Teachers retirement system targets new downtown tower

Group teams up with major real estate player for high-rise proposal

OAKLAND >> The nation’s largest teachers retirement system and a major real estate player have teamed up to propose a new office tower in downtown Oakland, public documents show.

The California State Teachers’ Retirement System has joined forces with Boston-based Beacon Capital Partners in a proposal to develop a new tower near downtown Oakland’s Lake Merritt, according to city Planning Department documents and public business records.

The proposal contemplates a “new high-rise” consisting of “commercial space” that would total “over 100,000 square feet,” a very preliminary proposal filed with the Oakland Planning Department shows.

The potential project would be constructed at 1956 Webster St. in Oakland, according to the Planning documents.

At present, the site accommodates a four-story office building totaling 42,300 square feet, the city files show.

The development alliance intends to demolish the four-story building and replace it with a commercial tower as outlined in the preliminary proposal.

The standard definition of the planning term “commercial” combined with the development realities of a tower would suggest that the building would be primarily office, although it also might include some ground-floor retail or restaurant space.

Through separate affiliates, the California Teachers’ Retirement System owns both the 1956 Webster building as well as an adjacent office tower and a onestory restaurant and retail building at 1999 Harrison St., Alameda County documents show.

CalSTRS bought both properties in 2016, paying a combined $235.5 million.

The teachers retirement group paid $224.75 million for the 1999 Harrison high-rise and one-story

building and paid $10.75 million for the 1956 Webster building.

The prices were disclosed both through county grant deeds as well as staff memos related to a dispute whereby the state Teachers’ Retirement System was demanding that the county refund the documentary transfer taxes for the property purchase. The county denied the claim.

In the past few years, a growing number of developers have become interested in building towers, either office or residential, in downtown Oakland.

However, the great majority of those proposals have yet to break ground amid economic uncertainties unleashed by the coronavirius.

Still, commercial and residential property experts believe Oakland could continue to attract interest because it’s deemed to be a low-cost alternative to San Francisco for some office tenants and is a hub for mass transit, including several BART stations.