There are more than three times as many AI companies (825) in the Bay Area as the next most concentrated market, New York City, with 237.

Even more so, Cushman & Wakefield anticipates a 200 percent growth for GenAI companies over the next two years in the Bay Area. In its latest report, AI Genesis | The Role of Generative AI in Transforming Bay Area CRE, Cushman & Wakefield broadly defines AI and includes semiconductor companies and other tech companies deploying AI.

Last year, 82 percent of global Gen AI venture capital landed in San Francisco.

Robert Sammons, Cushman & Wakefield senior research director and co-author of the report, told Commercial Property Executive that what had primarily started in San Francisco proper has spread more recently across the Bay Area region.

“Silicon Valley is certainly in the spotlight, largely because of AI divisions at the Big Tech players that are headquartered there, but also increasingly because of standalone AI companies popping up in the area,” Sammons said.

Given the depth of tech talent in the Bay Area, the focus will likely remain within the region, he anticipates. “However, like most tech sectors in the past, the GenAI phenomenon will likely spread to other markets as well—we already see that in major global cities such as New York and London. Thus far, it’s the search for talent leading that charge, but in the future, it could be about cost savings.”

READ ALSO: Why AI Firms Are Taking a Measured Approach to Office Leasing

Sammons said what surprised him most about the report was the sheer number of GenAI companies based in the Bay Area region—from the very early seed stage to the later stage to divisions of Big Tech.

“It’s still overwhelmingly a Bay Area phenomenon,” he said. “Also surprising was that there was more GenAI leasing activity in Silicon Valley than in San Francisco in 2024 as well as more unique job postings in Silicon Valley than in San Francisco in 2024.”

An office market rebound

The concentration of artificial intelligence companies in the San Francisco Bay Area is helping drive a market rebound, being a catalyst to lift the region of its real estate downturn, according to Avison Young VP Tyler Paratte, based in the San Francisco office.

“The correlation between companies receiving funding and leasing office space has drastically improved, leading to increased office attendance, revitalizing downtown cores and creating expanded opportunities for adjacent industries as these companies grow.”

Paratte said San Francisco has historically been a boom or bust market, heavily dependent on the technology industry.

“Not only does the data show the market is recovering, but there’s also a shared sentiment of being on the precipice of a boom, with AI being the engine that renewed momentum in the Bay Area,” he said.

AI firms’ leasing activity

JLL also sees a heavy influx of AI-based companies. Its data focuses on firms dedicated to the AI vertical. According to Chris Pham, JLL senior analyst, the Bay Area’s dominance in AI is echoed in JLL’s research in leasing activity and job posting trends.

He told CPE that new AI deals in the Bay Area comprise nearly 40 percent of the AI deal count this year, primarily from new startups. San Francisco alone saw 30 percent of the deal count last year from AI startups. Monthly AI job postings have nearly doubled year-over-year as companies emphasize AI positions.

He said AI companies occupy different property types beyond just office space, which accounts for 49 percent of leasing activity. Lab space accounts for 23 percent, flex space for 10 percent and industrial for 18 percent.

“AI is centered mainly in the Bay Area, eclipsing all U.S. and global markets for several reasons, including that it has the highest location quotient for AI in the U.S. at 9.5 (meaning AI talent is 9.5x more concentrated compared to the national average).

The Bay Area has 20.2 percent of U.S. AI talent, far ahead of Seattle (9 percent) and New York City (7 percent). The Bay Area is also near major AI research institutions, innovation companies and venture capital.

“[The Bay Area] has a strong talent pipeline from local universities, including UC-Berkeley and Stanford which are among the top 5 institutions for AI graduates,” Pham said.

The Bay Area has been a proving ground for tech startups for more than 30 years, so we’re excited to see the growing demand for AI, Katy Redmond, JLL senior managing & tech sector lead of leasing advisory, told CPE.

“This growth is a leading indicator for optimism for other AI hub markets for startups and innovation, such as New York City, Seattle and Washington, D.C.,” she said.

In 2024, AI companies leased 420,000 square feet in New York City, including new secondary offices opened by San Francisco-based startups.

The post How Generative AI Is Reshaping Bay Area CRE appeared first on Commercial Property Executive.

Supermicro plans to build a roughly 3 million-square-foot industrial complex in San Jose, Calif., marking its third Silicon Valley campus.

Construction is set to kick off this year on the park’s first building, which will measure more than 300,000 square feet.

Supermicro manufactures liquid coolers for AI factories, which reduce the carbon footprint of data centers and lower operational costs. The tech company is bound to triple its footprint in San Jose, where it owned roughly 1.5 million square feet of office and manufacturing space as of June 2024.

Supermicro’s future campus

The first building of the campus will rise at 550 E. Brokaw Road, on the site of a former Fry’s Electronics store. The San Jose-based firm went out of business in 2021 following a series of store closings.

Supermicro purchased the 20-acre site for $80 million last February. At the time, the property was entitled for the development of a 1.9 million-square-foot office campus.

In October, Supermicro filed the current plans for the manufacturing and office complex., designed by Arc Tec. Pacific Gas & Electric Co. will deliver the campus’ energy requirements, PG&E Vice President Teresa Alvarado said in prepared remarks.

Silicon Valley’s supply-restrained industrial market

Silicon Valley’s industrial pipeline had just 2 million square feet under construction as of December, according to a report by CBRE. The market’s vacancy rate stood at 3.3 percent at the end of 2024, tightening 30 basis points year-over-year.

With no industrial deliveries during 2024’s last quarter, the market is undergoing supply challenges, the same source shows. AI hardware companies drive industrial demand in Silicon Valley as they’re looking for specialized facilities with heavy power. However, only 17.5 percent of the available space in December could provide 4,000 amps or more.

Hines Interests seeks to capitalize on this demand. Last June, the company broke ground on a three-building advanced manufacturing campus in San Jose, which was the largest industrial development in Silicon Valley at the time. Completion is expected this summer.

The post Supermicro Eyes 3 MSF Bay Area Expansion appeared first on Commercial Property Executive.

NVIDIA is expanding its Silicon Valley office holdings. The firm intends to buy from The Sobrato Organization a 500,000-square-foot campus located across the road from its headquarters, according to SiliconValley.com.

NVIDIA has leased the four buildings at 2701, 2711, 2721 and 2731 San Tomas Expressway in Santa Clara since April 2010. The tech company agreed to acquire the assets along with a parking garage at 2741 San Tomas Expressway. The price to be paid was not reported and a closing date was not disclosed.

READ ALSO: Top California Markets for Office Transactions

Completed in 2010, the 19.2-acre campus comprises three-story, 125,000-square-foot buildings with 41,667-square-foot floorplates, according to CommercialEdge. NVIDIA was the sole tenant at the property that’s across from its 2788 San Tomas Expressway corporate offices.

NVIDIA keeps expanding

In May, NVIDIA paid former landlord Preylock Holdings nearly $375 million for several sites also located near its headquarters, according to media reports. That deal included six parcels of land, eight buildings, two parking structures and 2 million square feet of future development rights, the San Francisco Standard reported. Data centers and lab facilities were part of that transaction as well.

In more recent expansion news, the firm leased an office and research building in north San Jose, Calif., from Menlo Equities in December. The 101,600-square-foot property is at 300 Holger Way.

Office sales in the Bay Area

The Bay Area ranked third in the U.S. for office sales volume last year, after Manhattan and Washington, D.C., according to a CommercialEdge report. The market witnessed more than $2.1 billion in transactions year-to-date as of November, with assets changing hands, on average, for $293 per square foot.

In one of the largest deals of the period, Microsoft paid $330 million for a five-building campus in Mountain View, Calif. The sale price equated to $513.2 per square foot.

The post NVIDIA Eyes Bay Area Expansion appeared first on Commercial Property Executive.

San Francisco-based flex office provider Pacific Workplaces will open in February a 13,000-square-foot coworking space on the seventh floor at 84 W. Santa Clara St. in San Jose, Calif.

The new location was initially scheduled for completion by September 2024. This is the company’s second coworking space in Silicon Valley, after opening another location in 2023 in Cupertino, Calif.

Amenities will include 51 private offices, six fully equipped meeting rooms, workstations, private phone booths and flexible desk options, designed by Workplace Studio and suited to elevate the coworking experience.

Other tenants in the building include TMC Financing, Hann Law Firm, Silicon Valley Accounting-Tax, Power Personnel and Innovar Marketing, according to CommercialEdge information.

Completed in 1976, the eight-story property is a Class B, 110,000-square-foot building. Pestana Properties owns the LEED Gold-certified asset, the same source shows. The mid-rise features 13,338-square-foot floorplates, three passenger elevators, 49 car parking spaces and 12,000 square feet of retail. Amenities include a conference center, tenant lounge and fitness center.

The property is in downtown San Jose, across the street from Blue and Green Line light rail stops and within 1 mile from the San Jose Diridon Station. The San Jose Mineta International Airport is some 3 miles northwest. Major thoroughfares in the area include interstates 280, 680 and 880, as well as State Route 87.  

The post Pacific Workplaces to Open Bay Area Location appeared first on Commercial Property Executive.

Bridge Industrial has secured a $117 million construction loan for a four-building, 714,491-square-foot industrial project in San Jose, Calif., according to Santa Clara County records. Bank OZK issued the funds with First American Title Insurance Co. as trustee. The developer expects to complete Bridge Point San Jose in 2025’s fourth quarter.

Bridge acquired the 32.8-acre site for $134 million in 2021, leveraging an $81.2 million acquisition loan from Invesco. Plans at the time called for the demolition of the existing campus prior to constructing the new industrial park.

READ ALSO: CRE Sentiment Index Hits All-Time High

Bridge Point San Jose’s buildings are set to measure 358,180, 202,735, 83,751 and 69,825 square feet. The two larger facilities will have 36-foot clear heights while smaller ones will cap at 32 feet. The park will have a combined 77 dock-high doors—with roughly half featuring mechanical pit-levelers—and six ground-level doors. Truck courts are slated to measure from 185 to 135 feet in depth. Parking will consist of 344 car and 99 trailer spaces in total.

The development is at 2150 Commerce Drive, less than 3 miles from the San Jose Mineta International Airport, as well as roughly 33 and 35 miles southeast of the Oakland and San Francisco international airports, respectively. The Port of San Francisco is about 48 miles northwest.

Bridge Industrial targeting infill assets

Bridge is continuing its strategy of targeting infill industrial assets in supply-constrained core markets ripe for redevelopment or capital improvements.

In July, the company kicked off the office-to-industrial redevelopment of Ryder System Inc.’s former headquarters, a 248,989-square-foot office building in Medley, Fla. The developer plans to raise a 326,448-square-foot speculative industrial campus in its place. Ryder sold its former head office to Bridge for $42.1 million in March 2023.

Bridge is not the only developer looking to reshape office spaces. Earlier this month, Lincoln Property Co. began to put plans into motion for redeveloping a 218,268-square-foot office building into a 254,000-square-foot industrial project in Tempe, Ariz., by purchasing the 16.3-acre site upon which the office asset rises for $18.3 million.

Bay Area industrial assets priciest nationwide

The Bay Area’s industrial investment volume reached $2.7 billion year-to-date through September, securing the second spot nationwide—behind Dallas-Fort Worth—according to a recent CommercialEdge report. The market took the lead nationwide for sale prices, with assets trading at an average of $476 per square foot through September, more than triple the $130 national figure.

The overall vacancy rate in the Bay Area stood at 7.5 percent at the end of the third quarter, 50 basis points above the national average. The supply-constrained market’s pipeline still had 3.5 million square feet under construction as of September, although this was significantly behind other Western regions, such as Phoenix (33.8 million), the Inland Empire (10.2 million) and Denver (7.6 million), the same source shows.

In July, Hines secured $120.3 million for the construction of a 636,000-square-foot industrial project in San Jose. Edenvale Industrial Park is slated for completion in 2025.

The post Bridge Industrial Lands $117M for Bay Area Project appeared first on Commercial Property Executive.

In the second-largest deal of its kind in the U.S. to date, Jay Paul Co. has obtained $220 million in C-PACE financing for 200 Park Ave., a 965,000-square-foot office building in San Jose, Calif. Nuveen Green Capital provided the financing in a JLL-brokered deal that brought NGC’s total originations volume to more than $3 billion.

The borrower used the funds to recapitalize the building’s sustainability and resiliency measures, as well as refinance existing debt. In October 2021, Jay Paul took out a $350 million construction loan originated by JPMorgan Chase, according to CommercialEdge information.

The 19-story building, the tallest in downtown San Jose, came online last year. The LEED Gold-certified property features floorplates averaging 65,000 square feet, 16 passenger elevators and about 2,900 car parking spaces.

READ ALSO: C-PACE Is Helping Borrowers ‘Optimize’ the Capital Stack

Common-area amenities also include a 20,500-square-foot fitness center, 24,300 square feet of outdoor terraces and EV charging stations. The building has multiple sustainable features, including solar PV arrays, high efficiency lighting and insulated high performance envelope.

The transit-oriented property is close to a host of dining and retail options. San Jose Mineta International Airport is some 3 miles northwest.

JLL Capital Market’s Debt Advisory team representing the borrower comprised Director Matt Cimino and Senior Managing Director Bruce Ganong.

C-PACE loans pick up pace

The deal is part of a larger ongoing trend, as more and more investors and developers turn to C-PACE financing. According to PACENation, this type of loans involving commercial projects totaled nearly $7.2 billion at the end of December 2023.

Earlier this fall, Carlyle committed $1 billion to North Bridge ESG LLC to facilitate the firm’s origination of C-PACE loans. The partnership, reportedly designed to allow North Bridge to meet changing market demands on a broader scale, was Carlyle’s largest commitment to C-PACE at the time.

The post Jay Paul Co. Lands $220M C-PACE Loan for Bay Area Property appeared first on Commercial Property Executive.

NBIM acquired the majority stake in a two-building, 133,449-square-foot office campus in Menlo Park, Calif., on the most expensive street for office space in the U.S. The fund paid $217 million, or $1,632 per square foot, for its 97.7 percent ownership interest in 2882-2884 Sand Hill Road, valuing the property at $222 million.

NBIM bought the Silicon Valley asset in partnership with DivcoWest, from Clarion Partners and Invesco Real Estate. According to the sovereign fund, the property is unencumbered by debt and there was no financing involved in the transaction.

READ ALSO: Top California Markets for Office Transactions

A subsidiary of DivcoWest, which acquired the remaining 2.3 percent interest in the office campus, will perform the asset management for the property on behalf of the NBIM-DivcoWest joint venture. DivcoWest also owns three office campuses on Sand Hill Road known as The Sand Hill Collection, totaling 570,000 square feet among 22 buildings.

Clarion Partners had owned the office property since June 2006, when it acquired the asset also known as Sand Hill Commons from The Courson Co. for $138.8 million, or $1,044 per square foot. Eight years later, Invesco acquired a 49 percent ownership stake in the campus for $117.6 million. Courson still maintains office space at the property, according to CommercialEdge.

Prestigious location

Located in the Redwood City submarket of San Francisco, the property came online in 1964. In its most recent report released in April, JLL ranked Sand Hill Road in Menlo Park as the nation’s most expensive street for office space, with rents averaging $167.74 per square foot. Sand Hill Road is considered the “epicenter for the rapidly growing AI industry” and is home to some of the top venture capital and private equity firms which have been active in 2024, driven largely by funding for generative AI companies, the report showed.

Another Silicon Valley thoroughfare is on JLL’s top five—University Avenue in Palo Alto, Calif., occupies fourth place, with rents averaging $109.04 per square foot. Other top expensive streets for office properties are 34th Street, Hudson Yards in Manhattan; Royal Palm Way in Palm Beach, Fla., and Greenwich Avenue in Greenwich, Conn.

The office campus features floorplates averaging 66,500 square feet and some 530 parking spaces. Firms leasing space at the two-story property include Patient Square Capital, which occupies 24,754 square feet, CommercialEdge reported. Other tenants include Lightstone Ventures and GE Ventures, among others.

More NBIM investments

Meanwhile, on the East Coast, NBIM acquired a 45 percent interest in 290 Binney St., a life science development in Cambridge, Mass., from BXP in March. The 16-story, 570,000-square-foot laboratory/life science property will be fully occupied by AstraZeneca when it’s completed in April 2026.

BXP is retaining 55 percent interest in two joint ventures with NBIM that also include 300 Binney St., which is also fully preleased. NBIM’s total investment in both assets totals about $746.4 million. 300 Binney St. is undergoing a complete renovation and will have 240,000 square feet of lab and life science space when it is completed next year.

NBIM also has a presence in Washington, D.C. The fund owns District Center, a Class A, 850,000-square-foot office building at 555 12th St. NW, in partnership with MetLife Investment Management. The joint venture had acquired the building in 2014 for $505 million, according to CommercialEdge.

The post Norges Bank Invests $217M in Bay Area Office Campus appeared first on Commercial Property Executive.

Located in the heart of Silicon Valley, Berkeley Space Center is set to capitalize on its proximity to leading tech companies, venture capital and research institutions, and provide an ecosystem for innovation in areas such as robotics, artificial intelligence, space sciences and aerospace engineering.

Commercial Property Executive asked SKS Partners Director of Development Tim Smith to talk about this transformative project and how the increased interest in space-focused projects is fueling the development of new, highly specialized real estate projects in the Silicon Valley and around the country.

What determined you to embark on the Berkeley Space Center at NASA Research Park project? How did it all begin?

Smith: Berkeley Space Center at NASA Research Park is set to become a hub of innovation where tomorrow’s breakthroughs are identified, incubated and launched. This $2 billion endeavor seeks to create a constellation of innovation, bringing together leaders from diverse fields—from aeronautics and quantum computing to climate studies and social sciences—to collaborate and revolutionize entire industries.

The vision for Berkeley Space Center first came about over two decades ago, when the National Aeronautics and Space Administration set aside a parcel on its Silicon Valley site for academic and research purposes. Fast forward to 2019, when the University of California, Berkeley, announced its plan to team up with NASA Ames Research Center to transform part of Moffett Field, a former federal airfield, into a dynamic mixed-use, multidisciplinary research center. In 2022, SKS Partners joined forces with UC Berkeley and by 2023, we had officially kicked off the process of redeveloping the 36.2-acre site into a state-of-the-art advanced innovation hub. 

From day one, SKS Partners saw Berkeley Space Center as a once-in-a-generation opportunity to rethink how large-scale developments are designed, built and managed. This isn’t just a ground-up project—we’ve had the opportunity to start ‘from the underground up,’ and create a living lab that embodies the latest in sustainable design and construction practices, which are at the core of what we do best. Additionally, several staff members at SKS Partners had been exposed to the project site through their past work, further boosting our confidence in delivering on such a complex location.  

READ ALSO: Meta’s Bay Area Mega-Development Moves Forward

How has the market responded to the project so far? How is it progressing?

Smith: Berkeley Space Center has received overwhelmingly positive feedback from key stakeholders and the overall market, and we’re eager to continue pursuing entitlements and sharing project updates as they become available. Even before a shovel has hit the ground, we’ve had over 100 expressions of leasing interest, emphasizing the project’s unique and unparalleled location—a fact that the marketplace clearly recognizes.

This summer, the joint venture took a significant step forward by issuing a Notice of Preparation and Notice of Intent, marking the official start of environmental analyses for the proposed project. As we await the results, we’re considering two build alternatives for the project: one entailing the construction of 1.4 million square feet of space, and the other for 2.3 million square feet, pending the city’s approval. Both alternatives share the same general site layout and would bring tremendous value to Northern California.

