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September 25, 2008, 5:30-7:30 p.m., Doubletree Hotel, Rohnert Park

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Thursday, October 9, 2008, 7:30-11:45 a.m., Doubletree Hotel, Rohnert Park

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Landmark building at 96 percent full

SUTTER LEASES BRING OFFICE COMPLEX NEAR TOTAL OCCUPANCY

SANTA ROSA – Rapid expansion of a medical group has nearly filled a large northwest Santa Rosa office building that was mostly vacant two years ago.

In early June Sutter Medical Foundation North Bay signed a 10-year lease for 45,400 square feet of space at 3883 Airway Drive to consolidate seven of a dozen medical offices in Santa Rosa, Rohnert Park and Sebastopol operated by Sutter Medical Group of the Redwoods.

The foundation estimates it will spend $13 million outfitting portions of the second and ground floors of the 104,000-square-foot building, called Landmark Executive Center, as a clinic for up to about two dozen physicians in specialties such as urology, gynecology, pediatrics and obstetrics.

The medical center is in addition to a five-year lease the foundation inked last year for 18,000 square feet of space on the third floor. That space houses support staff for the doctor’s group offices.

The foundation operates separately from Sutter Medical Center of Santa Rosa.

On top of the 63,000 square feet now set aside for Sutter Medical Foundation North Bay in the building, geothermal-energy engineering firm ThermaSource has been expanding since it moved in last year. The firm started with about 4,000 square feet on the third floor and two expansions later now occupies 10,400 square feet.

The Sutter and ThermaSource deals bring the three-story tiered red brick building to 96 percent occupancy.

Urdang/Sequoia Creek Holdings, managed by Nearon Enterprises of Danville, acquired 3883 Airway Drive in December 2004 and quickly began planning for more than $1 million in building improvements to convert it from a home for one tenant to a multi-tenant space.

The building was constructed in 1983 for Wells Fargo Mortgage and came to be a Washington Mutual lending office after a series of mergers. In 2004 Washington Mutual pulled back its lending offices, including the one in Santa Rosa, and marketed the building for sale.

“It was the original belief when we worked with the ownership in the purchase of the building that, because of the size of the building, a tenant like Sutter or other large tenants could locate on a single floor or have contiguous space,” said Jeff Negri, one of the NAI BT Commercial agents marketing the property. “We were in negotiations with a couple of tenants of similar size.”

The renovations included a more modern look to the lobby, a small gym, restrooms with lockers and showers, a cafe and several ready-to-occupy small offices.

Nearon also positioned asking rents for Landmark Executive Center so they would be between office space in the business parks to the north near Charles M. Schulz-Sonoma County Airport of around $2 a square foot per month on a full-service basis and $2.50 a square foot full-service rents for new space in the Fountaingrove area to the east across Highway 101.

Deals at Landmark have been inked with base rental rates in the $2 to $2.25 a square foot full service.

Nearon hasn’t revealed how it plans to use the eight-and-a-half acres of surplus land on the property, most of which is located south of the building along Airway Drive and across the street from the Kohl’s department store. That land is zoned for office and retail projects. A hotel developer is in contract to buy three of those acres.

Nearon also owns the Burlington Coat Factory property in Rohnert Park, which has an undeveloped retail pad. The firm also owns Northpoint Commerce Center, a nearly 85,000-square-foot, six-building light-industrial and R&D complex at 2160 Northpoint Parkway in southwest Santa Rosa.

Mr. Negri, Niels von Doepp and Tony Lucchesi of NAI BT represented Nearon in the Sutter leases, and Shawn Johnson of Keegan & Coppin/Oncor International represented Sutter.

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