OAKLAND — A landmark Oakland office tower has changed ownership following a swift foreclosure process, indicating ongoing weakness in the regional office market.

601 City Center Changes Hands

601 City Center, a prominent feature of the downtown Oakland skyline and part of the City Center complex, has been purchased by an affiliate of Kennedy Wilson, according to documents filed with the Alameda County Recorder’s Office on April 1st. The seller was an affiliate of Shorenstein Properties.

Foreclosure Details and Debt Assumption

Prior to the purchase, Kennedy Wilson acquired the loan that financed the property. The deed indicates that the Kennedy Wilson affiliate acted as both the buyer and the foreclosing lender in the transaction.

Significant Debt Reduction

At the time of the sale, 601 City Center was encumbered by $265 million in mortgage debt. Kennedy Wilson’s affiliate assumed only $63.8 million of this debt – representing just 24% of the total financing.

Impact on Property Value and Tax Revenue

As of January 2025, the property was assessed at $275.6 million, meaning the assumed debt is 76.9% below the assessed value. This decline in value could have broader ramifications for local public services.

Potential for Reduced Tax Revenue

A decrease in the assessed valuation of 601 City Center could impact property tax revenue for the city of Oakland, Alameda County, regional agencies, and local school districts. This is part of a larger trend of declining commercial real estate values in the Bay Area.

Part of a Larger Trend

The purchase of 601 City Center represents the latest in a series of loan failures involving high-profile buildings in downtown Oakland. The tower previously served as a success story for downtown Oakland when Blue Shield moved its headquarters and 1,200 workers there from San Francisco.