With the 1.4 million-square-foot build, Berkeley Space Center will create a dynamic environment, support cutting-edge research and attract a diverse range of tenants. On the other hand, a 2.3 million-square-foot development would take these benefits to the next level, providing almost 1 million additional square feet.

We also recognize that we have one opportunity now to secure approvals to build this additional square footage and given the 10- to 15-year planned buildout timeline, we have confidence that there will be market demand for the space we are creating at Berkeley Space Center.

You mentioned receiving over 100 leasing inquiries so far. What type of companies are showing interest, and what does this interest indicate about the project’s potential?

Smith: In less than a year, we’ve received interest from a diverse range of organizations spanning numerous sectors. Berkeley Space Center is located at Moffett Field, which has long been a hotspot for air and spacecraft innovation, so naturally, aerospace companies make up a significant portion of tenant interest. This interest further underscores the value of specialized space in Northern California for those in the aerospace industry. 

We’ve also received interest from companies in newer, high-tech industries such as climate tech. With California’s robust climate initiatives driving demand for innovative solutions, there’s been a notable amount of activity from companies in the industry. Similarly, vertical taxis, extreme environmental survival and artificial intelligence firms are also eager to explore tenancy opportunities.

Another significant share of interest is from organizations looking to create partnerships with UC Berkeley. These R&D relationships constitute another robust pipeline of prospective tenants—one made all the more powerful because of a shared mission. This commonality among prospective tenants, UC Berkeley and NASA Ames Research Center will be a key driver to the success of Berkeley Space Center.  

How is the project designed to adapt to future trends in biotech, life science and R&D?

Smith: Berkeley Space Center’s master plan is centered around operational sustainability, with flexible Class A office and R&D spaces that include specialized areas like wet and dry labs. This adaptable design coincides with a long-term perspective allowing for quick reconfiguration, ensuring the facility can easily accommodate the evolving needs of different research disciplines. The site will also feature conference spaces, academic spaces and retail amenities, giving tenants easy access to a broader range of everyday resources.

Further positioning it at the forefront of long-term, sustainable development, Berkeley Space Center embodies transformational, regenerative design. The project will enhance the site’s existing ecosystem while also promoting a deeper connection between humans and the spaces they inhabit. With nearly 18 acres of open space—including a network of landscaped promenades and a pedestrian-friendly, car-free zone dubbed the Central Green—the development supports collaboration and the cross-pollination of ideas, and creates a versatile environment for community gatherings, activations and exhibitions. 

What are your long-term goals for the project, and how do you see it evolving over the next decade?

Smith: The long-term vision for Berkeley Space Center is to set a high standard for sustainable development and innovation. To achieve this, Berkeley Space Center will serve as a ‘living laboratory,’ implementing the latest in regenerative infrastructure that addresses today’s needs while anticipating tomorrow’s demands. Drawing from SKS Partners’ expertise in innovative, sustainable and enduring real estate development, this includes utilizing advanced infrastructure such as low-carbon materials and renewable energy sources. We’re inspired by and will support the State of California’s goal to achieve net zero carbon emissions by 2045, which is well within the lifecycle of the buildings we’re planning.

Berkeley Space Center will also feature onsite stormwater treatment systems and the use of recycled water, pollution-free mobility options and various techniques to restore groundwater. Our unique ‘underground up’ design approach—which extends beyond traditional LEED standards and focuses on long-term sustainability—further enables us to push the boundaries of what’s possible in development. 

Looking at new standards of innovation, we plan to leverage the collective power of academia, private industry and government. By bringing together the top minds within these sectors, our goal is for Berkeley Space Center to act as a constellation of innovation where diverse leaders can collaborate to transform ideas into revolutionary products and services that address the challenges and opportunities of today and tomorrow. 

How will the Berkeley Space Center align with the broader innovation ecosystem in Silicon Valley? What role do you see it playing in the region’s future?

Smith: Silicon Valley is rightfully known globally as the heart of innovation and technology, and Moffett Field is where much of that groundbreaking work began. From microchips to personal computers, the Internet as we know it, to cell phones and their apps, life-changing technological revolutions have started or been significantly advanced in Silicon Valley ever since the establishment of NASA Ames in 1939. Now home to tech giants like Apple, Google and Meta, a vibrant startup culture, an incredible talent pool and numerous world-renowned research institutions, Silicon Valley is where big ideas come to life. 

As new industries and economies emerge, Northern California’s history as the leader in global innovation is getting a fresh chapter—and Berkeley Space Center will be there to help write it. By redeveloping this site, we’re breathing new life into the area and expanding the existing innovation ecosystem. Berkeley Space Center will become the birthplace of tomorrow’s breakthroughs and carry the torch in continuing the region’s legacy of shaping the future.

How do you expect the increased interest and investment in space travel and exploration to impact real estate development in the years to come?

Smith: Momentum from the global space economy—which has grown from $280 billion in 2010 to over $447 billion in 2023 and is projected to reach nearly $2 trillion by 2035—is driving demand for specialized R&D spaces. While California has historically been a hub for this activity, it is transforming real estate development on a national scale. 

Just as the life sciences boom led to a surge in lab and R&D space, real estate is poised for a similar trajectory led by the space industry. As the interest and investment in space travel and exploration continue to flourish and grow, so will the demand for physical space that caters to the industry’s specific needs. With this, we’ll likely see an uptick in both ground-up and redevelopment opportunities across the country.

The post How NASA, SKS and UCB Are Launching the Future of Space-Focused Real Estate appeared first on Commercial Property Executive.

The partnership between Arc Capital Partners and Milan Capital Management has purchased The Plant, a 367,000-square-foot super-regional retail center in San Jose, Calif.

The property traded for $95 million, as reported by Silicon Valley. Oceanview Life provided a $71.8 million acquisition loan, according to CommercialEdge information.

The Plant’s previous owner was Global Net Lease, which merged in 2023 with The Necessity Retail REIT, which had purchased the asset in 2022. GNL has recently subdivided the property into two parts: The Plant, which recently traded, and a separate property that remains under the company’s ownership and has significant value. The property is leased to Home Depot, which has a long-term lease.

Completed in 2008, The Plant encompasses 17 buildings across some 45 acres. Anchored by Best Buy, Ulta Beauty and Ross Dress for Less and shadow-anchored by Target and Home Depot, the super-regional shopping center also has a diverse mix of retailers such as Grico, McDonald’s, Game Stop, Applebee’s, Starbucks and Petsmart, among others. The new owners are actively engaged in preleasing negotiations to fill major vacancies.

READ ALSO: First-Half Investor Darlings

Located at 1 Curtner Ave., at the corner of Curtner Avenue and Monterey Street, the property is 3 miles from downtown San Jose. There are nearly 87,000 households within a 3-mile radius, having a median income of $104,299, according to Atlantic Retail.

San Jose’s retail scene

Driven by a strong economy and diverse community, San Jose’s retail market remains resilient. The vacancy rate clocked in at 4.9 percent, increasing by 30 basis points year-over-year, according to a second-quarter 2024 report by Institutional Property Advisors. A total of 80,200 square feet of retail space was under construction in the metro at the end of June, while the average asking rent reached $36 per square foot.

T&T Supermarket Inc.—the largest Asian food retailer in Canada—will open its first California location in San Jose in the fall of next year. The 55,000-square-foot store will operate inside Federal Realty’s 645,000-square-foot Westgate Center.

The post Bay Area Retail Center Trades for $95M appeared first on Commercial Property Executive.

Federal Realty Investment Trust has signed a 23,680-square-foot lease at its One Santana West, a 375,000-square-foot office building in San Jose, Calif. Database platform Couchbase will establish its new headquarters at the Class A office property’s ground floor area, with moving in scheduled for the first quarter of next year. Newmark negotiated on behalf of the landlord.

One Santana West is part of Federal Realty Investment Trust’s Santana Row, a mixed-use 2.4 million-square-foot development. The project is set to include more than 1 million square feet of Class A office space, along with a boutique hotel, 615 rental homes, 219 condo units, a movie theater and retail space.

READ ALSO: Top Destinations for Corporate Relocations

Designed by Studios Architecture, One Santana West came online in 2022 at 3155 Olsen Drive, at the corner of Winchester Boulevard and Olin Avenue. The eight-story office building features floorplates of up to 53,000 square feet, 13-foot clear heights, covered parking spots and EV charging stations.

Amenities include an on-site café, a fitness studio with private showers, a common-area lobby, a conference center, multiple terraces on the second, seventh and eighth floors, an outdoor plaza, a food court and a golf simulator.

The LEED Gold-certified property also has a five-story parking garage with 1,750 spaces to be shared with the upcoming Two Santana West, an office building expected to comprise 374,100 square feet. Its tenant roster features Acrisure, which occupies 28,626 square feet, and London-based PwC U.S. Group LLP, which signed a 141,000-square-foot lease in April.

One Santana West occupies almost 5 acres north of Interstate 280. The location is 5 miles from downtown San Jose and 6 miles from San Jose Mineta International Airport.

Newmark’s team of Executive Managing Directors Todd Shaffer, Tracey Solari and Randy Gabrielson represented the landlord and are in charge of leasing the property.

High office vacancy rates in the West

The Bay Area’s office vacancy rate reached 20.8 percent in July, showing a 280-basis-point rise over the year, according to a recent CommercialEdge report. However, the area performed better than Denver (22.1 percent), Seattle (23.2 percent) and San Francisco, which recorded the highest vacancy rate in the West (25.4 percent).

One of the more significant deals closed in the San Jose metro year-to-date through July was the Intermolecular’s lease extension. In March, the tenant renewed its 146,159-square-foot commitment at Cannae Partners and Blue Vista Management’s 3011 N. First St., a property is has occupied for more than a decade.

The post Federal Realty Inks HQ Lease at Bay Area Campus appeared first on Commercial Property Executive.

T&T Supermarket Inc.—the largest Asian food retailer in Canada—will open its first California store in the fall of next year. The 55,000-square-foot store is set to debut at a former Walmart location inside Federal Realty’s 645,000-square-foot Westgate Center in San Jose, Calif.

The launch will mark T&T’s third store in the U.S. Its first location is set to open this summer in Bellevue, Wash., inside Kimco Realty’s Marketplace at Factoria. The brand’s second store is slated to launch in the summer of 2025 in Lynwood, Wash.

T&T’s California store will feature a barbecue counter, noodle station, dim sum and street food section, made-to-order Chinese crepe station, as well as an in-store bakery, to name a few. The store will also trade its Private Label products.

READ ALSO: Retail Owners Gain Leverage: Report

Federal Realty purchased Westgate Center for $149.4 million in 2004, CommercialEdge data shows. The tenant roster includes Ross Dress for Less, Target, T.J. Maxx, Nike, Nordstrom Rack and Old Navy.

Located at 1600 Saratoga Ave., Westgate Center is some 4 miles from Interstate 280 and roughly 8 miles from downtown San Jose. Within a 3-mile radius, there are 76,225 households with an average income of $208,496, according to Federal Realty.

Loblaw’s steps to reinforce its U.S. presence

T&T started out in 1993 in Vancouver and now operates more than 33 stores throughout Columbia, Alberta, Ontario and Quebec. Loblaw Cos. purchased the company for roughly $225 million in 2009.

Loblaw sold all its National Tea Co. U.S. stores in 1995 and its last Joe Fresh U.S. store closed in 2016, although the brand is still available online. However, the company is slated to strengthen its U.S. presence with a brick-and-mortar location once T&T’s first store launches in Washington.

The post Canada’s Largest Asian Food Retailer Expands to California appeared first on Commercial Property Executive.

CIP Real Estate has acquired Tully Business Center, a small-bay, 143,221-square-foot industrial park in San Jose, Calif. Dollinger Properties sold the asset for $40 million. The Colliers team of Andy Zighelboim and Kevin Moul represented both parties.

CIP owns other properties nearby as well, including Cabot Business Park in Hayward, Calif., and Bayside Tech Park in Fremont, Calif.

And, barely a year ago, CIP acquired Clipper Court Commerce Center, a 14-building, a 352,280-square-foot industrial park in Fremont from BKM Capital Partners. J.P. Morgan Asset Management provided acquisition financing for the $103.5 million deal that was brokered by Newmark.

Tully Business Center, up close

The Class B property came online in 1987, according to CommercialEdge information. The campus comprises six single-story buildings totaling 81 light/flex industrial and R&D units ranging from 500 to 5,000 square feet. Each building has grade-level loading.

The 11-acre Tully Business Center is at 1310-1460 Tully Road, close to the 101, 280, 680 and 880 freeways, providing easy access to the Greater Bay Area.

The asset was 92 percent leased at the time of sale. Its largest tenant is AM&S Inc., an aerospace machine manufacturing company. CIP plans to invest more than $750,000 in property improvements, including project rebranding and the immediate upgrade of all vacant suites into “ready-to-lease” condition.

After advising earlier this year on the disposition of a 1.7 million-square-foot multi-state light industrial portfolio, part of which is in San Jose, Cushman & Wakefield commented that the small-bay niche remains in high demand for its ability to accommodate a variety of user types and hence sees continuing demand from investors.

The post CIP Real Estate Pays $40M for San Jose Industrial Asset appeared first on Commercial Property Executive.

Pacific Workplaces will soon open a new coworking location totaling 12,965 square feet in downtown San Jose, Calif. The flexible office provider leased the space at Pestana Properties’ 84 W. Santa Clara St., a 110,000-square-foot, eight-story office building.

Pacific Workplaces’ new location includes 51 private offices, flex desks, dedicated workstations, virtual offices and six fully equipped meeting rooms designed by Workplace Studio.

The new coworking location is scheduled to be completed by the end of this September. The deal marks Pacific Workplaces’ second location in the Silicon Valley area. In late 2023, the company secured a 14,928-square-foot new location in Cupertino, Calif., while also relocating within the same city.

Other tenants leasing space at the office property include Innovar Marketing, Green Bay Construction Co., TMC Financing and HGA Architects and Engineers, among others, according to CommercialEdge. The same source shows that a Cushman & Wakefield team is the assigned leasing broker for the office building, led by Executive Director Bob Simpson and Director Rob Souza.

The eight-story property dates back to 1976 and features 13,338-square-foot floor plates, three passenger elevators, 12,000 square feet of retail space and 49 parking spots. The ownership completed a multi-year improvement strategy, resulting in hospitality-infused amenities and finishes, such as a conference center, a fitness center, a tenant lounge, secured underground parking spaces and easy access to nearby parking structures.

Coworking deals in the area

84 W. Santa Clara St. is close to multiple bus stops and to San Pedro Square, being 4 miles from San Jose Mineta International Airport, 13 miles from Saratoga, Calif., 34 miles from San Francisco International Airport and within 48 miles of downtown San Francisco.

Recent flexible workplace providers that expanded with new locations in California includes Industrious, that signed a 19,000-square-foot lease in Century City, Calif. The company’s 10-year deal is at Watt Cos.’ North Tower of Watt Plaza, a 476,120-square-foot office building rising 23 stories. In the same period, the flex office provider also opened another location at Westwood Center, a 333,830-square-foot property in Westwood, Calif.

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Hines has obtained $120.3 million for the development of Edenvale Industrial Park, a 636,000-square-foot project in San Jose, Calif. Bank OZK provided the senior portion of the financing—$99.8 million, according to CommercialEdge information—while Affinius Capital originated the rest of the sum. Kevin MacKenzie and Chris Gandy of JLL arranged the transaction.

Edenvale Industrial Park is currently the largest industrial project under construction in Silicon Valley. Hines broke ground on it last month and completion is expected in the third quarter of 2025.

READ ALSO: The Inland Empire’s Industrial Strength Doesn’t Wane

Designed by HPA Architecture to achieve a LEED Silver certification, the campus is rising just off Highway 101 at 550-650 Piercy Road and comprises three buildings each with 36-foot-clear heights, dock/grade loading, LED warehouse lighting and a minimum of 4,000 amps of power. CBRE Vice Chairman Chip Sutherland and Executive Vice President Brian Matteoni spearhead leasing at the property.

The 45-acre site is within the South San Jose submarket, 15 miles from San Jose Mineta International Airport. The location is also 27 miles from Fremont, Calif., and 58 miles from San Francisco.

The complex will contribute to a supply-constrained industrial node that lacks competitive, new product. The property can service warehouse and advanced manufacturing tenants and is strategically positioned to provide convenient access to Silicon Valley and the greater Bay Area.

Low on development, high on rents

The Bay Area had more than 4.1 million square feet in the development pipeline as of May, according to a recent CommercialEdge industrial report. The amount represents 1.4 percent of total stock, 50 basis points below the national average of 1.9 percent.

Meanwhile, the market’s average rent clocked in at $13.29, one of the largest in the U.S. The Bay Area ranked third after Orange County ($15.49) and Los Angeles ($14.57).

The post Hines Obtains $120M for Bay Area Industrial Project appeared first on Commercial Property Executive.

Hines Interests has started construction on Edenvale Industrial Park in San Jose, Calif. The three-building advanced manufacturing campus is set to encompass 635,833 square feet.

CBRE has been appointed as exclusive leasing and marketing agent. HPA Architecture provided the designs.

According to CBRE, this is currently the largest industrial development in Silicon Valley, set to come online in June 2025.

READ ALSO: Boost in U.S. Manufacturing Spurs Construction Boom

Designed to achieve a LEED Silver certification, Edenvale Industrial Park is taking shape at 550 and 650 Piercy Road. Each building is set to have 36-foot clear heights, ESFR sprinkler systems, dock and grade loading configuration, 4,000 amps of power, LED warehouse lighting, office suites, vehicle parking and 130-foot truck courts.

The 45-acre project is within the South San Jose submarket, just off State Highway 101 and 15 miles from San Jose Mineta International Airport. The location is also 27 miles from Fremont, Calif., and within 58 miles of San Francisco.

The CBRE team marketing and leasing the project includes Vice Chairman Chip Sutherland and Executive Vice President Brian Matteoni.

The need for large industrial space

Driven by the ongoing growth of cloud computing, server, smart automobile solutions and AI companies, demand for Class A space larger than 50,000 square feet is high in Silicon Valley. However, supply is tight, according to CBRE research. As of the first quarter of this year, there were 1.2 million square feet of industrial space under construction, amounting to only 1 percent of existing stock.

Last month, CBRE Investment Management, in a joint venture with Trammell Crow Co., completed Cochrane Technology Center in Morgan Hill, Calif. At the time, the 500,000-square-foot property was the largest speculative industrial campus available in the region.

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PMB and Santa Clara Valley Healthcare have topped out Valley Health Center San Jose, a 10-story, 230,000-square-foot medical office building in San Jose, Calif. Completion is expected in late 2025.

The developers broke ground on the project in October and are aiming for LEED Silver certification. WRNS Studio and Boulder Associates designed the medical office development, while South Bay Construction serves as general contractor. 

As for project financing, Capital One provided the partnership with a $205.3 million loan in 2022, according to CommercialEdge data. Harrison Street is the equity partner.

Located at 1410 S. Bascom Ave., near VTA’s Bascom Station, VHC San Jose is part of a transit-oriented, mixed-use development that also includes a 590-unit multifamily component. PMB and Harrison Street Real Estate Capital acquired the master plan’s office component in June 2022. The Maxwell, the residential portion of the development, is also under construction.

In line with San Jose’s Urban Village strategy

VHC San Jose is a signature project of the city’s Urban Village strategy that creates complete neighborhoods where daily needs, including medical care, can be met in close proximity to where people live. It will be the 10th local Valley Health Center servicing Santa Clara County, the sixth largest county in California with a population of 1.9 million residents.

