Kennedy Wilson took control of the 601 City Center office tower in downtown Oakland through a foreclosure proceeding, according to an April 3 report. The Beverly Hills-based firm acquired the property at 601 12th Street from a Shorenstein Properties affiliate after efforts to restructure about $265 million in debt were unsuccessful, as reported by the San Francisco Business Times and Mercury News.
The transfer marks another significant change for Bay Area commercial real estate, which has seen multiple foreclosures as property values decline. Kennedy Wilson was one of the lenders involved in the building’s capital stack alongside Deutsche Bank. The company purchased the debt secured by the tower before acquiring ownership via a grant deed filed with Alameda County records, showing Kennedy Wilson as both buyer and foreclosing lender.
Property records indicate that Kennedy Wilson assumed $63.8 million of the total debt while approximately $179.6 million was discharged. The building is a 23-story, 600,000-square-foot structure completed in 2020 and was once considered a symbol of Oakland’s office market growth. Blue Shield leased nine upper floors totaling 255,000 square feet when it opened; other tenants include E.l.f. Beauty—which signed for nearly 28,000 square feet in 2024—consulting firm CRA International, and engineering firm Degenkolb.
However, leasing activity slowed during the pandemic amid rising interest rates and higher tenant improvement costs. Currently about 260,000 square feet remain vacant at the property—including eight contiguous floors still unfinished.
This transaction follows similar moves in Oakland’s office sector: In January Deutsche Bank took over three buildings from Starwood Capital via deed-in-lieu of foreclosure after unpaid debts reached more than $442 million. As comparable properties have recently sold for significantly less than their previous values per square foot—sometimes just one-fifth—the resulting lower valuations may reduce property tax revenues and put further strain on local government budgets already affected by post-pandemic challenges.
