, near the Hayward-Union City border. BART operates a repair yard in Hayward. The AC Transit bus system, which provides bus service for Alameda County and Contra Costa County, operates in Hayward, and has a repair/training center located there. Amtrak, the national rail passenger system, provides daily service at its Hayward station for the Capitol Corridor train, which runs between San Jose in the South Bay, and Auburn in the Greater Sacramento area.
TRANSPORTATION
P. 16
CALIFORNIA STATE LOTTERY BUILDING
P. 16
1 Mile 3 Mile 5 Mile2000 Total Population 16,332 138,081 298,3172010 Total Population 17,553 139,019 308,7422016 Total Population 19,486 152,560 338,5392021 Total Population 21,069 164,991 367,967Population Change 2000 to 2016 19.3% 10.5% 13.5%Population Change 2010 to 2021 20.0% 18.7% 19.2%Population Change 2016 to 2021 8.1% 8.1% 8.7%
1 Mile 3 Mile 5 Mile2000 Households 4,779 41,218 94,1422010 Households 5,013 41,224 96,6322016 Households 5,323 43,294 101,2592021 Households 5,505 44,780 105,308Household Change 2000 to 2010 4.9% .0% 2.6%Household Change 2000 to 2016 11.4% 5.0% 7.6%Household Change 2010 to 2021 9.8% 8.6% 9.0%Household Change 2016 to 2021 3.4% 3.4% 4.0%
HO
US
EH
OLD
SP
OP
ULA
TIO
N
1 Mile 3 Mile 5 Mileup to $24,999 12.9% 13.8% 13.6%$25,000 to $49,999 17.4% 20.4% 17.8%$50,000 to $74,999 17.0% 17.3% 17.1%$75,000 to $124,999 26.7% 25.7% 25.9%$125,000 to $199,999 19.1% 16.0% 17.5%$200,000 or more 6.9% 6.8% 8.2%2000 Median Income $57,006 $57,731 $59,5012010 Median Income $71,434 $68,656 $70,8022016 Median Income $79,254 $72,855 $77,9432021 Median Income $84,080 $78,780 $83,885
INC
OM
E
Demographics
MONTEREY BAY
SAN LUISRESERVOIR
SANPABLO
BAY
SUISUNBAY
LAKEBERRYESSA
FOLSOMLAKE
SANFRANCISCO
BAY
PACIFICA
DALYCITY
SAN MATEO
MOUNTAINVIEW
HALF MOONBAY
PALO ALTO
REDWOODCITY
LOS GATOS
CAMPBELL
BOULDERCREEK
LIVERMORE
SAN RAMON
BRENTWOOD
ANTIOCH
MILPITAS
WALNUTCREEK
CONCORD
MILL VALLEY
HAYWARD
FREMONT
ALAMEDA
BERKELEY
MORGAN HILLSCOTTSVALLEY
GILROY
VALLEJONOVATO
PETALUMA
ROHNERTPARK SONOMA
HEALDSBURG
VACAVILLE
FAIRFIELD
YOUNTVILLEDIXON
WINTERS
GALT
ELK GROVE
DAVIS
LODI
TRACY RIVERBANK
MANTECA
TURLOCK
GEYSERVILLE
CLOVERDALE
ST HELENA
CALLISTOGA
COLOMAROSEVILLE
PATTERSON
NEWMAN
GUSTINE
LOS BANOS
WOODLAND
SAN RAFAEL
PACIFICA
DALYCITY
SAN MATEO
MOUNTAINVIEW
HALF MOONBAY
PALO ALTO
REDWOODCITY
LOS GATOS
CAMPBELL
BOULDERCREEK
LIVERMORE
SAN RAMON
BRENTWOOD
ANTIOCH
MILPITAS
WALNUTCREEK
CONCORD
MILL VALLEY
HAYWARD
FREMONT
ALAMEDA
BERKELEY
MORGAN HILLSCOTTSVALLEY
GILROY
VALLEJONOVATO
PETALUMA
ROHNERTPARK SONOMA
HEALDSBURG
VACAVILLE
FAIRFIELD
YOUNTVILLEDIXON
WINTERS
GALT
ELK GROVE
DAVIS
LODI
TRACY RIVERBANK
MANTECA
TURLOCK
GEYSERVILLE
CLOVERDALE
ST HELENA
CALLISTOGA
COLOMAROSEVILLE
PATTERSON
NEWMAN
GUSTINE
LOS BANOS
WOODLAND
SAN RAFAEL
LA HONDALA HONDA
SACRAMENTO
STOCKTON
MODESTO
SAN JOSE
OAKLANDSAN
FRANCISCO
NAPA
SANTAROSA
SANTACRUZ
SACRAMENTO
STOCKTON
MODESTO
SAN JOSE
OAKLANDSAN
FRANCISCO
NAPA
SANTAROSA
SANTACRUZ
505
680
5
5
5
680
680
80
80
280
280880
580
205
80
80
5
780
80
580
128
37
1
1
92
152
132
33
994
16
99
84
160
113
12
12
128
88
116
29121
35
26
84
17
120
165
4
41
1299
99
101
101
50
101
N
California State Lottery Building
This Confidential Offering Memorandum (the “Memorandum”) has been prepared and presented to the recipient (the “Recipient”) by Colliers International (“Colliers”) as part of Colliers’ efforts to market for sale the real property located at 2489 Industrial Parkway West, Hayward, CA 94545 (the “Property”). Colliers is the exclusive agent and broker for the owner(s) of the Property (the “Owner”). Colliers is providing this Memorandum and the material contained in it to the Recipient solely to assist the Recipient in determining whether the Recipient is interested in potentially purchasing all or part of the Property. Colliers also is providing this Memorandum and the material in it to the Recipient with the understanding that the Recipient will independently investigate those matters that it deems necessary and appropriate to evaluate the Property and that the Recipient will rely only on its own investigation, and not on Colliers, the Owner or this Memorandum, in determining whether to purchase the Property. The Recipient’s use of this Memorandum and the material in it is strictly governed by the terms and conditions of the Registration and Confidentiality Agreement that the Recipient previously executed and delivered to Colliers.