The health center will have 16 departments including adult medicine, OB/GYN subspecialties, adult urgent care, behavioral health, dental, diagnostic imaging, facility support services, maternal and fetal medicine, patient support services, pediatric primary care, pediatric subspecialties and pediatric urgent care, among others.

The 2.4-acre triangular-shaped site is at the light rail stop along Southeast Expressway, north of Los Gatos Creek. The development is within walking distance of more than 11,000 households, with downtown San Jose about 5 miles away.

PMB’s medical office projects

PMB has developed more than 130 health-care facilities across the U.S., totaling approximately 6 million square feet. The firm owns and manages 70 medical facilities comprising more than 5.2 million square feet and works with health systems, hospitals, medical groups, specialty providers, academic medical centers and senior living providers.

In April, PMB, in partnership with Providence St. Joseph Hospital, opened Helen Caloggero Women’s and Family Center, a 137,000-square-foot medical office building in Orange, Calif. The property is on the Providence St. Joseph Hospital campus and provides such services as OB/GYN, a maternity wellness center, maternal mental health, pelvic health and rehab.

Elsewhere in California, PMB and Sutter Health began construction of a four-story, 100,000-square-foot medical office building in the Sacramento area last June. The facility at 7 Medical Plaza Drive is slated to open this summer.

The post PMB Tops Out 230 KSF Bay Area MOB appeared first on Commercial Property Executive.

A joint venture between Hines Interests and Oaktree Capital Management has broken ground on Milmont Industrial, a 267,000-square-foot advanced manufacturing and distribution facility in Fremont, Calif. Completion is expected next year.

First Citizens Bank & Trust Co. issued a construction note of $54.2 million in 2023, public records show. CBRE Executive Vice Presidents Brad Zampa and Mike Walker, alongside Senior Director Megan Woodring, secured the financing.

The partnership purchased the infill, 14-acre unentitled industrial site for $47 million in 2021. Three buildings, which dated back to the 1980s, were demolished to make room for the new structure.

READ ALSO: Emerging Industrial Markets in the US

Upon delivery, the facility will feature 36-foot clear heights and flexible design. CBRE will handle the marketing and leasing efforts.

Located 10 miles north of downtown San Jose, Calif., at 49000 Milmont Drive, the site is part of the Warm Springs District—an area known for its concentration of companies in the semiconductor, tech, EV and life science industries. The property is roughly 1 mile from interstates 880 and 680.

Bay Area’s robust industrial pipeline

Bay Area’s supply pipeline totaled nearly 4.4 million square feet of industrial space—accounting for 1.5 percent of stock—as of March, according to a recent CommercialEdge report.

One large future addition to this pipeline will pertain to Related Cos.’ $8 billion, 9.2 million-square-foot mixed-use development in Santa Clara, Calif. The mega project was initially planned and approved for 5 million square feet of office space and 1,680 multifamily units, together with 700 hotel keys. However, Related recently applied with the city to replace most of the office space with up to 1.6 million square feet of light industrial and manufacturing space.

The post Hines JV Launches Bay Area Project appeared first on Commercial Property Executive.

A joint venture between Trammell Crow Co. and CBRE Investment Management has completed construction of Cochrane Technology Center, a five-building, 500,000-square-foot speculative industrial campus located in Morgan Hill, Calif., in the southern portion of Silicon Valley. The property is the largest development of its kind in the area, spanning 30 acres.

This marks the partners’ second outing in Morgan Hill. The firms previously collaborated on the development of Butterfield 5 Technology Park, a 410,000-square-foot project that Invesco Real Estate acquired in June 2022. Trammell Crow also delivered the first phase of Fairfield Industrial Center, a 205,223-square-foot facility located northeast of San Francisco in Fairfield, Calif. 

Construction of Cochrane Technology Center began in 2022, four years after the partners purchased the site. HPA designed the park and Kier + Wright provided civil engineering services, while Millie and Severson served as the general contractor. CBRE is overseeing leasing.

Specs in the tech capital

The park’s five buildings range in size from 73,668 square feet to 138,698 square feet. Building A is the largest of the five and includes an exterior with 14 dock-high and two grade-level loading doors, which feed into an interior with 32-foot clear heights. Building B encompasses 92,841 square feet and features 32-foot ceilings, nine dock-high and two grade-level loading doors.

Building C spans 122,101 square feet and provides the same clear heights as A and B, as well as 12 dock-high and two grade-level loading doors. Building D, the park’s smallest, has 10 loading doors, 8 dock-high doors and two grade-level doors. Building E, clocks in at 74,006 square feet and both D and E  have 28-foot clear heights.

Each building in Cochrane Technology center has 4,000 amps of power, while the campus has a total of 969 parking spaces. Additionally, the buildings include speculative office space with conference rooms.

READ ALSO: Top 5 Metros for Industrial Deliveries

Many of Cochrane Technology Center’s neighbors are in the tech sector, such as include Anritsu, Terrapin Systems, Aragen Bioscience and semiconductor supplier NxEdge. The park is also within one mile of Cochrane Commons and Madrone Village, two shopping centers that offer a variety of retail and dining options.

Located at 1840 Cochrane Road, the campus lies within 1 mile of U.S. Route 101 and is an 18-mile drive from San Jose. San Francisco is 60 miles northwest.

Trammell Crow’s tech focus

Trammell Crow continues to be active in deals tied in some way to technology, whether in life science projects or investment in markets seeing growth by tech companies. Last week, the firm wrapped the first phase of Science Square, an 18-acre, 368,258-square-foot life science project in Atlanta that it is developing in partnership with the Georgia Institute of Technology.

In February, the firm topped out on Hyde Park Labs, a 302,388-square laboratory project in Chicago’s South Side.

The post Trammell Crow, CBRE IM Cap Off Bay Area Industrial Campus appeared first on Commercial Property Executive.

PGIM Real Estate and Equinix Inc. have entered a $600 million joint venture for the development and operation of SV12x, a San Jose, Calif., data center. Upon completion, the facility will be the first xScale data center in the nation.

The two-story asset will be built in two phases. SV12x is anticipated to provide more than 28 megawatts of power capacity once completed.

Situated in the Equinix Great Oaks data center campus, the facility will be developed alongside four already operational Equinix data centers.

READ ALSO: How AI is Boosting the Data Center Market

Downtown San Jose is approximately 11 miles from the up-and-coming facility. The San Jose Mineta International Airport is within some 15 miles.

Phase one of SV12x is scheduled for completion in the second quarter of this year. PGIM Real Estate will own an 80 percent equity interest in the joint venture, while Equinix will control the remaining 20 percent.

A larger demand for data centers

Upon delivery the new xScale project will bring Equinix’s global xScale data center portfolio to more than $8 billion and 725 megawatts of power.

This project marks the second joint venture that Equinix and PGIM Real Estate have embarked on together. With a total commitment of $575 million, the first joint venture was formed in 2021, for the development of two xScale data centers in Sydney, Australia. In 2022, the first building, Sy9x, was completed.

As artificial intelligence explodes, demand for data centers is seeing a significant increase. As such, data center REIT equities have been witnessing an extremely strong performance. Those with global operating scale, such as Equinix, are especially poised to benefit from strong secular growth.

The post PGIM Real Estate, Equinix Enter $600M JV appeared first on Commercial Property Executive.

London-based PwC US Group LLP has signed a long-term lease for 141,000 square feet at the One Santana West office building in San Jose, Calif. The tenant plans to move into its new offices in early 2026. This new commitment brought the eight-story building to 50 percent occupancy.

The leasing negotiations began in September as PwC decided to relocate from 488 S. Almaden Blvd. in downtown San Jose, according to The Real Deal. At the time, the firm had also shown interest in an office property in downtown Sunnyvale, Calif.

Part of the Santana West office campus

One Santana West is part of a 1 million-square-foot office campus developed by Federal Realty Investment Trust. The REIT broke ground on the first phase of the project in 2019 and topped out two years later. The 376,000-square-foot building came online in 2022.

The development team included Devcon Construction as general contractor, Studios Architecture as designer and Newmark as leasing agent for the project.

READ ALSO: New in Office Design: Creating the Ultimate Employee Experience

The LEED Gold-certified building features floorplates up to 52,000 square feet and 13-foot clear ceiling heights. The property has covered parking with 1,571 car parking spots, which is shared with Two Santana West. Amenities include rooftop terraces and gardens, together with a community fitness center and conference center, among others.

Federal Realty Investment Trust landed the first tenant at the property in December 2023, according to the Silicon Valley Business Journal. The Michigan-based financial technology company Acrisure signed a 29,000-square-foot lease to occupy three and a half floors.

One Santana West rises on more than 4 acres at 3155 Olsen Drive, near the intersection of Winchester Boulevard and Olin Avenue. Located across Santana Row’s shopping and dining district, the property has access to interstates 280 and 880 and is less than 7 miles west of downtown San Jose.

High office vacancy in the Bay Area

Despite this new significant office commitment, vacancy is still high in the Bay Area. As of February, the market’s rate increased by 320 basis points over a 12-month period, up to 20.8 percent, a recent CommercialEdge report shows.

As the office sector still faces headwinds, owners and developers search for alternate ways to adjust and reposition their existing or upcoming properties. Earlier this year, Related Cos. filed an application with the City of Santa Clara to change the development plans of an $8 billion, 9.2 million-square-foot project in Silicon Valley that initially included 5 million square feet of corporate office space.

The post Federal Realty Signs 141 KSF Office Tenant appeared first on Commercial Property Executive.

The joint venture of Cannae Partners and Blue Vista Capital Management has secured a long-term lease extension at a 146,159-square-foot R&D building in San Jose, Calif.

The tenant is Intermolecular, a firm that focuses on advanced materials innovation, affiliated with Germany-based science and tech company Merck KGaA. Intermolecular has fully occupied the property for well over a decade and will continue to be its sole tenant. Cushman & Wakefield negotiated on behalf of the landlord, while JLL worked on behalf of the tenant.

The one-story building at 3011 N. First St. includes 28,300 square feet of laboratory space. The asset came online in 1980 and was most recently renovated in 2013, according to CommercialEdge.

The joint venture picked up the Class B property in June 2021 for $28.9 million, the same source reveals. The buyer also assumed the outstanding balance of a CMBS loan from 2015 in the original amount of $21 million, with a maturity date in 2025. The previous owner, Sand Hill Property Co., had planned to replace the asset with a $50 million mixed-use redevelopment, according to the Silicon Valley Business Journal.

READ ALSO: Brokerage Strategies for Older Properties

The 9-acre property is close to multiple bus and light rail stations, close to Interstate 880 and 3 miles from San Jose Mineta International Airport. The location is 6 miles from downtown San Jose, 32 miles from San Francisco International Airport and within 45 miles of downtown San Francisco.

Cushman & Wakefield Vice Chairman Todd Beatty, Executive Vice Chairman Steve Horton and Director Kelly Yoder assisted the landlord during negotiations. Intermolecular was represented by JLL Executive Vice President Bret Yerkovich and Senior Managing Director Grant Dettmer.

Increased office vacancy rates in western U.S.

U.S. office vacancy rates saw a major increase in western markets, a recent CommercialEdge report shows. The Bay Area’s office vacancy clocked in at 20.8 percent, representing a 320-basis-point rise. The region lagged San Francisco (24 percent), Seattle (22.5 percent) and Denver (22.1 percent).

One of the area’s significant office deals signed in late 2023 was Alexandria Real Estate Equities’ 99,557-square-foot long-term lease at The Alexandria Center for Life Science in San Carlos, Calif. The tenant, CARGO Therapeutics, will move into its new lab space at the campus’ 276,945-square-foot Building 2.

The post Cannae Partners, Blue Vista Ink 146 KSF Bay Area Lease Extension appeared first on Commercial Property Executive.

Urban Catalyst has landed financing to recapitalize the land site and pre-construction costs for the Icon/Echo, the mixed-use redevelopment project planned for downtown San Jose, Calif. Gantry provided the $10.5 million bridge loan.

After the demolition of the existing buildings and a parking lot on the approximately 2.1-acre site is complete, Urban Catalyst can get underway on Icon/Echo’s two towers. The developer’s current plans are for a 21-story office tower with street-level retail and a 27-story multifamily residential tower. The two will be connected by a shared podium on floors one through four.

The project will also feature one level of below-grade parking and about 1,000 parking spaces. Construction is scheduled to begin over the next 12 to 24 months.

READ ALSO: Why C-PACE Loans Are at a Record High

Gantry Principals Jeff Wilcox and Robert Slatt, of the firm’s San Francisco production office, represented the borrower in securing the short-term, interest-only financing through a private real estate investment company.

Urban Catalyst will use the financing to recapitalize the project’s land acquisition and entitlement costs while providing additional proceeds to support final technical programming and site preparation, according to a company statement.

Perhaps understandably, the Icon/Echo project has not been racing forward. It was in November 2022 that the San Jose Planning Commission approved the development by unanimous vote.

Still, the transit-oriented project is indeed a major undertaking. Sited at Santa Clara Street at Fourth Street, it’s directly across from San Jose’s city hall and very close to a planned BART station.

According to local media, the architect for both towers is BDE Architecture.

Deliveries vs. layoffs

Another outsized project is planned for San Jose: Berkeley Space Center at NASA Research Park, a $2 billion master-planned innovation hub across 36 acres within NASA’s Ames Research Center. It’s planned to total about 1.4 million square feet of Class A office and R&D space. As of last fall, it was going through the environmental entitlement process, with construction expected to start in 2026.

Silicon Valley’s office market saw overall availability rise from 19.7 percent to 21.2 percent from the third to the fourth quarter of 2023, according to a report from Kidder Mathews. Vacancy too climbed, by a similar amount, following both mass layoffs in the tech sector and continued work-from-home policies.

The post Urban Catalyst Recaps San Jose Mixed-Use Site appeared first on Commercial Property Executive.

Hammes has completed the development of Silicon Valley Surgery Center, a 24,000-square-foot ambulatory facility in Campbell, Calif. The project was a joint venture between Surgery Ventures, powered by HCA Healthcare, and 50 multi-specialty physicians.

The building originally came online in 1983 as a laboratory, CommercialEdge data shows. Hammes acquired the property in 2021 for $10.8 million and led the rezoning process for this adaptive reuse project. Boulder Associates and COBE Construction were also part of the development team.

Hammes also recently completed another medical office property, the 43,000-square-foot Jackson Medical Plaza in McAllen, Texas. The developer partnered with Surgery Ventures, HCA Healthcare and Texas Digestive Specialists for the project.

Addition to the Bay Area inventory

The one-story building features six operating rooms and two procedure rooms. Services provided include surgical specialties such as colon and rectal surgery, gastroenterology, orthopedic surgery, surgery of the hand, plastic and reconstructive surgery and urology, general surgery, otolaryngology and obstetrics and gynecology.

The property occupies 1.9 acres at 2605 S. Winchester Blvd., near the intersection of San Tomas Expressway and U.S. Route 17 and some 8 miles south of downtown San Jose, Calif. Medical centers in the surrounding area include Good Samaritan Hospital, Ueno Center Dental Specialists, Community Medical Center and Carbon Health Urgent & Primary Care Campbell, among others.

The Bay Area had 10 medical office properties in various stages of development as of February, set to add 1.5 million square feet to the existing inventory, according to CommercialEdge research. The largest project currently under construction is a 230,500-square-foot development slated for completion in 2025.

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Developer Sand Hill Property Co. has received city approval for The Rise, a 6.5 million-square-foot redevelopment of the former Vallco Mall in Cupertino, Calif. This version of the project comes following a substantial modification from the initial 2018 proposal, with new architect Kohn Pedersen Fox at the helm.

The project calls for 24 buildings occupying 15 city blocks near Apple Park, and the commercial side includes nearly 2 million square feet of office along with 226,400 square feet of retail space. The office component is expected to occupy three blocks and will be designed with flexible floorplates to accommodate for potential R&D and life sciences tenants. Most of the retail space will be distributed on ground floors designed for customer-serving tenants and small businesses rather than big-box shopping and entertainment.

READ ALSO: Where to Find the Bright Side of Office

The residential component will span nearly 4.4 million square feet and encompass 2,669 units, of which 890 will be designated as affordable in compliance with city requirements, for low- and very low-income residents. This version of the project features an 11.1 percent increase in the number of units, reaching the maximum allowed under the State Density Bonus Law, along with an 11.7 percent reduction in overall square footage from the plan initially approved in 2018. Much of the decrease stems from cuts to the retail component, which originally spanned 485,900 square feet.

The Rise is also slated to comprise more than 13 acres of open space, including recreational parks and pedestrian corridors, as well as two town squares. The parking count for the development totals 9,570 vehicle stalls, along with more than 3,000 bicycle spots. Plans call for several phases across multiple years, with the residential component being prioritized.

Bay Area development keeps up

Located at 10123 N. Wolfe Road, off Interstate 280, the site of The Rise is some 10 miles from downtown San Jose and 9 miles from the San Jose Mineta International Airport. The mixed-use project will also be within walking distance of the Kaiser Permanente Santa Clara Medical Center.

The Bay Area’s office pipeline totaled some 4.5 million square feet as of January, according to a recent CommercialEdge report. In addition, San Francisco proper had some 6.6 million square feet of office under construction.

One sizeable development underway in the Bay Area is Healthpeak Properties’ Vantage, slated for 1.7 million square feet of life science space at full buildout. The project recently received approval of entitlements for its second and third phases. The developer completed the first phase in 2023, which is now 52 percent occupied by Japanese company Astellas Pharma.

The post 6.5 MSF Bay Area Project Gets City Nod appeared first on Commercial Property Executive.

After a decade of planning and approvals, Related Cos. is seeking to change the mix of uses at Related Santa Clara, its $8 billion, 9.2 million-square-foot public-private partnership and megaproject in Silicon Valley. The company now plans to swap out most of the office space for up to 1.6 million square feet of light industrial and advanced manufacturing space.

As originally approved in 2019 by the Santa Clara City Council, the 240-acre LEED-certified, multi-phased, mixed-use project adjacent to Levi’s Stadium was expected to have a city center with commercial office, retail/entertainment including a globally inspired food market, approximately 5 million square feet of corporate office space, 1,680 residential units and 700 hotel guestrooms. About 168 of the apartments will be designated as permanently affordable. The urban village, designed to be a new live-work-play neighborhood built on city-owned land that was previously a golf course and landfill, will also include new roadways and a 30-acre city park.

READ ALSO: Why CREFC Survey Says Things Are Looking Up

However, the Silicon Valley Business Journal reported Related Santa Clara has filed an application with the city to replace about 4 million square feet of office space on the eastern portion of the property with industrial uses. The developer would reportedly incorporate the remaining 2.4 million square feet in the City Center section. That would mean taller buildings in the City Center, according to the Mercury News.

The shift away from a heavy emphasis on new office development comes as Silicon Valley is facing high office vacancy rates of around 22 percent to 23 percent as of late last year. The overall office vacancy rate in Santa Clara was 28.4 percent in the fourth quarter of 2023, according to Cushman & Wakefield. Layoffs in the technology industry have also hit Silicon Valley hard and remote and hybrid work trends have also impacted the office market.

Steve Eimer, an executive vice president at New York-based Related Cos. & co-managing partner of Related Santa Clara, said in a prepared statement the development firm is optimistic this adjustment will allow it to advance construction on the project by focusing on market segments where there is demand. Eimer added that reimagining portions of the projects in ways that better suit the current economic environment has the potential to accelerate economic benefits to the city.

Project history

Further details were not available yesterday and the City of Santa Clara Planning Department did not respond to a request for more information on the project’s status. On the city government website, the project was slated to begin construction in mid-2023 but it has still not started.

In June 2016, Commercial Property Executive reported the project, then estimated to cost $6.5 billion, had received unanimous approval from the Santa Clara City Council after three years of planning. At that time, the Related Santa Clara was to be constructed in multiple phases over a 30-year period. But the report noted some of the later phases, including office campuses, would be built to market demands. Related began the process in April 2013, when it signed an exclusive negotiating agreement with the city.

The public-private partnership with the city is expected to create as many as 10,000 construction jobs and almost $1 billion in wages over the life of its construction and hundreds of union jobs for hospitality workers. Once completed, the entire project is expected to bring up to 25,000 local jobs and nearly $40 million in taxes, fees and lease revenue annually.

Meanwhile, Related California is expected to finish construction of its 684-unit Tasman East residential project located east of the Related Santa Clara site this year. Two towers, which will combine apartments and condominiums with senior and affordable housing, received $690 million in construction financing in August 2022, according to CPE’s sister publication, Multi-Housing News.

The post Related’s $8B Project Swaps 4 MSF of Office for Industrial appeared first on Commercial Property Executive.

JLL Capital Markets arranged the ten-year, fixed-rate loan through RGA Reinsurance Co. Senior Managing Director Bruce Ganong, Director Lillian Roos and Associate Matthew Mingrone worked on behalf of the borrower. At the time of the sale, the retail center was 100 percent leased.

The 10 tenants at Almaden Safeway Center make up 95 percent of the GLA and have a weighted average lease term of 7.2 years. Anchored by Safeway, the center also includes retailers such as JoAnn’s Fabrics, McDonald’s, T-Mobile and Savers.

Located at 4950 Almaden Expressway within the South San Jose submarket, the retail center in close to Interstate 85, which allows direct access to downtown San Jose, Campbell and Los Gatos. The two-building property serves approximately 500,000 individuals within a five-mile radius, while the average household income within a 3-mile area is $161,000, according to JLL.

The retail vacancy in San Jose ended a five-year climb in 2023, due to increasing tenant demand in the metro’s largest submarket by inventory, South San Jose. According to a Marcus & Millichap report based on data through the first nine months of 2023, retail properties changed hands most frequently across this submarket, consistent with previous years.

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BKM Capital Partners, a Newport Beach, Calif.,-based institutional fund manager, has expanded its presence in the Western U.S. with the acquisition of three multi-tenant industrial parks in Phoenix and Silicon Valley for a total of $79 million, in two separate deals with Stockbridge Capital Group.

In the larger of the transactions, BKM purchased Gateway University Park I & II with a total of 268,409 square feet in the Airport submarket of Tempe, Ariz., for $48 million. Located at 1605-1635 and 1705-1797 W. University Drive, the properties consist of 16 tilt-up buildings with 81 units ranging in size from 1,712 to 22,352 square feet. Built in 1982 and 1983, the buildings have two dock-high and 106 ground-level loading doors, clear ceiling heights of 16 to 22 feet and an above average parking ratio of 3.73 spaces per 1,000 square feet.

The property is 99 percent leased to 77 tenants. Noting that current in-place rents are 36 percent lower than market rate, BKM said it plans to leverage the property’s weighted average lease term of 2.7 years to bring rents up to market rate over its hold period. The firm also intends to reduce the office space from 54 percent of net rentable area to 35 percent.

BKM plans to spend about $2.4 million on capital improvements including upgrades to roofs, parking lots, landscaping, HVAC systems and updates to the signage and paint scheme.

READ ALSO: Are Suburban Office-to-Industrial Conversions Feasible?

The industrial parks are located adjacent to key logistics hubs including Phoenix Sky Harbor International Airport and I-43/I-60-10/Loop 202, providing last mile capability for tenants and giving them access to the fastest growing population centers in the country.

BKM also notes the growing semiconductor industry in the region that should provide trickle-down benefits to nearby light industrial markets. Phoenix industrial rents have already grown by 59 percent between 2020 and 2022, according to Green Street Advisors. Among the major companies committing to projects in the region are Intel, Taiwan Semiconductor Manufacturing Co., NXP Semiconductor and ON Semiconductor.

Brian Malliet, BKM CEO, said in prepared remarks the acquisition of Gateway University Park, one of the largest single-asset concentrations of multi-tenant industrial space in the submarket, bring the firm’s Phoenix-area holdings to 2.7 million square feet across 15 properties. He said nearly 1 million square feet of that space is located within a 5-mile radius of Gateway. 

The deal was brokered by Cushman & Wakefield’s National Industrial Advisory Group, including Will Strong, James Carpenter, Kirk Kuller, Robert Buckley, Tracey Cartledge, Michael Matchett and Molly Hunt.

Silicon Valley space

BKM also acquired Junction Business Park, a two-building, multi-tenant industrial property with 119,101 square feet in San Jose, Calif., for $31 million. Located at 1911-1943 Hartog Drive and 1914-1968 Junction Ave., the business park was completed in 1978. It has 16 units ranging in size from 6,156 to 12,672 square feet. There is about 30 percent office space at the site. The property has 16 grade-level and 14 dock-high loading doors, 16-foot clear heights and an above-average parking ratio.

Malliet stated BKM now owns more than 900,000 square feet of space in five properties throughout Northern California. He said Junction Business Center aligns perfectly with BKM’s investment strategy of identifying a well-located light industrial asset, buying it at a significant discount to replacement cost and leveraging its expertise and resources to maximize its value.

The firm plans to make about $1 million in capital improvements to bring it up to Class A standards. Plans call for upgrades to HVAC systems and parking lots, as well as improved landscaping, signage and paint schemes. BKM has also budgeted $873,000 in tenant improvements to elevate unit interiors to brand standards to attract premium industrial users. The property is currently fully leased to 13 tenants. The firm intends to take advantage of a 2.5-year WALT to correct an 18 percent market rent deficiency over a four-year hold period.

The property is located adjacent to San Jose International Airport, the Port of Oakland, US-101 and I-880, providing access to both international and domestic markets.

The sale was brokered by Cushman & Wakefield’s National Industrial Advisory Group, including Jeff Chiate, Rick Ellison, James Carpenter, Will Strong, Scott Prosser, Steve Hermann, Jack Depuy, Mike Adey, Brad Brandenburg and Matt Leupold.

BKM growth

The new acquisitions come several months after BKM formed a partnership with StepStone Real Estate, the real estate arm of the global private markets investment firm StepStone Group, for a GP-secondary direct transaction. SRE acquired interests in two BKM industrial properties and committed to future investments in small- and mid-bay light industrial assets.

Earlier in 2023, BKM teamed up with Investcorp to acquire seven light industrial assets in Las Vegas for $157.8 million from Terry York Properties. In July, BKM purchased an eight-building industrial park in Carlsbad, Calif., from Alexandria Real Estate Equities for $44 million.

The post BKM Capital Pays $79M for Industrial Parks appeared first on Commercial Property Executive.

Berkeley Space Center will encompass office and laboratory space, along with academic and retail facilities. Image courtesy of UC Berkeley

A joint venture of UC Berkeley and SKS Partners will develop Berkeley Space Center at NASA Research Park, a master-planned innovation hub spanning 36 acres in San Jose, Calif., within NASA‘s Ames Research Center.

The $2 billion project is slated to comprise some 1.4 million square feet of Class A office and R&D space. It is currently going through the environmental entitlement process, and construction is expected to begin in 2026.

The development team also includes architecture firm HOK, as well as Field Operations which will handle urban design and landscape architecture. CBRE has been appointed as exclusive leasing agent for the project and is discussing built-to-suit opportunities with tentative tenants. The firm’s Senior Vice Presidents Bob Steinbock and Michael Domanico and Executive Vice President Ben Knight, along with Vice Chairman Gregg Domanico and Associate Matt Gutierrez will market the lab and R&D space.

Plans include research facilities for astronautics, quantum computing, climate studies and social sciences. Berkeley Space Center is estimated to generate more than 6,000 jobs in advanced R&D positions once complete. It will comprise wet and dry labs, conference space, along with academic and retail facilities. It will also feature some 18 acres of open spaces, featuring outdoor working yards. Subsequent phases of the project will include student and faculty housing.

Developers are aiming for a strong sustainability focus, with LEED certification, among others. It plans to use photovoltaic panels for energy generation along with storm water retention systems to use recycled water for landscaping and within the buildings. The campus will also offer multiple modes of transportation.

Tech and life sciences driving Bay Area development

Plans include a central green area which will serve as a platform for gatherings, exhibitions and other activities. Rendering courtesy of Field Operations and HOK

The project will take shape within the expansive NASA Research Park, located in Mountain View, Calif., off Highway 191, some 13 miles from San Jose and 38 miles from San Francisco. It will be in close proximity to many of NASA’s research facilities, such as the world’s largest wind tunnel, the NASA Advanced Supercomputing Division and the Arc Jet Complex.

As of August, the Bay Area had 3.9 million square feet of office space under construction, still driven by tech and life sciences activity, according to CommercialEdge data. One of the largest projects in San Jose is Google’s 135-acre master-planned neighborhood, slated to feature 3.1 million square feet of office space, along retail and residential components.

The post UC Berkeley, SKS Plan $2B Research Hub in San Jose appeared first on Commercial Property Executive.

Valley Health Center San Jose will rise at 1410 S. Bascom Ave. Image courtesy of PMB

Health-care real estate developer PMB and partner Santa Clara Valley Healthcare have broken ground on a 10-story, 230,000-square-foot medical office building in San Jose, Calif. Aiming for LEED Silver certification, Valley Health Center San Jose is slated for completion in 2025.

The building will rise at 1410 S. Bascom Ave., near the VTA’s Bascom Station, as part of a transit-oriented, mixed-use development that also includes a 590-unit multifamily component. WRNS Studio and Boulder Associates are the project architects, while South Bay Construction serves as general contractor. Capital One is the lead bank, having provided the developer with a $205.3 million loan in 2022, according to CommercialEdge data.

READ ALSO: Checkup on Health-Care, Life Science Opportunities

VHC San Jose will be the 10th local Valley Health Center servicing Santa Clara County, the sixth largest county in California with a population of 1.9 million residents and growing. The health center will have 16 departments including adult medicine, OB/GYN subspecialties, adult urgent care, behavioral health, dental, diagnostic imaging, facility support services, maternal and fetal medicine, patient support services, pediatric primary care, pediatric subspecialties, pediatric urgent care, pharmacy, specimen collection lab and administration.

Because the building will take shape on a triangular site, it was designed as two halves that “slide past” each other. The lower floors will be clad in articulated aluminum screens that play with light and shadow throughout the day, while the upper floors will recede to create terraces for the staff.

The 2.4-acre site is at the light rail stop along Southeast Expressway, north of Los Gatos Creek. Downtown San Jose is roughly 5 miles away.

Part of the Bascom Station mixed-use development

In June 2022, PMB and equity partner Harrison Street acquired the site for the office component of the mixed-use Bascom Station from Bay West Development for $26.2 million, in an all-cash deal. The project’s residential component, dubbed The Maxwell, is also under construction nearby.

Both developments are part of the South Bascom Urban Village Plan and approved under the City of San Jose’s Signature Project process. The urban village strategy addresses the criteria for creating complete neighborhoods, where residents’ daily needs can be met within close proximity by providing needed medical services in conjunction with housing.

More MOB construction

Since its inception, PMB has developed more than 130 health-care facilities across the U.S., totaling approximately 6 million square feet. The firm works with health systems, hospitals, medical groups, specialty providers, academic medical centers and senior living providers.

Elsewhere in California, PMB and Sutter Health began construction of a four-story, 100,000-square-foot medical office building in the Sacramento area in June. The building at 7 Medical Plaza Drive is slated to open in the summer of 2024.

A year ago, PMB and Providence St. Joseph Hospital topped out the Helen Caloggero Women’s & Family Center in Orange, Calif. The four-story MOB houses a mother and baby assessment center, maternal diabetes and wellness, pelvic health and rehabilitation services.

The post PMB Breaks Ground on 230 KSF Bay Area MOB appeared first on Commercial Property Executive.

JP Morgan Asset Management is the owner of 10080 N. Wolfe Road. Image courtesy of CommercialEdge

Flexible office space provider Pacific Workplaces will open a new coworking space in the San Jose-area, at 10080 N. Wolfe Road in Cupertino, Calif. The company will occupy 14,928 square feet at the property and will relocate from its current space at 19925 Stevens Creek Blvd. The new location is scheduled to open in December 2023.

Completed in 1972, the building rises three stories and spans 59,915 square feet. It is owned by JP Morgan Asset Management, which acquired it in 2012, CommercialEdge data shows. Other tenants at the property include Celona and Silver Lake, the same source shows.

The new Pacific Workplaces location will comprise 50 private offices, along with 10 meeting rooms and an open coworking area featuring both dedicated and flex desks.

The building is located near Interstate 280 and roughly 9 miles from downtown San Jose. It is in the heart of Silicon Valley, close to the Apple Campus and within walking distance of the Main Street Cupertino shopping mall, as well as other retail and entertainment options.

Pacific Workplaces operates a total of 18 coworking locations across the states of California, Nevada and Arizona. The flex office provider has been active in the Bay Area, having recently renewed its lease for a 14,090-square foot location in Pleasant Hill, Calif., after debuting another one in San Francisco at the beginning of the year.

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The new owner will invest $5 million to upgrade Clipper Court Commerce Center. Image courtesy of CommercialEdge

CIP Real Estate has acquired Clipper Court Commerce Center, a 352,280-square-foot industrial park in Fremont, Calif. BKM Capital Partners sold the 14-building property for $103.5 million with the assistance of Newmark, while J.P. Morgan Asset Management provided acquisition financing. The property last traded in 2017, when BKM Capital Partners and Canyon Partners Real Estate purchased the asset for $72 million.

Completed between 1987 and 1990, buildings at Clipper Court Commerce Center range between 33,706 and 82,600 square feet. The entire property is used as office, flex, R&D and industrial space and has units ranging from 1,041 to 10,000 square feet, grade level and loading docks and three car parking spaces per 1,000 square feet. The campus has upgraded interiors which include ADA restrooms, kitchenettes and fire sprinklers. The new owner plans to invest $5 million in improvements.

READ ALSO: CIP Real Estate’s CEO is Still Keen on Industrial. Here’s Why

The tenant roster includes technology and advanced manufacturing companies such as BASF Corp., Hyundai Corp., Kaeser Compressors and CTEMS Co. The property was 89 percent occupied at the time of the sale.

Located at 4005-4124 Clipper Court and 46704 and 46720 Fremont Blvd., the commerce park is between the 880 Freeway and San Francisco Bay. The property is 12 miles from downtown San Jose and some 40 miles from downtown San Francisco. Tesla Engineering, Seagate, Fremont Tech Center, Zoox Kato Warehouse and FedEx are situated nearby.

The Newmark team representing the seller included Executive Vice Chairman & President Steven Golubchik and Vice Chairman Edmund Najera. Vice Chairman Ramsey Daya alongside Executive Managing Director Chris Moritz with Newmark Capital Markets arranged the acquisition financing.

Bay Area: Top industrial market

Year-to-date as of June, industrial sales amounted to $1.2 billion in the Bay Area, coming in second only after the Inland Empire, which registered $2.4 billion in transactions, a recent CommercialEdge report shows.

Some other recent acquisitions in the area include Peninsula Land & Capital acquiring Oakland Road Business Park from Link Logistics. The 177,117-square-foot campus in San Jose, Calif., traded for $37.2 million. Earlier this month, Prologis bought a 246,450-square-foot industrial and research building in Fremont, Calif., from Blackstone. The asset changed hands for $86.6 million.

The post CIP Pays $104M for Bay Area Campus appeared first on Commercial Property Executive.

Prologis acquired the property at 48350 Fremont Blvd. for nearly $87 million. Image courtesy of CommercialEdge

Prologis has purchased a 246,450-square-foot industrial and research building in Fremont, Calif., from Blackstone, as reported by The Mercury News. The asset changed hands for $86.6 million, according to Alameda County public records.

The transaction came on the heels of the $3.1 billion all-cash deal in which Prologis agreed to acquire more than 14 million square feet of industrial assets from Blackstone. The properties are in major markets such as Atlanta, Baltimore, Washington, D.C., California, Phoenix, Las Vegas, New York and South Florida.

Prologis’ Fremont acquisition

Completed in 1989, the Class B property occupies a 10.5-acre site within Bayside Business Park. Tenants at the building include Super Micro Computer and Cintas. The asset previously traded in 2019, when Blackstone’s Link Logistics acquired Global Logistic Properties in a $18.7 billion deal, adding 179 million square feet of industrial, office and retail space to its portfolio, CommercialEdge data shows.

Located at 48350 Fremont Blvd., the property is off Interstate 880 and close to Interstate 680, roughly 10 miles north of downtown San Jose, Calif. The building is also 10 miles from the San Jose Mineta International Airport.

Although the first half of 2023 has seen a significant reduction in industrial transactions, registering $21.2 billion through June, compared to the $55 billion figure recorded during the same period of last year, the average per-square-foot price has risen slightly from 2022’s $124, reaching $129, a recent CommercialEdge report reveals.

The Bay Area continued to lead the nation in terms of sale prices, registering a whopping $355 per square foot in June, according to the same source. The area’s industrial investments totaled more than $1.2 billion in the first six months of the year.

The post Prologis Pays $87M for Bay Area Industrial Asset appeared first on Commercial Property Executive.

Oakland Road Business Park. Image courtesy of Newmark

Newmark has completed the sale of Oakland Road Business Park, a four-building, 177,117-square-foot industrial, warehouse and flex campus in San Jose, Calif. Link Logistics sold the property for $37.2 million, CommercialEdge data shows. According to Santa Clara County public records, Peninsula Land & Capital acquired the business park using a $24.2 million acquisition loan originated by J.P. Morgan Chase.

At the time of the deal, the property was 90 percent occupied by multiple tenants, with an average tenure of eight years.

Located between 1580 and 1630 Oakland Road on an 8-acre lot, Oakland Road Business Park is a four two-story buildings campus that include flex, office and warehouse space, with a total of 620 vehicle parking spots, CommercialEdge data shows. The park is close to interstates 880 and 680, some 3 miles from San Jose Mineta International Airport, 6 miles from downtown San Jose and within 47 miles of San Francisco.

READ ALSO: Fed Rate Hike Ahead. What’s in it for CRE?

Peninsula Land & Capital’s team of Principal Roger Fields, General Manager & Partner Lois Quilalang, Director Parker Fields and Senior Manager Mary Blaser is in charge of leasing at the property.

Newmark’s Vice Chairman Edmund Najera, Senior Managing Director Jonathan Schaefler, Executive Vice Chairman & President of Western Region Capital Markets Steven Golubchik, together with Director Darren Hollak, closed the deal.

One of the top markets in the U.S.

According to a recent CommercialEdge report, some $16.3 billion in industrial assets changed hands in the first half of the year across the country. Deal volume is on a downward trajectory due to increased interest rates and the slowing of the e-commerce sector. With $1.1 billion in assets trading as of May, the Bay Area was the third market for industrial sales volume in the U.S., following the Inland Empire and Los Angeles.

Recent deals in the Bay Area include Terreno Realty’s $186 million acquisition of Morton Commerce Center in Newark, Calif. Overton Moore Properties sold the four-building, 603,000-square-foot industrial campus, where Meta, Lucid Motors, Pegasus Logistics Group and RK Logistics Group hold leases.

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211 River Oaks Parkway. Image courtesy of CommercialEdge

Global Net Lease Inc. has sold a 164,608-square-foot office campus in San Jose, Calif., for $50 million. GNL originally purchased the property in 2014 for $52.5 million.