PLEASE NOTE THE FOLLOWING:
Colliers, the Owner and their respective agents, employees, representatives, property managers, officers, directors, shareholders, members, managers, partners, join venturers, corporate parents or controlling entities, subsidiaries, affiliates, assigns and predecessors and successors-in-interest make no representations or warranties about the accuracy, correctness or completeness of the information contained in this Memorandum. The Recipient is urged not to rely on the information contained in this Memorandum and to make an independent investigation of all matters relating to the Property.
This Memorandum includes statements and estimates provided by or to Colliers and/or the Owner regarding the Property. Those statements and estimates may or may not be accurate, correct or complete. Nothing contained in this Memorandum should be construed as a representation or warranty about the accuracy, correctness or completeness of such statements and estimates. Further, nothing contained in this Memorandum should be construed as representation or warranty about any aspect of the Property, including, without limitation, the Property’s (1) past, current or future performance, income, uses or occupancy, (2) past, current or prospective tenants, (3) physical condition, (4) compliance or non-compliance with any permit, license, law, regulation, rule, guideline or ordinance, or (5) appropriateness for any particular purpose, investment, use or occupancy. Again, the Recipient is urged not to rely on this Memorandum and the statements and estimates in it and to make an independent investigation regarding the Property and the statements and estimates contained herein.
This Memorandum may include statements regarding, references to, or summaries of, the nature, scope or content of contracts and/or other documents relating to the Property. Those statements, references or summaries may or may not be accurate, correct or complete. Additionally, Colliers may not have referenced or included summaries of each and every contract and/or other document that the Recipient might determine is relevant to its evaluation of the Property. Nothing contained in this Memorandum should be construed as a representation or warranty about the accuracy, correctness or completeness of such statements, representations or summaries. On request and as available, and subject to the Owner’s consent, Colliers will provide the Recipient with copies of all referenced contracts and other documents. Colliers assumes no obligation to supplement or modify the information contained in this Memorandum to reflect events or conditions occurring on or after the date of its preparation of this Memorandum.
This Memorandum does not constitute an offer to sell, or a solicitation of an offer to buy, an interest in the Property. Nothing contained in this Memorandum may be construed to constitute legal or tax advice to a Recipient concerning the Property.
More detailed information regarding the anticipated terms, conditions and timing of any offering by the Owner relating to the Property will be provided in due course by separate communication. Colliers and/or the Owner reserve the right to engage at any time in discussions or negotiations with one or more recipients of this Memorandum and/or other prospective purchasers of the Property without notice or other obligation to the Recipient.
The Owner reserves the right to change the terms of any offering relating to the Property or to terminate without notice that offering. The Owner also reserves the right to operate the Property in its sole and absolute discretion prior to the completion of any sale of the Property. Colliers reserves the right to require the return of this Memorandum and the material in it and any other material provided by Colliers to the Recipient at any time. Acceptance of this Memorandum by the Recipient constitutes acceptance of the terms and conditions outlined above.
CONFIDENTIALITY & DISCLAIMER
EXCLUSIVE ADVISOR:
BRYAN WEBBSenior Vice President
415.288.7873 | [email protected]
Lic. 01826546
California State Lottery Building