Situated on 9.8 acres at 211 River Oaks Parkway, the property comprises three two-story buildings completed in 1982 and completely renovated in 2012, Commercial Edge data shows.

The buyer plans to convert the asset to residential use, said James Nelson, CEO of GNL, in prepared remarks. A filing with the San Jose Planning Department shows that Valley Oak Partners proposed 737 units to be constructed on the site, according to SiliconValley.com.

READ ALSO: How Vacant Office Spaces Get New Life

The campus is 7 miles from downtown San Jose, across the street from River Oaks Park. Several shopping and dining options are nearby, alongside Interstate 880.

Low office sales volume in the Bay Area

GNL’s property was the largest office asset that sold in San Jose since the beginning of the year, according to CommercialEdge data. The submarket’s sales volume totaled only about 335,000 square feet of office space as of July.

Office sales were scarce in the Bay Area overall as well. The same data provider shows that some 1.6 million square feet traded in the area in the first half of 2023. One of the biggest deals involved a 244,906-square-foot office asset in Santa Clara, Calif., that changed hands for more than $182 million.

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Seagate Fremont campus. Image courtesy of CommercialEdge

Madison Capital Group has acquired a 575,775-square-foot R&D campus in Fremont, Calif., The Real Deal reported. Hard drive manufacturer Seagate Technology sold the asset for $260 million.

The property, a former Solyndra manufacturing plant, originally came online in 2010 at a cost of $300 million. At that time, the company received a $535 million federal loan guarantee to develop the property. A year later, Solyndra filed for bankruptcy. In 2013, Seagate purchased the asset for $90.3 million, a third of its initial cost.

After the acquisition, the facility underwent a $200 million capital investment in 2016. The redevelopment plan included the transformation of the plant into an R&D/advanced manufacturing campus.

Situated on 30.1 acres, the LEED Gold certified facility encompasses a two-story and mezzanine building and includes more than 100,000 square feet of clean room and laboratory build-out, a two-level office space component, on-site lounge and conference room, heavy power and MEP infrastructure. The property also includes 590 parking spaces, 20 dock roll-up doors and 10.1 undeveloped acres for potential expansion. Seagate remains the sole tenant as part of the sale-leaseback transaction, according to the San Francisco Business Times.

The Fremont campus at 47488 Kato Road has access to interstates 880 and 680. The Silicon Valley property is 12 miles from San Jose, Calif., and some 43 miles from San Francisco. Corporate neighbors in the area include Tesla, FedEx, DHL, Amazon and Siemens, among others.

Madison Capital, which owns and manages $3.2 billion in assets, has four more commercial properties in the Bay Area, including the historical Ford Point building, now a 517,000-squre-foot R&D industrial facility in Richmond, Calif. The company, alongside Meadow Partners, paid $103.7 million for the asset last year.

Bay Area R&D demand takes hit

Despite economic uncertainty, asking prices remained flat in Silicon Valley in the first quarter of 2023, according to Kidder Mathews’ latest report on the R&D market. However, layoffs in the tech sector have contributed to a decrease in tenant demand and an increase in market vacancy, from 7.9 percent in the fourth quarter of 2022 to 8.7 percent the next quarter.

The Kidder Mathews report shows that, despite a decrease in transaction volume in sectors such as biotech, hardware and medical devices, there still are specific facilities that are sought after, including properties that feature clean rooms, heavy power and other specialized laboratory improvements.

The post Madison Capital Pays $260M for Bay Area Campus appeared first on Commercial Property Executive.

Cityline. Rendering courtesy of Gensler

Hunter Storm and Sares Regis Group of Northern California have topped out three buildings within Cityline, an upcoming mixed-use development in downtown Sunnyvale, Calif.

The developers broke ground on this final phase of the project last year and after 15 months, they reached a pivotal point in the construction of two seven-story office buildings and a 12-story apartment tower.

READ ALSO: Will CRE Construction Hold Steady in 2023?

Dubbed Cityline Block 3 North and developed on a former Macy’s parcel at 200 W. Washington Ave., the office component was designed to attain both LEED Gold and WiredScore Gold certifications, while the entire project is set to be Fitwel certified. Additionally, Cityline is slated to include MERV 15 air filters to ensure adaptability in a post-COVID-19 setting.

A walkable, transit-friendly development

The developers intend to establish a live-work-play neighborhood in the city’s downtown area. The two office buildings will encompass floorplates measuring 45,000 square feet, resulting in a total of about 560,000 square feet of rentable space. Plans also call for a 25,000-square-foot outdoor terrace area, while the ground floors will be exclusively designated for retail use. The Martin, the residential component of the mixed-use development, is set to include 479 units.

CBRE Executive Vice Presidents Vincent Scott and Mike Benevento will oversee office leasing at the upcoming properties. By expanding the historic Murphy Avenue block, the offices will establish a link to the retail quarter of Redwood Square. Designed by Gensler, with Devcon Construction serving as general contractor, both buildings are slated for completion in the fall of 2024.

The first two phases of the 36-acre project include both residential and commercial space. At full build-out, Cityline will feature 1,000 apartments, 1 million square feet of office space and more than 500,000 square feet of retail.

Sunnyvale leads Silicon Valley office construction

According to a recent report by Colliers, more than 6.2 million square feet of office space is currently under construction in the Silicon Valley area, with more than half of the development pipeline concentrated in Sunnyvale. It is anticipated that almost 50 percent of these projects will be completed this year.

The same report shows that leasing activity in the Silicon Valley area remained healthy at the beginning of the year, even though gross absorption decreased by 47.6 percent year-over-year through March, signaling a slowdown in the market. Part of this can be attributed to the ongoing tech layoffs and rising interest rates.

The post Sares Regis JV Tops Out Bay Area Mixed-Use Project appeared first on Commercial Property Executive.

Rendering of Founders Tower. Image courtesy of the City of San Jose

Adobe has opened Founders Tower, its new Class A office building in San Jose, Calif. The 18-floor project is the fourth to rise at the company’s corporate campus at 333 W San Fernando St. Employees are beginning to transfer to the building as it gradually opens, according to The Mercury News.

Located next to State Route 87, known as the Guadalupe Freeway, the 1.3 million-square-foot building includes 700,000 square feet of office space. A parking garage across five floors offers space for 1,603 vehicles, according to CommercialEdge data.

Floors at the all-electric Founders Tower average about 60,000 square feet, compared to the roughly 25,000-square-foot average at the site’s other three towers, which allows for space for an additional 4,000 employees.

The office space includes focus rooms, collaboration zones, drop-in desks and communal space, as well as a café, food hall and event dining rooms. A ground-level coffee shop and museum will be accessible to the public.

Adobe began construction at the project, which is located in an Opportunity Zone, in 2019. The Silicon Valley giant has been based in San Jose since its 1994 move from nearby Mountain View, Calif., where founders John Warnock and Charles Geschke started the company as “Adobe Systems” in 1982. The building is named for the two founders.

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Rendering of 2225 E. Bayshore Road. Image courtesy of BentallGreenOaks

BentallGreenOak, in partnership with Gray Matter by Graymark Capital, is set to develop Bayshore Bio, a 100,000-square-foot life science campus in Palo Alto, Calif. Construction has begun on the first building, which is part of a three-phase redevelopment of office and R&D buildings into lab spaces.

BentallGreenOak and its partner acquired the three-building campus in 2021 for a total sale price of $56.8 million. Two of the facilities were subject to a $52.9 million loan provided by ACORE Capital and maturing in 2031, CommercialEdge data shows.

READ ALSO: MBH Architects on Trends in Bay Area Life Science Designs

The first phase of the redevelopment is set to encompass 36,000 square feet and is slated for completion by the end of the third quarter. The two-story building will feature 16,903-square-foot floorplates and will include conference rooms, benching style workstations and upgraded electrical capacity, as well as new once-thru mechanical systems. Plans call for the conversion of the former office and R&D buildings into lab space at a 60/40 lab-to-office ratio for biological research and development. The spaces are designed for early-stage VC-backed life science companies, including Stealth, Series A and Series B.

Bayshore Bio’s buildings are located at 2225 E. Bayshore Road, 2197 Bayshore Road and 1050 Meadow Circle in the Bay Area market, with the third structure 7 miles away from the spaces at Bayshore Road. The campus is roughly 16 miles from San Jose, 33 miles from San Francisco and has access to Highway 101.

Bay Area life science space in high demand

Boston, Manhattan, Dallas, Austin and San Francisco were the top five markets with the largest development pipelines at the beginning of the year, according to a recent CommercialEdge report. As of January, the Bay Area had 5.8 million square feet of office space under construction, representing 2.9 percent of stock. Nationally, there were 123.6 million square feet of office space underway, accounting for 1.9 percent of stock.

In the Bay Area, several large life science projects are currently underway, including the Avia Labs at Millbrae Station, an upcoming 315,000-square-foot project campus in Millbrae, Calif., developed by Longfellow Real Estate Partners. The same company is building Bioterra, a 316,000-square-foot life science project in San Diego, after receiving $202.6 million in financing at the end of last year.

Another major project is taking shape in San Francisco. Lane Partners received a $373 million financing package for the construction of the first phase of Southline, a mixed-use, life science project totaling approximately 3 million square feet.

In late 2022, Lincoln Property and Dune Real Estate Partners received the approval for the development of a Bay Area research and development center, anticipated to encompass more than 400,000 square feet. More than $1 billion in economic activity is projected to result from the development.

The post BentallGreenOak JV to Develop 100 KSF Bay Area Life Science Project appeared first on Commercial Property Executive.

San Francisco skyline. Image by Raphael Stäger via pixabay.com

The top three tech cities in the world are all in the U.S., according to Savills Tech Cities 2023 report. San Francisco leads the way, followed by New York and third-place Silicon Valley. And with the California towns holding two of the three top spots, the San Francisco Bay Area carries the distinction of being the preeminent global tech hub.

“As the fourth industrial revolution transforms business and industry, new tech sectors are driving growth, supporting demand for property in the cities that lead in them,” according to the report.

Savills examined a diverse range of factors in determining the leading tech cities. The London- based commercial real estate services firm assessed each market’s business environment, tech environment, city buzz and wellness, as well as strength and depth in 11 tech sub-sectors ranging from AgTech & FoodTech to SpaceTech. New York, may have ranked second in the world overall, but the city takes top billing globally in AgTech & FoodTech, FinTech, DeepTech and MediaTech.

READ ALSO: Top 10 Markets for Office Deliveries in 2022

Talent, however, is the leading measurement of success in the Savills ranking, as skilled labor is the backbone of the tech world. San Francisco, New York and Silicon Valley all have extensive talent pools and premier universities to keep the educated labor force flowing.

Taking all factors into consideration, Savills’ findings indicate that the U.S. far outranks Europe and Asia in tech leadership, with 15 U.S. cities holding a place on the list of the 30 principal tech markets of the world.

Upward bound

While the world’s established tech cities—the global markets that record the highest marks in depth of tech base, quality of life and supportive business environment, and attract the most venture capital—will continue to lead the tech industry, rising cities are making waves. “Big cities are back in vogue as the effect of the pandemic has eased, though smaller cities that offer more affordable living, easy access to green space and outdoor pursuits are also in high demand,” according to the report.

Rising cities, secondary global markets that often specialize in one tech sector, include the likes of Houston, Raleigh-Durham, N.C., and Denver. “These cities offer a quality business and education environment, combined with city living on a smaller footprint, benefitting as people sought a better quality of life in the wake of the pandemic. That allows easier access to amenities and a better work/life balance for residents, but with all the ‘buzz’ of larger urban centers.” Before the pandemic, neither Houston, Raleigh-Durham, N.C., nor Denver ranked in the top 30, having made no appearance at all in Savills’ 2019 report.

Other rising cities of note include Austin, Texas, which is the seventh-leading city in the world for MediaTech, and St. Louis, ranking eighth in the world in AgTech & FoodTech.

As rising cities grow in appeal to specialist tech companies, these metros are seeing a positive effect on their respective office markets. As noted in the report, specialist tech firms face evolving real estate needs as they grow in size, making the flight to quality at most levels and thereby bolstering the Class A office sector. And Class A accommodations in rising cities have a far more palatable price per square foot than those in established tech cities.

Although rising cities are attracting more attention, the leading tech hubs will continue to have a firm hold on their position at the forefront. The factors that make the big tech cities perform well, such as the depth of their talent pools and the weight of money flowing into them, are enough to keep them at the top of Savills’ index, Paul Tostevin, director with Savills Research, said in prepared remarks.

The post US Cities Lead the World in Tech appeared first on Commercial Property Executive.

Stanford Research Park. Image courtesy of Cushman & Wakefield

Stanford University has tapped Cushman & Wakefield’s Northern California Asset Services team to provide the full suite of property management services for a 14-building, 1.1 million-square-foot office campus, alongside a 7 million-square-foot triple-net ground lease portfolio in Palo Alto, Calif. The firm will provide leasing, asset management, project and development services, as well as leverage brokerage and sustainability operations across the campus.

Senior Managing Director Marsha Ramsey leads the Cushman & Wakefield team overseeing the portfolio’s property management. Director of Operations Trude Hursh and Senior Assistant Property Manager Christ Narayan will be managing the campus’ Transitions and Quality Control Services. Additional members include Assistant Controller Phil Blair, Director & Occupier Services Lead of Project and Development Services Jason Jacobson, Managing Director Rachel Schiftan and General Manager Alissa Lee. Vice Chairmen Ben Paul and David Hiebert will provide brokerage and leasing services.

Within the world’s first university research park

The portfolio in question is part of Stanford Research Park, a 700-acre, 10 million-square-foot office and technology campus located around Page Mill Road. Its first building broke ground in 1951, and was the headquarters of high-tech pioneer Varian Associates.

The initial project, called the Stanford Industrial Park, started as a joint initiative between Stanford University and the City of Palo Alto. In the 1950s, the city annexed several parcels of SRP-owned land for the the creation of the world’s first university research park.

The park’s historic tenants include Apple, Facebook, Hewlett-Packard, Xerox and Lockheed. Their work there produced many innovations such as the microwave, personal computer mainframes, laser printers and ethernet cabling, as well as the growth of several social media companies.

READ ALSO: How Property Managers Can Unlock Proptech’s Potential

Overall, the complex currently has more than 150 tenants in the tech, engineering and life science sectors including Google, Tesla, VMware and Jazz Pharmaceuticals. Tesla uses its space for the development and design of electric vehicle battery prototypes. VMware, the campus’ largest tenant, uses its space for its cloud computing hardware and software solutions operations.

With quick access to El Camino Real and Interstate 280, Stanford Research Park provides quick access to much of the Bay Area and is within 2 miles of the University’s main campus. Downtown San Francisco and San Jose are 28 and 15 miles away, respectively.

Silicon Valley’s office sphere

Despite attracting large investments from Google and Meta, Silicon Valley’s office sector has struggled in the face of continuing obstacles, including economic uncertainty and corporate downsizing driven by an omnipresent hybrid work schedule. Still, the area’s overall year-over-year fundamentals are positive. According to data from a fourth quarter 2022 report from Kidder Mathews, the region has seen 479,000 square feet of leasing activity, alongside 8 million square feet of new deliveries year-over-year.

Recent headlines from around the area include Prime Data Centers’ November 2022 groundbreaking on a new 80,000-square-foot turnkney, build-to-suit data center in Santa Clara. That same month, Blue River Technology purchased an 83,590-square-foot office building in the same area from Toeniskoetter Development.

The post Cushman & Wakefield to Manage 8.1 MSF Bay Area Technology Park appeared first on Commercial Property Executive.

Cochrane Technology Center. Image courtesy of Trammell Crow Co.

Trammell Crow Co. and partner CBRE Investment Management have broken ground on Cochrane Technology Center, a business park in Morgan Hill, Calif. The 500,000-square-foot, five-building project currently is Silicon Valley’s largest speculative industrial development.

HPA is the project architect, while Kier and Wright will be the civil engineer and Millie & Severson will serve as general contractor. Completion is slated for early 2024.

Cochrane Technology Center is taking shape on a 30-acre site that the joint venture acquired in 2018. The industrial buildings will range from 73,000 square feet to 138,000 square feet, intended for multiple tenant sizes and needs. CBRE’s Chip Sutherland, Rob Shannon and Brian Matteoni will head up leasing and marketing at the property.

Located between Cochrane and Half roads, the development site is off Highway 101 providing easy access to distribution channels. It is in proximity to San Jose as well as the larger Silicon Valley.

On familiar ground

TCC and CBRE IM have been highly active together, especially in the Bay Area. Also in Morgan Hill, the joint venture developed Butterfield 5 Technology Park and recently sold the property to Invesco Real Estate. The industrial campus is similarly situated near Highway 101.

Elsewhere in the nation, the two purchased 74 acres with plans to develop a 1.1 million-square-foot industrial property in Sayreville, N.J. The soon-to-be Arsenal Trade Center is set for completion late next year.

The post Trammell Crow, CBRE IM Break Ground on Bay Area Project   appeared first on Commercial Property Executive.

In September, the Bay Area (East and South Bay), driven by the market’s thriving tech and life science hubs, had 10.3 million square feet of office space under construction—the third largest pipeline in the country after Manhattan and Boston—while 7.9 million square feet of office space taking shape within the San Francisco Peninsula market.

Between January and September, six properties amounting to 1.9 million square feet of office space were delivered in the Bay Area, while 3.2 million square feet of office supply came online in San Francisco. Almost 100 percent of these properties are Class A product, reflecting the area’s strong demand for high-quality workspace. Here are the top Bay Area submarkets for office construction, based on CommercialEdge data.

5. Emeryville

Situated on the East Bay between Berkeley and Oakland, Emeryville is the home of Pixar Animation Studios, along with several well-known tech companies. As of September, the Emeryville submarket had 867,572 rentable square feet of office space under construction across five office properties. Out of the five, four are life science facilities—echoing ongoing trends within the submarket.

Emeryville Center of Innovation. Image courtesy of BioMed Realty

BioMed Realty is behind the largest life science project in the making within the Emeryville submarket. In April 2021, the company received approval for the expansion of its Emeryville Center of Innovation campus. At that point, the campus consisted of a 303.000-square-foot research building, fully leased to Zymergen Inc. Four new lab/office buildings totaling 950,000 square feet are planned for the extension, with the first phase, comprising 281,000 square feet, already under construction.

4. Mountain View – Shoreline

An integral part of Silicon Valley’s early history, the city of Mountain View houses the headquarters of numerous large tech companies, including Google, Microsoft, LinkedIn and Samsung. As of September, the Mountain View – Shoreline submarket in Santa Clara County had 994,810 rentable square feet of office space in the making.

Google is wrapping up construction on its Google Charleston East building within the company’s first ground-up campus dubbed Bay View. Designed by two of the most revolutionary architecture studios, Bjarke Ingels Group and Heatherwick Studios, the 595,000-square-foot project will house roughly 3,000 employees. The canopy-covered, 111-foot tent-like structure will aim for LEED Platinum certification.

3. Sunnyvale – North

Google Caribbean. Image courtesy of the City of Sunnyvale

Part of the Santa Clara Valley, Sunnyvale represents the birthplace of the video industry. Some of the biggest tech players have offices in the city, with the area’s largest employers including Google, Apple, Amazon, Microsoft and LinkedIn. In September, 1.3 million square feet of rentable office space was under construction within the Sunnyvale – North submarket.

Google is currently developing a two-building, 40.5-acre office campus in the Sunnyvale – North area, to total more than 1 million square feet. The City Council approved the project known as Google Caribbean in 2020 and construction broke ground the following year. Bjarke Ingels Group is also behind the ziggarut-like architecture of the buildings.

2. San Jose – CBD

With a significant jump from the previous entries in terms of under-construction pipeline, the San Jose – CBD submarket saw 2,972,330 square feet of office space in the making, as of September. As the cultural and financial center of Silicon Valley, San Jose is the most populous city in the Bay Area and the third most populous city in the state. One of the wealthiest cities in the world, San Jose has the third highest GDP per capita—as well as the fifth-most expensive housing market—on the planet.

Park Habitat. Rendering courtesy of Westbank

The two largest office developments currently taking shape in San Jose’s CBD are both rising along Park Avenue. Located at 180 Park Ave., Westbank’s Park Habitat project will create 1.3 million square feet of office, museum and retail space. Designed by world-renowned Japanese architect Kengo Kuma, the mixed-use building is set to become one of the first net zero carbon workspaces in the country. Construction officially broke ground in April, with planned completion in 2025.

1. South San Francisco

As of September, South San Francisco had the largest under-construction stock across the Peninsula and Bay Area submarkets, reaching 2,982,010 square feet, according to CommercialEdge data. The city has one of the nation’s largest life science hubs. Last year, a total of three office properties amounting to nearly 1.2 million square feet came online in the area.

Kilroy Oyster Point. Rendering courtesy of Kilroy Realty

In June 2021, Kilroy Realty Corp. broke ground on the second phase of Kilroy Oyster Point, a 50-acre, 3 million-square-foot life science and office megadevelopment. The first stage of the waterfront project, totaling 656,000 square feet, was completed last year. The second phase dubbed Gravitate will create 860,000 square feet of lab and office space, across three separate buildings. The seven- and eight-story ensemble will target LEED Gold certification.

The post Top 5 Bay Area Submarkets for Office Construction appeared first on Commercial Property Executive.

200 S. Mathilda Ave.

Drawbridge Realty has acquired 200 S. Mathilda Ave., a 157,000-square-foot office building in Sunnyvale, Calif., for $193.3 million, according to The Mercury News. JPMorgan Chase sold the asset after seven years of ownership, with Eastdil Secured acting on behalf of the seller, according to The Registry. CommercialEdge data shows that the company paid some $135 million for the building back in 2015.

Completed in 2010, 200 S. Mathilda Ave. is a Class A, five-story office building fully occupied by Uber. The property has a glass and masonry exterior, floorplates between 27,736 and 36,356 square feet, three passenger elevators and 628 parking spots.

Situated on a 1.5-acre lot in the city’ s Heritage District, 200 S. Mathilda Ave. is across the Caltrain station on West Evelyn Avenue, 3.4 miles from downtown Mountain View and 11.3 miles from downtown San Jose. The LEED Silver certified asset is close to multiple retail options such as Sunnyvale Square Shopping Center or Allario Shopping Center.

Earlier in November, another major office sale closed in Sunnyvale: Harvest Properties and Invesco Advisors sold a 194,624-square-foot Class A office property, for $222 million. Occupied by LinkedIn, the building is part of Catalyst, a 540,000-square-foot office campus that spans across a 14.4-acre lot.

According to recent CommercialEdge data, the Bay Area was one of the top markets for office transactions in the first half of 2022. With a sales volume of $2.4 billion, the market was second only to Los Angeles.

The post Uber Office Commands $193M in Bay Area appeared first on Commercial Property Executive.

Icon/Echo. Image courtesy of Urban Catalyst

Urban Catalyst’s development of Icon/Echo, a two-tower office and multifamily project planned for downtown San Jose, Calif., moves closer toward realization with a recent key accomplishment. In a unanimous vote, the City’s Planning Commission approved the mixed-use undertaking.

Upon completion, the 21-story Icon will deliver an estimated 500,000 square feet of office space, while Echo will provide 389 multifamily apartment units across 27 floors, combining to serve as a crucial component in the urbanization of San Jose’s downtown area. The two towers, which will include a total of approximately 8,500 square feet of ground-level retail, will occupy a site across from City Hall and right next to a future BART station.

READ ALSO: Seeking Development Financing? Here’s What to Expect

“Downtown needs more of everything—jobs, residents, retail—and pushing this project forward is a great way to accomplish some of those goals in one fell swoop,” Nate LeBlanc, business development manager with San Jose Downtown Association, said during the Planning Commission’s public hearing.

Next steps

The Planning Commission’s work included a resolution approving a permit allowing for demolition of existing buildings totaling approximately 22,500 square feet on the roughly 2-acre site that will become home to Icon/Echo. Urban Catalyst has been making strides toward the project’s commencement all year; in January 2022, the company secured the third of the four parcels required for the development. The real estate equity fund manager and development company’s acquisition of the fourth and final parcel is scheduled to reach completion by year’s end.

Before any work can get underway on Icon/Echo, however, Urban Catalyst must obtain additional authorization. With the Planning Commission having given the thumbs up, Urban Catalyst can now move forward in pursuit of final review and approval from the San Jose City Council.

Urban Catalyst will finance Icon/Echo through Urban Catalyst Opportunity Zone Fund II LLC, a $200 million investment vehicle launched in 2021. Fund II remains open to investors, having yet to reach its final close.

The post San Jose Mixed-Use Project Lands Key Approval appeared first on Commercial Property Executive.

684 W. Maude Ave. Image via Google Street View

A Sunnyvale, Calif., office building that’s fully leased to LinkedIn has been acquired by an affiliate of two German investors for $222 million, a Silicon Valley media outlet reported Monday. The sellers were Harvest Properties and Invesco Advisors.

The 194,624-square-foot, four-story, Class A office building at 684 W. Maude Ave. was completed just last year and is certified LEED Gold, according to information from CommercialEdge.

The building is part of Catalyst, a 14.4-acre, 540,000-square-foot campus developed by Harvest Properties.

The German buyers reportedly were Union Investment Real Estate GmbH, of Hamburg, and Metzler Real Estate Advisors, the Seattle-based U.S. affiliate of Bankhaus Metzler, which is Germany’s oldest private bank, having originated in 1674.

READ ALSO: Office Trends, Takeaways From SIOR CREate 360

LinkedIn has been rapidly assembling its own empire in Sunnyvale.

Last December, LinkedIn leased the office building at 604 W. Maude Ave., also known as Catalyst Phase I, and bought for $122.8 million the two buildings in Catalyst Phase II, at 810 and 870 W. Maude Ave.

Silicon Valley’s office market slows down

Silicon Valley’s office market appears to be slowing down, with negative net absorption of about 800,000 square feet so far this year and total vacancy at a record high of 17.8 percent, according to a third-quarter report from JLL.

684 W. Maude Ave.

Further, about 3.3 million square feet of space is in the development pipeline, on an inventory of 69.7 million square feet.

Class A space in Sunnyvale is in a somewhat healthier situation, with 11.9 percent total vacancy and a modest amount of positive net absorption so far in 2022.

JLL expects that things might be turning for the better for the region, as large employers like Apple, Comcast and Peloton are pushing employees to return to the office. Data from Kastle Badge points to a substantial surge in office attendance, to about 40 percent of pre-pandemic levels.

The post LinkedIn Office Commands $222M in Bay Area appeared first on Commercial Property Executive.

675 Almanor Ave. Image courtesy of Gantry

Dollinger Properties has secured $97 million in permanent financing to retire construction debt for 675 Almanor Road, a 152,000-square-foot office building in Sunnyvale, Calif. Gantry arranged the construction takeout loan on behalf of the owner. According to CommercialEdge data, the loan was originated by AXA Equitable Life Insurance Co. The property is leased by software company Synopsys, which occupies three other buildings nearby.

The non-recourse, permanent interest-only balance sheet loan was structured with flexible payment and term extension options. The borrower’s rate was locked at 90 days in advance of closing and features a sub 4.4 percent rate with interest-only terms and options to extend. As stated in prepared remarks by Director Tony Kaufmann of Gantry, this decision was influenced by the current office market, emerging after the pandemic.

The Class A office building completed in 2020 includes 2,500 square feet of retail space. The property is LEED Gold certified and features on-site electric vehicle charging stations, dining facilities and a roof deck. Floorplates range between 36,315 and 38,112 square feet.

The building is part of Sunnyvale’s Perry Park office district, 10 miles from downtown San Jose and 40 miles from San Francisco. Other notable companies in the area include Google, Facebook, Apple and Amazon.

Gantry recently secured another loan for Dollinger Properties, from United Omaha Life Insurance, for the refinancing of a Silicon Valley tech park.

The post Bay Area Office Asset Lands $97M Refi appeared first on Commercial Property Executive.

Fremont Tech Park II

Dollinger Properties has secured $27.5 million for the refinancing of the 140,000-square-foot Fremont Tech Park II in Fremont, Calif. Gantry arranged the 11-year, fixed rate loan, provided by United Omaha Life Insurance, on behalf of the owner.

Originally built in 1998, the property has been modernized and well-maintained throughout the years, featuring high-image design and landscaping. The owner bought the asset in September 2015 for $19.7 million. Tenants at the tech park include Equity Office Properties, Flash Electronics and Pacira Pharmaceuticals, according to CommercialEdge data.

The three-building, light industrial/R&D flex-tech campus is located at 46400 Fremont Blvd., one mile west of Interstate 880, providing easy access into California’s San Jose, Fremont and Oakland areas, and generally into the Greater Silicon Valley region. Gantry’s Director, Tony Kaufmann, said in prepared remarks that properties such as Fremont Tech Park II performed well during the pandemic due to the demand for flexible lab space. According to Gantry’s Principal Mark Ritchie, the trend of lenders competing for loans tied to industrial properties will continue in 2022.

The post Dollinger Lands $28M Refi for Silicon Valley Industrial Asset appeared first on Commercial Property Executive.

Coleman Highline. Image courtesy of Hunter Storm

Coleman Highline, a 1.7 million-square-foot mixed-use project in North San Jose, Calif., is about to enter a new construction phase. Developers Hunter Storm and Sansom Partners intend to add a 290,000-square-foot office building to the master-planned complex, according to The Mercury News.

The newest addition to the live-work-play destination will be located at 1185 Coleman Ave. on a 4.5-acre site. Work on the project—labeled Building 6—is expected to start in the third quarter of 2022.

Coleman Highline is taking shape immediately next to the Norman Y. Mineta San Jose International Airport, some 5 miles from downtown San Jose. At full buildout, the development is set to encompass eight mid-rise office buildings totaling more than 1.5 million square feet, 1,600 residential units, two hotels, as well as four amenity buildings with ample retail and dining space. Architecture firm Gensler is the designer of the entire project.

READ ALSO: Top LEED-Certified Buildings in California in 2021

Since the project’s debut in 2017, the partnership delivered most of the planned office space. In 2020, two new office buildings totaling 357,000 square feet and a 27,000-square-foot amenities structure were completed. Tech-company Roku Inc. is currently anchoring the location, taking up more than 700,000 square feet at Coleman Highline. In 2020, BCORE Coleman Owner, a Blackstone affiliate, paid $275 million for the Roku-leased location.

In December, AGC Equity Partners purchased Phase II of Coleman Highline for $780 million, marking last year’s largest office sale in San Jose. Totaling 655,577 square feet across two buildings at 1199-1193 Coleman Ave., the property was originally designed as a lease-to-purchase Verizon campus, but part of the space is currently occupied by Yahoo.

Tech-driven office sector

The developers told The Mercury News that demand for state-of-the-art office locations, particularly from large tech companies, prompted them to move forward with the project.

Coleman Highline is just one of the large-scale mixed-use projects Hunter Storm is bringing to Silicon Valley. Last month, the Cupertino-based developer announced Cityline Sunnyvale is entering the last construction phase. Hunter Storm is developing the mixed-use project in partnership with Sares-Regis Group of Northern California and a series of institutional investors. Upon completion, the development is slated to bring more than 1 million square feet of office space, as well as residential and retail  space, in the heart of Sunnyvale’s financial district. 

Despite office vacancy in the Bay Area reaching 16.1 percent in December—60 basis points above the national vacancy rate—the sector continues to be supported by the presence of large tech companies, according to CommercialSearch data. Case in point, one of last year’s largest office leases in the country was at a Sunnyvale location. Meta, the recently founded parent company of Facebook, leased a 719,037-square-foot, four-building office campus owned by Tishman Speyer.

The post JV Adds 290 KSF Office Project at San Jose Campus appeared first on Commercial Property Executive.

Cityline Sunnyvale, a mixed-use master plan in downtown Sunnyvale, Calif., has moved into the final phase of development. STC Venture, a partnership between Hunter Storm, Sares-Regis Group of Northern California and institutional investors advised by J.P. Morgan Asset Management, have broken ground on two office buildings and a residential tower, part of the project’s third phase. 

The developers received the city’s approval for the upcoming development at the start of last year. The office component, dubbed Cityline Block 3 North, will consist of two seven-story office buildings developed on a former Macy’s parcel at 200 W. Washington Ave. The entire 590,000-square-foot development will include 500,000 square feet of office space and 98,000 square feet of retail and outdoor terrace space. Gensler designed the buildings to achieve LEED Gold and WiredScore Gold certification.

Adjacent to Cityline Block 3, the developers are planning a 12-story residential tower dubbed The Martin. The 479-unit property will include 53 affordable housing apartments and 30,000 square feet of retail. Architecture studio Heller Manus is designing the residential component. The development will also include a park that will serve as the new town square.

The masterplan had been stalling for years before STC Venture took over the project in 2016. At full buildout, the 36-acre development should encompass 1 million square feet of office space, 600,000 square feet of retail and more than 1,000 apartments, according to the project’s website.

Phase 1, consisting of retail and residential space, is completed. AMC Theatres and Whole Foods Market have leased space in the new buildings. Phase 2, which includes 150,000 square feet of office along with residential redevelopment, is currently underway. The project’s latest phase is slated for delivery in the second half of 2024.

In addition to the entertainment and retail options available at Cityline Sunnyvale, residents and office tenants also have easy access to a Caltrain Station, connecting to downtown San Jose, which is approximately 11 miles south.

Sunnyvale attracts big tech names

The Sunnyvale office market is fairing particularly well, thanks to a number of large companies expanding in the city. Just last month, Meta—formerly Facebook—has closed the largest office lease transaction nationwide at a Sunnyvale campus. The tech giant signed a 719,000-square-foot lease agreement with Tishman Speyer for 1398 Crossman Ave. The deal comes just months after the property changed hands for $365 million. 

Other large deals in the city include LinkedIn‘s lease of Catalyst Phase I, a 15-acre corporate campus at 604 W. Maude Ave. in December. The same month, the tech company paid $122.8 million for Catalyst Phase II, encompassing two office buildings at 810 and 870 W. Maude Ave., according to The Mercury News. 

The post Silicon Valley Mixed-Use Project Moves Forward appeared first on Commercial Property Executive.

Tribune Tower. Image courtesy of CBRE

Highbridge Equity Partners has refinanced a three-building creative office portfolio totaling about 300,000 square feet in downtown Oakland, Calif., with an $111 million five-year, floating rate loan from a global investment debt fund.

Oakland-based Highbridge will use the debt to repay existing loans and fund future improvements at the properties—the iconic Tribune Tower, 1500 Broadway and 405 14th St.

The loan from the unidentified debt fund was arranged by Brad Zampa and Mike Walker with CBRE Capital Markets’ Debt and Structured Finance group.

READ ALSO: Why Debt Funds Should Get a Look for Office Makeovers

Zampa, an executive vice president at CBRE, said in a prepared statement there are abundant financing options in the value-add space for transitional office deals in desirable markets like Oakland. He said the majority of loan originators the team works with had record-breaking origination volume in 2021 and he expects that to continue in 2022.

The oldest of the assets is the 22-story Tribune Tower at 409 13th St. Built in 1906, the high-rise has about 90,000 square feet of creative office space and 360-degree views of Lake Merritt, Oakland Hills and the San Francisco Bay. Highbridge acquired the building from Harvest Properties in February 2019 for about $48 million, according to the San Francisco Business Times. At that time, the asset had about 40,000 square feet of vacant office space, the newspaper reported.

405 14th St. is located a block from the Tribune Tower. The 16-story building, which includes a penthouse floor, has about 95,000 square feet of creative office space and was previously known as the Financial Center Building. It has a sand-blasted terra cotta façade and notable architectural details. Highbridge acquired the building in 2017 for $33.3 million, according to property records cited by the Business Times.

1500 Broadway is a Class A, creative office building in Oakland’s Uptown Station neighborhood. The historic building has frontage on Broadway and is a three-minute walk to the 12th Street BART station. The property, with about 91,500 square feet of space, was purchased by Highbridge in 2016 for $36.6 million, according to the Business Times.

 Active Office Market

Oakland’s tight office market has driven Class A asking rates to $5.46 per square foot, according to CBRE research. Rates are expected to rise further in the near term as new construction projects in Oakland’s CBD are delivered and leased in the coming years.

In August, Swift Real Estate Partners purchased 1111 Broadway, a 566,000-square-foot office tower built in 1990 from the University of California for a reported $325 million. Designed by architectural firm Gensler, the 24-story asset is a Class A, LEED Gold-certified building located above a BART station.

Earlier in 2021, CIM Group sold Uptown Station, a 397,000-square-foot Class A creative office and retail building at 1955 Broadway, to Singapore-based Mapletree Investments for a price reported in March to be between $420 million and $435 million. The property, built in the 1920s, is situated at the nexus of three key arteries in downtown Oakland’s Uptown district: Broadway, Telegraph Avenue and 20th Street. The building is also located directly above a BART station.

The post CBRE Arranges $111M Loan for Bay Area Creative Office Portfolio appeared first on Commercial Property Executive.

Davidson Building

San Jose–based developer Urban Community and Westbank Corp., of Vancouver, have received city approval to move ahead with The Arbor, their two-building office project in San Jose, the Silicon Valley Business Journal reported.

The Arbor will consist of a new mass timber structure adjoining and connected by a skybridge to an adaptive reuse of the existing Davidson Building, at 255 W. Julian St., totaling between them more than 500,000 square feet of office space. The new building will replace a parking lot just north of the Davidson Building.

READ ALSO: Why Office Absorption Will Turn Around in 2022: NAIOP

The new structure will have 452,000 square feet of office space, as well as 13,000 square feet of ground-floor retail space, all atop four levels of underground parking. The developers also plan to include 35,000 square feet of terraces and a rooftop garden.

The Davidson building is a six-story, 56,000-square-foot structure completed in 1984. The renovation will add 17,000 square feet of outdoor patios, balconies and a rooftop garden, as well as a 6,000-square-foot food hall on the first floor.

The roughly 5-acre site is adjacent to the Guadalupe Freeway/California Route 87, more or less at the northern edge of downtown San Jose.

The architect for the project is Studio Gang, of Chicago and San Francisco.

Development despite pandemic

Central San Jose is doing fine for office development right now, and the 800-pound-gorilla is Adobe’s North Tower. The nearly 1.3-million-square-foot project at 333 W. San Fernando St. is slated for completion by next summer. The building is designed to be all-electric and to achieve LEED Gold certification.

In addition, the Jay Paul Co. is underway with a speculative 879,000-square-foot office project, CityView Plaza, at 200 Park Ave. It’s scheduled to deliver by the third quarter of 2023.

Silicon Valley has 6.5 million square feet of office space under construction, which contrasts with a 12.9 percent direct and sublease vacancy, according to a third-quarter report from Avison Young. The sublease office market alone is at a record high of 3.1 million square feet.

Despite that, AY says, “Demand is continuing to increase as the economy reopens and tenants that postponed their long-term occupancy strategies re-enter the market.”

One very favorable factor is the region’s 73.7 percent vaccination rate, which well exceeds the U.S. average of 55 percent, also according to Avison Young.

The post Bay Area Office Project Gets Green Light appeared first on Commercial Property Executive.

Elco Yards. Image courtesy of IQHQ Inc.

Life science property developer IQHQ Inc. has acquired Elco Yards, a fully entitled development site in downtown Redwood City, Calif., between San Francisco and San Jose, the company announced Monday.

The mixed-use Elco Yards district reportedly is the first large-scale office and life science development site in central downtown Redwood City and will expand on IQHQ’s ongoing Bay Area development efforts.

The seller was Greystar, an IQHQ spokesperson told Commercial Property Executive. The purchase price was not disclosed.

READ ALSO: ULI, PwC Name Real Estate’s Top Cities

The development will feature four buildings totaling about 600,000 square feet and two residential buildings totaling 540 units; all are intended to be LEED Gold certified.

Greystar will be IQHQ’s development partner for the residential buildings. Redwood City Mayor Diane Howard noted in a prepared statement that the 540 residential units are “much-needed” in Redwood City and will include 147 affordable housing units.

The project will also include more than an acre of public outdoor space, and plans include a new landscaped pedestrian- and bike-friendly path along Redwood Creek, extending from El Camino Real to Lathrop Street.

The site is along El Camino Real, near the Caltrain corridor, and a long-time location for used-car dealerships and auto repair shops. “Elco” comes from a nickname for the classic Chevrolet El Camino, the 1960s hybrid of a coupe and pickup truck.

Biotech hub

In September of last year, IQHQ broke ground on the 8-acre, $1.5 billion Research and Development District, on San Diego’s waterfront.

And last November, IQHQ completed a $1.7 billon equity raise, earmarked to help finance 4.4 million square feet of development in Boston, San Francisco and San Diego.

As an indicator of the Bay Area’s strength as a biotech and pharma hub, from 2016 through 2020, the University of California, San Francisco; Stanford University; and the University of California, Berkeley collectively received roughly $6.4 billion in funding from the National Institutes of Health, according to a report from Cushman & Wakefield.

“Market demand has created a continually landlord-favorable market,” the report states, and developers have responded vigorously, with 5.2 million square feet of deliveries over the last six years, 3 million now under construction and more than 16 million at various stages of planning. The vast majority of this construction is speculative.

The post IQHQ Acquires Site for Bay Area Life Science Project appeared first on Commercial Property Executive.

Assembly at North First

A partnership between Invesco Real Estate, ProspectHill Group and SKS Partners has sold Assembly at North First in San Jose, Calif., for $192 million, public records show. Exeter Property Group purchased the roughly 300,000-square-foot office campus.

READ ALSO: San Francisco Market Update: Sales Volume, PSF Prices Up

Located at 3930, 3940, 3950 and 4000 N. First St., as well as 90 Headquarters Way, the property is less than 4 miles from Interstate 880, within walking distance of several public transit options and some 3 miles from Oracle’s Santa Clara, Calif., campus. The sellers initially purchased the asset in 2016 and began the redevelopment of the four buildings in 2018. Originally completed between the 1980s and the 1990s, the buildings served as the headquarters of Novellus.

Remarkable Renovations

Redevelopment plans featured two phases, with Gensler serving as the project architect. The first encompassed the renovations of the four initial buildings and combining two of the buildings into a single 100,000-square-foot structure. Additionally, interiors and exteriors were modernized and Assembly at North First was awarded LEED Gold certification. The second phase had not begun at the time of sale.

In 2019, Google began negotiations with the partnership to lease most of the space at the 27-acre campus, but the plan fell through and the tech giant purchased other office buildings in the area. Additionally, Google has major plans for downtown San Jose in the form of a mixed-used project, which will include some 7.3 million square feet of space.

The post Invesco Real Estate JV Sells Bay Area Campus for $192M appeared first on Commercial Property Executive.

Paseo. Image courtesy of Urban Catalyst

Urban Catalyst has made two crucial steps toward starting work on its conversion of the former Camera 12 theater in San Jose, Calif., into a mixed-use property. The company closed on a $56.2 million senior construction loan provided by Rialto Capital and secured the building permit for the project. JLL’s Jordan Angel arranged the construction financing from Rialto Capital.

READ ALSO: Hunt’s Grand Dallas Project Gets Green Light

Called Paseo, the project calls for the conversion of the former Camera 12 theater in downtown San Jose, which has been closed since 2016, into 100,000 square feet of mixed-use office and retail space.

The property, which is expected to be completed in July 2022, will offer 75,000 square feet of Class A office space alongside 25,000 square feet of ground-floor retail space. The project team will take advantage of the building’s former life as a theater and use the high ceilings to create features like floating conference rooms, mezzanine levels and catwalks to rooftop gardens, according to Urban Catalyst.

The company tapped HGA and ArcTec to design the urban revitalization project, while Swenson Builders was hired as the general contractor. Colliers International’s Nick Goddard will be the retail leasing broker for Paseo, with Newmark’s Jeff Arrillaga as the leasing broker for the office space. When completed, MCM Diversified will be responsible for the property management for both the office and retail portions of Paseo.

The project has already attracted interest from full-service bars and restaurants for its retail component, according to Urban Catalyst. Josh Burroughs, partner & COO at Urban Catalyst, said in prepared remarks that the retail section of Paseo is almost 100 percent leased.

Second fund for San Jose

Paseo will be the first of six projects that Urban Catalyst is expecting to begin construction on in 2021. The project is also one of six developments in Urban Catalyst’s Fund I, which closed in December after raising $131 million. The other projects in the company’s Fund I span a variety of uses, including office, retail, multifamily and student housing.

Urban Catalyst also opened its Fund II in February, with a goal of raising $200 million. The fund will similarly focus on office and residential developments in downtown San Jose. The first project announced for the second fund is a mixed-use property with multifamily rentals and office space called Icon/Echo.

The post Urban Catalyst Lands Financing for Silicon Valley Makeover appeared first on Commercial Property Executive.

One Santana West. Image courtesy of Federal Realty Investment Trust

Federal Realty Investment Trust has topped out the first building of its 1 million-square-foot office campus in West San Jose, Calif., adding more Class A supply to Silicon Valley at a time when companies are slowly bringing workers back to their desks.

The REIT said it had also installed the exterior skin of the 375,000-square-foot building, One Santana West, and made the property fully available for tenant build-out.

The eight-story tower is located across Winchester Boulevard from Federal Realty’s Santana Row shopping and dining district. Designed by Studios Architecture, the building will provide flexible floorplates of as much as 54,000 square feet, outdoor terraces on three floors, and more than an acre of landscaped, amenitized plaza space. Newmark Knight Frank is the project’s leasing agent, while Devcon Construction serves as the general contractor.

READ ALSO: Behind Oracle’s $155M San Jose Deal

The development milestone comes after tech firm NetApp announced in April that it will move its headquarters to 700 Santana Row, another property in the upcoming office campus. NetApp leased out the entire 304,000-square-foot building after selling its existing headquarters campus in Sunnyvale to Tishman Speyer.

The Fortune 500 cloud services firm said it would spend the rest of the year customizing and moving into the new offices, which are more oriented for hybrid work. Other office buildings in the sprawling campus dubbed The Offices at Santana Row include 300 Santana Row, 500 Santana Row, 900 Santana Row and Two Santana West.

Ready for the great return

One Santana West is geared toward “innovation companies that are ready to get back to work,” according to a prepared statement by Seth Bland, Senior Vice President of Regional Development at Federal Realty.

Features of the building include seven high-speed elevators, touchless elevators and doors and above-standard clean-air systems, along with an adjacent five-story parking garage, two floors of below-grade parking and more than 100 electric vehicle chargers. Landscape design and building engineering are provided by GLS Landscape/Architecture and Holmes Structures, respectively.

The building has 13-foot clear heights with exposed concrete ceilings and sits across from Santana Row’s retail offerings, which include dozens of shops and restaurants, as well as hundreds of rental apartments and condos and the 215-key Hotel Valencia.

Silicon Valley’s office vacancy rate reached 9.4 percent in the first quarter, up 350 basis points from the same period of last year, according to a market report by Colliers. The brokerage noted that vacant new construction along with uncertainty caused by the pandemic and remote work prompted some tenants to shed space, but average asking rents remain steady.

The post Federal Realty Tops Out Silicon Valley Tower appeared first on Commercial Property Executive.

The project will comprise two buildings: The Boulevard, a Class A office project, and a Life Time athletic resort, totaling just over 400,000 square feet of new construction. Developers have received full approvals from the City of San Jose and expect to break ground in the fourth quarter. Project completion is estimated in late 2023.

READ ALSO: Top 5 Office Projects Under Construction in California

CBRE Senior Vice Presidents Shane McNulty and Mike Grado will handle marketing and leasing efforts for The Boulevard. Developers hired HKS for architectural services.

The Boulevard will total 284,000 square feet of office space and is designed to meet LEED Silver standards. Developers opted for a wellness-focused design, set to include open atriums, break-out balconies, outdoor living rooms, an event space on the rooftop deck and a half-acre outdoor meeting and dining area. The building is also set to feature on-site storm water management and a bio-retention system. A 16,000-square-foot retail component and a 1,200-stall parking garage will also be included.

The Life Time athletic resort will be a three-story, 120,000-square-foot facility adjacent to the office building. It will include studios and a fitness floor, as well as outdoor fitness areas and a rooftop pool. In addition, the resort will feature a spa, a café, and a Kids Academy.

Stevens Creek Urban Village

The Boulevard will be located at the corner of Stevens Creek Boulevard and Saratoga Avenue. The City of San Jose has designated the southern side of Stevens Creek—between Lawrence Expressway to the west and Winchester Boulevard to the east—as the ‘Stevens Creek Urban Village’ development plan, adopted in 2017 to provide guidelines and guidance for the area’s growth. The official document calls for a transition to “a mixed-use and pedestrian-oriented place that supports and creates a safe environment for all modes of travel, a thriving commercial corridor, and public gathering places.”

Cypress Equities owns the properties associated with 3086 Stevens Creek Blvd., according to CommercialEdge, where it will develop the mixed-use project. The site’s location provides access to several shopping, dining and entertainment destinations within walking distance. Downtown San Jose is approximately 7 miles away.

“The development will provide pedestrian friendly ground-floor retail space, new 30-foot-wide landscaped sidewalks and secured bike storage,” said Cypress Equities CEO Chris Maguire, in a prepared statement.

In a recent report, CBRE identified San Jose as a top city for office development opportunities, among 50 other U.S. markets, based on construction costs, strength of existing supply, prior performance and forecast. The return to the office will most likely be led by the tech sector, benefiting office markets that are anchored by tech firms.

The Bay Area office market reached a total vacancy of 19.3 percent as of March, the latest CommercialEdge report shows. There were more than 4 million square feet of office space under construction in the Bay Area as of the first quarter, the same report shows. One of the largest projects currently underway in San Jose is Adobe North Tower, slated for completion next year and totaling 700,000 square feet of office space.

The post Cypress Equities, Life Time to Build Mixed-Use Asset in San Jose appeared first on Commercial Property Executive.

As the pandemic dramatically changed the office landscape, California’s office market took a deep dive, leaving owners and occupiers uncertain about what the future holds. Despite the lingering unpredictability, office construction did not come to a halt in California.

According to CommercialEdge, the state’s development pipeline encompassed some 38.5 million square feet of office space as of April, and nearly 3.5 million square feet was delivered year-to-date. The list below highlights the largest office projects underway across California, based on CommercialEdge data.

Source: CommercialEdge

5. CityView Plaza – 200 Park Ave., San Jose

Jay Paul Co.’s project in San Jose aligns with plans to revamp the city’s downtown. The 20-story office tower is one of the major downtown office projects that are poised to reshape Silicon Valley’s skyline. The 879,000-square-foot development broke ground in November 2019 and is slated for completion by the third quarter of 2023. The project also marks downtown San Jose’s first speculative building in more than a decade.

Jay Paul Co. purchased the site at 200 Park Ave., along with a parcel at 282 S. Almaden Blvd., for a total of $100 million. The two sites, at the corner of Park Avenue and South Almaden Boulevard, are located across the company’s Cityview Plaza redevelopment, a 3.8 million-square-foot project that will incorporate six interconnected office buildings.

4. The RaDD – Phase I, San Diego

The RaDD, San Diego. Image courtesy of IQHQ

IQHQ, a life sciences real estate development company, is developing the $1.5 billion San Diego Research and Development District, the first urban life sciences-centric waterfront campus in San Diego. The RaDD will include office, lab, and retail space and occupy more than 8 acres spanning three entire city blocks. At 937 N. Harbor Drive, the first phase consists of a 950,000-square-foot, 28-story office building, expected to come online in the third quarter of 2023.

The pandemic bolstered an already favorable environment for life sciences. The metro is the third-largest life sciences market in the U.S., with an existing inventory of some 19.6 million square feet at the beginning of 2020, according to Cushman & Wakefield. The life sciences hub is one of the major economic drivers in the metro, generating $39.4 billion in economic output and providing more than 65,500 jobs, Cushman & Wakefield researchers noted.

3. First Street Tower of Oceanwide Center, San Francisco

The 1.5 million-square-foot mixed-use development will feature more than 1 million square feet of office space. Upon completion, the 61-story tower will also include first and second-floor retail space and 110 residential units. The project broke ground in 2016 and was originally anticipated for completion by 2021, however, due to economic uncertainties the development timeline has been delayed until 2025.

Oceanwide Holdings purchased the 1.2-acre site in 2015 for $296 million for the development of First Street Tower, although as the company encountered financial difficulties, it planned to sell the project. Initially, SPF Capital International agreed to pay $1 billion for the development, but the deal failed to materialize after several delays. Oceanwide Holdings then entered a new agreement with Hony Capital, but that deal also fell through earlier this year, The Real Deal reported.

2. Richards Boulevard Office Complex, Sacramento

The California Department of General Services (DGS) is developing a nearly 1.3 million-square-foot office complex on the southwest corner of Richards Boulevard and Seventh Street in Sacramento’s River District, known for its industrial past. The office complex will encompass four buildings, spanning 17.4 acres, and will be connected by a three-story bridge.

DGS has selected Hensel Phelps and ZGF, in partnership with Dreyfuss + Blackford, to design the office complex. The team is focused on pursuing sustainable design solutions while keeping in mind the River District’s industrial character. The project is designed to achieve zero net energy and zero net carbon for the entire site and is pursuing LEED silver certification. The Richards Boulevard Office Complex is slated for completion by 2024.

1. Adobe North Tower, San Jose

Adobe North Tower. Rendering courtesy of the City of San Jose

Adobe’s project at 333 W. San Fernando St. in San Jose is the fourth tower of the company’s global headquarters. The 1.3 million-square-foot development will include first-floor retail space and five levels of parking. The North Tower will be an all-electric building, which means that the facility will be powered from renewable sources such as wind and solar energy. This also aligns with Adobe’s goal of relying on 100 percent renewable energy by 2035. Additionally, the asset is designed to achieve LEED gold certification.

According to initial plans, the 18-story North Tower will be connected to the firm’s existing buildings by a pedestrian bridge extending over San Fernando Street. However, due to the pandemic, the company put the construction of the sky bridge on hold. Adobe also expressed uncertainty about whether it will complete the building’s interior, pausing plans until the company has a clearer image of its future physical office space needs.

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Nine properties, totaling 2 million square feet, came online by March, with the largest of these being Uber’s 1-million-square-foot Mission Bay campus in SoMa. The downward trend of the past four years is expected to change, as 47 assets are slated for delivery in 2021, totaling approximately 11.5 million square feet. Besides tech, life sciences are spearheading the activity in urban areas, with BioMed Realty, Healthpeak Properties and Kaiser Permanente set to finish construction of about 1.9 million square feet of health care assets across the South San Francisco, Brisbane and Redwood City submarkets. BioMed Realty also recently received approval for its 12-acre Emeryville Center of Innovation, which is expected to break ground next year.

Tech-centric development is still a major driver, as work-from-home conditions are expected to change soon. Adobe Systems is building a 1.3-million-square-foot, 18-floor office tower in San Jose’s CBD, while Google and Microsoft are developing about 1.2 million square feet in Mountain View.

The largest project under construction in the Bay is Oceanwide Holdings’ First Street Tower of Oceanwide Center, a 1.5-million-square-foot office tower situated in San Francisco’s South Financial District. The project is scheduled for a 2022 delivery and will be the city’s second-tallest such building. It is designed to meet LEED Platinum specifications upon completion.

CommercialEdge covers 8M+ property records in the United States. View the latest CommercialEdge national monthly office report here. We included properties of 25,000+ square feet in our research.

The post San Francisco Market Update: The Pipeline Is Thawing appeared first on Commercial Property Executive.

2 N. First St.

A 43,400-square-foot office building in downtown San Jose, Calif., traded for $14.6 million, according to public records.

CommercialEdge data lists the previous owner as California-based company Leisure Sports. The asset last traded in 2018 for $15.5 million. Additionally, the asset was subject to a $12 million loan from Fremont Bank, set to mature at the end of the year. The Mercury News identified the buyer as a group of private investors led by Florian Barth.

Located at 2 N. First St., the six-story building is a few blocks from San Jose State University, 1 mile north of Interstate 280 and close to a future BART Silicon Valley Phase II station. Completed in 1948, the property houses Founders Floor, VTA and A3Cube.

With the market going into a recovery phase, Silicon Valley was no stranger to office deals lately, some of them with hefty price tags. Earlier in April, Tishman Speyer spent $365 million for NetApp’s headquarters campus in Sunnyvale. The seller will relocate later in the year to a hybrid work-oriented office. And just a few days earlier, Brookfield shelled out $630 million for a Mountain View campus leased to WeWork and occupied by Facebook as part of an enterprise lease.

The post Silicon Valley Office Building Trades for $15M appeared first on Commercial Property Executive.

Former NetApp campus in Sunnyvale. Image courtesy of Tishman Speyer

Tishman Speyer has acquired the Sunnyvale, Calif., headquarters campus of NetApp, as the Fortune 500 cloud services company prepares to decamp to a smaller, more forward-looking location in San Jose, Calif. The real estate development and investment giant snapped up the four-building, Class A property in the Moffett Park submarket for $365 million.

NetApp was the seller and will relocate later this year after a short lease-back period. Built in 2012, the huge property at 1395 Crossman Ave. spans a total of 700,000 square feet of office space. NetApp will move to 700 Santana Row, about 7 miles southeast of its current home.

READ ALSO: Facebook-Leased Campus Scores $750M Refi

The new global headquarters consists of an eight-story, 303,000-square-foot building owned by Federal Realty Investment Trust in the mixed-use Santana Row district of West San Jose. NetApp will spend the rest of the year further customizing and settling into the offices, which it says are more optimized for hybrid work.

The tech firm’s current location sits just south of the San Francisco Bay and includes two parking structures, along with outdoor recreational space. Tishman Speyer said in a prepared statement that it plans to re-lease the property to one or more tenants after capital improvements.

Growing in a tech hub

Manhattan-based Tishman Speyer, which has a global real estate portfolio worth $113 billion, noted that the office space is still in excellent condition. Amenities include a gym with basketball court, lockers and showers, an outdoor volleyball court, an executive briefing center and a full-service cafeteria. Tishman Speyer plans to retain most of the property’s amenities while adding its own wellness, lifestyle and corporate services for tenants under the company’s Zo brand.

700 Santana Row. Image courtesy of NetApp

A Savills team of Joe Brady, Michael Drew, Peter Hamann and John Brady represented NetApp in the sale and the relocation lease. Newmark’s Phil Mahoney, Jon Mackey, and Mike Saign will handle leasing at the campus on behalf of Tishman Speyer.

The property has been on the market since January, when The Mercury News reported that Savills had circulated a flyer offering. The sale marks NetApp’s second disposition on the block. In August 2019, Google bought a roughly 16-acre parcel, representing half of NetApp’s then 30-acre site, for $95.6 million, the newspaper reported at the time.

Tishman Speyer’s President & CEO Rob Speyer commented in a statement that demand for high-quality office space around Moffett Park is “very strong.” The area has become a favorite for Silicon Valley firms in recent years. In addition to Google, which has spent more than $1 billion buying up properties in the area, Facebook and Amazon have preleased Jay Paul Cos.’s 1.8 million-square-foot Moffett Towers II.

The acquisition by Tishman Speyer boosts the company’s portfolio in Silicon Valley, which already includes Bayside Towers in Foster City, 400 Castro St. in Mountain View and 222 Second in San Francisco, which is leased to LinkedIn. In 2018, the developer joined forces with Major League Baseball team the San Francisco Giants to build Mission Rock, a 28-acre mixed-use project in the team’s home city.

Going hybrid

NetApp said that its new location in San Jose will serve the company’s ongoing transition to a hybrid work model that is better geared toward employee needs. The state-of-the-art office will feature a cascading, interconnecting staircase, an indoor fireplace lounge, water walls on each floor and a full-service kitchen and café on the sixth floor that will be connected to a large outdoor terrace.

“The workplace focuses on the employee experience and promotes an innovative, open and fun environment,” a NetApp representative noted to Commercial Property Executive.

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SV1 Exterior. Photo courtesy of NTT.

NTT Global Data Centers Americas has entered the tight Silicon Valley data center market with the completion of its hyperscale facility in Santa Clara, Calif. SV1 is the provider’s first U.S. location to use its proprietary base isolation system developed in partnership with Earthquake Protection Systems.

Tokyo-based NTT Communications announced construction plans in 2019 at the Santa Clara site. At that time, NTT operated the RagingWire brand, now consolidated into NTT Global Data Centers Americas. NTT first acquired an 80 percent stake in colocation start-up RagingWire back in 2014—a $350 million investment—and achieved full ownership in 2018.

NTT’s four-story SV1 is a 160,000-square-foot data center, providing 64,000 square feet of IT space. It features an initial critical IT load of 5 MW, scalable to 16 MW, and more than 6,000 square feet of client storage and conference space. Available power densities range between 7kW and 20kW per rack.

Resilience in a high-barrier market

SV1 uses a base isolation system for protection against earthquakes. The design utilizes a combination of triple-friction pendulum pedestals and viscous dampers, meant to dissipate energy and reduce building displacement and allowing the structure to move up to 32 inches in any horizontal direction. According to NTT, several of its Japanese facilities have endured earthquakes of magnitudes up to 8.8 with systems performing within expectations.

The building is located on Walsh Avenue, in a high-density area just blocks from Digital Realty’s planned 430,000-square-foot campus. NTT’s facility offers access to multiple Tier-1 carriers, including Level 3, Frontier and Wholesale Networks—with more available via dark fiber. Cloud services include AWS, Alibaba Cloud and Oracle Cloud, among others.

According to a recent Cushman & Wakefield report, Silicon Valley is one of the tightest data center markets in the U.S., with vacancy at 6 percent at the end of 2020, second only to Northern Virginia’s 3 percent. Lack of physical space has not stopped developers from adding more inventory, however, with multi-floor buildings becoming the norm. Other operators with data centers underway in Silicon Valley include Equinix and Vantage Data Centers.

The SV1 facility is NTT’s third such delivery this year. In February, the global data center provider opened two new campuses: a 72 MW property in Chicago and another in Hillsboro, Ore., with a deployment of 126 MW.

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47200 Bayside Parkway. Photo courtesy of Newmark.

Kennedy Wilson, through its Kennedy Wilson Fund VI, has acquired a two-building R&D portfolio in Fremont, Calif., for $32.3 million. 

TA Realty sold the assets, which total 115,537 square feet and are fully leased to Intuity Medical and Mercury Systems. According to CommercialEdge data, the seller had acquired the two properties in 2018, in a $25 million portfolio transaction. 

READ ALSO: San Francisco’s Office Market Shows Signs of Life

The two-story office building located at 47200 Bayside Parkway comprises 53,713 square feet and is fully leased to aerospace and defense company Mercury Systems since 2005. The property, constructed in 1992, offers a parking ratio of 3/1,000.

The building occupied by Intuity Medical is located at 3500 W. Warren Ave. The two-story, 61,824-square-foot Class B office was initially constructed in 1986. It serves as the headquarters for the medical device manufacturer, where it develops its proprietary diabetes management solutions. The traded assets sit less than a mile from each other in Fremont’s dense tech market, with immediate access to Interstate 880 and various shopping and dining destinations.

A team of Newmark brokers led by Head of Northern California Capital Markets Steven Golubchik represented TA Realty in the transaction. 

A desirable alternative

Due to its lower rates, Fremont is a sought-after alternative to the overall pricier Silicon Valley. As of last year’s fourth quarter, the submarket reached an average triple-net asking rent of $1.39/square foot for R&D space, much lower than the Silicon Valley average of $2.37, according to a recent Newmark report.

Kennedy Wilson raised $775 million in capital commitments for its Kennedy Wilson Real Estate Fund VI, according to a 2019 press release. The fund is focused on the Western U.S., targeting value-add opportunities. Kennedy Wilson owns more than 20 office properties across the wider Bay Area totaling more than 1.6 million square feet, according to Commercial Edge data.

Deals still happening in the Bay Area

While overall office rates continued to drop across both Silicon Valley and San Francisco due to uncertainty brought by the health crisis and ensuing work-from-home policies, properties anchored by strong tenants with long-term commitments continued to trade in the area.

Earlier this month, Brookfield Property Partners paid $630 million for a Mountain View campus leased to WeWork and occupied by Facebook through an enterprise lease. In March, Kilroy announced the record $1 billion sale of The Exchange on 16th, Dropbox’s Mission Bay base. The buyer was later identified as KKR. And across the bay, CIM Group sold Oakland’s Uptown Station, a mixed-use asset whose office component is occupied by Square Inc., for more than $400 million.

The post TA Realty Sells Bay Area R&D Assets appeared first on Commercial Property Executive.

391 San Antonio. Image via Google Street View

An affiliate of Brookfield Property Partners has acquired a two-building, WeWork-leased office complex in Mountain View, Calif., for $630 million, marking one of the largest recent deals in Silicon Valley. The seller was an affiliate of Merlone Geier Partners, a San Francisco-based private real estate firm that redeveloped an old shopping center at the site.

Part of The Village at San Antonio Center, a mixed-use project at El Camino Real and San Antonio Road, the asset measures 456,760 square feet of office space, along with a 10-screen ICON Theater, a parking garage and retail space, for a grand total of 576,921 square feet. The office component is fully leased to WeWork and occupied by Facebook with an enterprise lease.

READ ALSO: Brookfield Property Partners Agrees to $6.5B Sale

Brookfield Strategic Real Estate Partners III purchased the asset for about $137.2 million in equity, while Goldman Sachs, Credit Suisse arm Column Financial and Société Générale provided a $505.6 million loan for the acquisition, according to an analysis by Fitch Ratings. The transaction also included $12.8 million in closing costs, landlord obligations and gap rents.

Built in 2017, the LEED Gold-certified property is located less than half a mile from the San Antonio stop of the Caltrain system, offering convenient access to San Jose and San Francisco. The largely commercial area around the site includes a WalMart and Target along with single-family and multifamily housing. Google’s corporate headquarters, dubbed the Googleplex, is roughly 2 miles to the northeast.

The two office buildings are located at 401 and 391 San Antonio Road and measure 217,754 and 239,006 square feet, respectively, plus 24,301 square feet of ground-floor retail. The asset also includes a nine-story, standalone parking garage with 1,229 spaces, the movie theater building and a leasehold interest in retail space on the ground floor of the Hyatt Centric Hotel.

In addition to the 157-key hotel, the larger master development also encompasses The Village Shops, a 90,000-square-foot retail property anchored by Safeway, and The Village Residences, a 330-unit luxury apartment community that Brookfield separately acquired in late 2019.

Bright spot in tech hub

According to Reis Inc. data cited by Fitch, the asset is located in the Palo Alto/Mountain View/Los Altos submarket of San Jose, which is significantly outperforming the overall San Jose market. Office vacancy in the submarket was 13.5 percent at the end of 2020, with asking rents of $69.06 per square foot.

The broader San Jose office market recorded vacancy of 19.3 percent as of the fourth quarter of 2020. Vacancy is expected to rise to 20.2 percent in 2021 and 22.9 percent in 2023, while asking rents, currently at $47.50 per square foot, are projected to fall to $42.16 per square foot in 2022.

Brookfield Property Partners, one of the largest owners, operators and developers of real estate in the world, had about $88 billion in total assets at the end of December, including more than 250 properties across the U.S. On Thursday, Canada’s Brookfield Asset Management Inc. said it had reached a $6.5 billion deal to take its real estate arm private by purchasing all of the outstanding shares of Brookfield Property Partners LP.

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South Bay Tech Center

South Bay Tech Center, a six-building, 161,700-square-foot office/R&D property in Milpitas, Calif., has changed hands for $35.3 million, Santa Clara County records show. The buyer was Intelli LLC, an entity affiliated with Vien Thao Media. The San Jose-based firm financed the acquisition with a $21.2 million loan from Cathay Bank. The seller was an entity affiliated with Benlin Properties.

The Class B property traded for approximately $218 per square foot. The price is more than 50 percent smaller than the average sale price recorded year-to-date through February for Bay Area office assets, according to a recent CommercialEdge report.

Situated on more than 11 acres at 1603 S. Main St., the office campus came online in 1987. The asset comprises four one-story and two two-story buildings that also feature loading doors for industrial use. A diverse mix of tenants leased space at the property, with the tenant roster including Bay Area Realty Investment, Wine Globe, Forever Health and Concentra Urgent Care.

The property is 6 miles north of downtown San Jose and Google’s massive mixed-use development, just north of Montague Expressway. The location is also 2 miles from another office/R&D campus that traded in August for $45.5 million.

A flurry of Silicon Valley investments

Despite difficulties brought about by the pandemic, the Bay Area office market has witnessed a high number of deals during the last six months. CommercialEdge data shows 38 properties totaling more than 4.5 million square feet changed hands for an aggregate value of $1.8 billion in the fourth quarter of 2020 alone. Of the total, Silicon Valley assets accounted for a little more than $4 million, marking a 44.5 percent drop in the year-over-year investment activity, according to a recent Kidder Mathews report.

One of the largest deals closed in October, when Swift Real Estate Partners acquired a 373,000-square-foot office campus leased to Apple in Cupertino, Calif., for $346 million. The seller was DWS Group, the asset management affiliate of Deutsche Bank, which sold the Class B asset after nearly seven years of ownership.

Other noteworthy transactions include DivcoWest’s $160 million disposition of a 317,612-square-foot office/R&D campus in San Jose, Calif., and Stanford University’s $123 million sale of a newly constructed, 85,420-square-foot building within its Stanford Research Park in Palo Alto, Calif.

The post Silicon Valley Office Asset Trades for $35M appeared first on Commercial Property Executive.

Mowry Business Center

RK Logistics Group has expanded its presence in the state of California. The third-party logistics provider signed two leases, totaling 410,000 square feet, at two Newark, Calif., warehouses and expects to hire between 50 and 100 people for the expansion. Cushman & Wakefield represented the landlords, while Townsend Commercial Real Estate acted as brokers for the new tenant.

RK Logistics Group will occupy the entire building located at 6753 Mowry Ave., part of Mowry Business Center. The 269,000-square-foot warehouse and distribution center is owned by Link Logistics and was constructed in 1997. The Class A facility offers insulated ceilings, ESFR sprinklers, HVAC and a 0.8/1,000 parking ratio, CommercialEdge data shows. The new tenant recently signed a multi-year deal with Lam Research, to provide the semiconductor systems manufacturer with logistics services support. Lam Research is the second-largest manufacturer in the Bay Area, with 6,200 employees, as reported by San Francisco Business Times in 2020.

RK Logistics also fully leased one of the four buildings at the newly constructed Morton Commerce Center, located at 7375 Morton Ave. and owned by Overton Moore Properties. The 141,000-square-foot warehouse is set to house RK’s primary eCommerce and retail fulfillment operations. It offers 18 dock doors and two grade-level doors, ESFR sprinklers, 159 parking spaces and a roof capable of handling 100 percent solar capacity. Morton Commerce Center is situated on a 30-acre site and comprises 604,796 square feet of usable space. Currently, the only other tenant at the property is Facebook, which signed a 225,679-square-foot lease back in January 2019, San Francisco Business Times reported.

Both properties are within a 30-mile radius of major transportation hubs, interstates 880, 580, 680 and 280, three airports and the Port of Oakland. RK Logistics operates in Newark, Fremont, and Hayward, with close to one million square feet of warehousing and distribution capacity, including a certified, general purpose Foreign Trade Zone in the South Bay area.

Semiconductors in the spotlight

The current global health crisis negatively impacted logistics and transportation networks worldwide, as well as multiple other sectors. One such side effect is a massive shortage of semiconductors, which is driving up not only chip stocks, as MarketWatch pointed out, but is also expected to spur domestic development.

Case in point, Intel is investing $20 billion in two new Arizona factories, expected to create some 15,000 jobs in the long term. In December last year, Taiwanese manufacturer TSMC unveiled first plans for its upcoming $35 billion U.S. megaproject, also in Phoenix.

President Joe Biden signed an executive order this February, aiming to “address vulnerabilities in the supply chains of four key products”, a White House press release states. These four products are pharmaceuticals, semiconductors, critical minerals and large-capacity batteries.

Solid industrial fundamentals

Despite a troubled year overall, Silicon Valley’s industrial market remained strong through 2020 and is poised to grow even more this year. Gross absorption reached 4.8 million square feet by last year’s end, a growth of 5.6 percent from 2019, according to a Colliers report, mostly driven by growing demand in e-commerce and the life science sector.

Vacancy rose to 3 percent in 2020, a 30 basis point uptick over 2019, while asking rates remained virtually unchanged, the same report showed. One million square feet of industrial space was delivered in 2020, of which more than 91 percent was instantly absorbed, with preleasing activity setting the norm.

The post RK Logistics Leases 410 KSF in the Bay Area appeared first on Commercial Property Executive.

Walsh Bowers. Image courtesy of Equus Capital Partners Ltd.

An affiliate of GI Partners, a San Francisco-based private investment firm, has acquired a two-building office/R&D portfolio totaling 108,459 square feet in Santa Clara, Calif., from Equus Capital Partners Ltd., for $41.5 million.

The sale of the Walsh Bowers portfolio was made on behalf of Equus Investment Partnership X, LP (Fund X) a $361 million discretionary equity fund managed by Equus.

READ ALSO: Dror Poleg on Post-Pandemic Office Demand

Equus, a private equity real estate investment management firm based near Philadelphia, acquired the properties at 2845-55 Bowers Ave. and 2710 Walsh Ave. in Silicon Valley’s highly sought after “Golden Triangle” in early 2017 from Swift Real Estate Partners for $32 million. The combined parcels total 6.31 acres and are bordered by Highway 101, Interstate 880 and California 237, which provides excellent regional access throughout Silicon Valley. The properties, built in 1975 and 1980, have convenient access to both San Francisco and Oakland, Calif., and are less than 5 miles to the Mineta San Jose International Airport. The portfolio is also a 10-minute drive to Levi’s Stadium and Santa Clara Convention Center and 1.3 miles from the Lawrence Caltrain station.

Robert Butchenhart, vice president for Equus and manager of Equus’ West Coast office in Los Angeles, told Commercial Property Executive both assets were fully leased. He said 2710 Walsh Ave. has one tenant and 2845-55 Bowers Ave. has two.

Butchenhart said in prepared comments the firm envisioned the portfolio as a classic “covered land play” when it acquired it in 2017 and has maintained short-term occupancy to make it easier for a new owner to redevelop the properties and capture significant density upside.

Tim Guarnieri of Newmark represented GI Partners. Eric Fox, Steve Hermann and Seth Siegel of Cushman & Wakefield represented Equus in the transaction.

The post Equus Capital Sells Silicon Valley Assets for $42M appeared first on Commercial Property Executive.

2590 Walsh Ave.

A few months after starting construction on two data centers at its Northern Virginia and Silicon Valley campuses, Vantage Data Centers might be preparing for another expansion. The company has paid $40 million for a 113,600-square-foot property at 2590 Walsh Ave. in Santa Clara, Calif., through Vantage Data Centers CA31 LLC, according to public records. The previous owner was D.R. Stephens & Co., according to CommercialEdge, and the office/flex industrial asset last changed hands in 2007 for 14.3 million.

The single-story building came online in 1981 on a 6.7-acre parcel, featuring a mix of office, warehouse and manufacturing space, as well as a parking ratio of 3 spaces per 1,000 square feet. However, the existing structure might end up demolished if Vantage is to make the property a starting point for a third Santa Clara campus, as the buyer LLC’s name could suggest. Vantage representatives did not immediately reply to a request for additional details.

Located some 2 miles northwest of downtown Santa Clara, the property is within walking distance of two Vantage data center facilities at 2565 and 2625 Walsh Ave. that Facebook leased in February 2020, according to The Mercury News. That deal also included three similar buildings at 2480, 2880, and 2820 Northwestern Parkway, also part of Vantage’s Santa Clara CA1 campus.

Further up the road is the 8-acre site of a planned, 430,000-square-foot data center of Digital Realty. The company intends to develop the facility, an addition to its Santa Clara connected campus, in partnership with local real estate firm Pelio & Associates.

A data center boom

The COVID-19 pandemic generated increased demand for online services and data centers felt the strain on the existing infrastructure. Trying to keep up with demand, data center owners accelerated the expansion, especially in the first half of 2020, according to a CBRE report. Silicon Valley had 24.6 MW of capacity under construction at the time, while total developments across primary markets reached 373.6 MW.

Data center activity in 2021 will, most likely, follow the same trends. Lee Kestler, chief commercial officer at Vantage Data Centers, told Commercial Property Executive that the main challenge will depend on how quickly and efficiently operators can keep up with demand. Kestler also stated the company will continue to eye North America and Europe for future expansion.

The post Vantage Data Centers Grows Silicon Valley Footprint appeared first on Commercial Property Executive.

16825 Murphy Parkway. Rendering courtesy of Duke Realty

Duke Realty has expanded its California footprint with the acquisition of two industrial buildings with redevelopment potential in Oakland, as well as 17.4 acres of land in San Jose and 7.9 acres of land in Richmond, where the company plans new projects. Duke’s expansion strategy in the region also calls for the construction of a 346,860-square-foot speculative development on a 19.8-acre site in Lathrop, Calif.

READ ALSO: Duke Realty Preleases New Jersey Distribution Center

One of the Oakland facilities, located at 955 Kennedy St., was built in 1968. The 119,000-square-foot asset is situated within 7 miles from Oakland International Airport. CommercialEdge data indicates that Duke Realty purchased the 5-acre site for $22 million in September 2020. That same month, Duke Realty also bought the second Oakland asset, which came online in 1958. The property sold for $31 million, according to CommercialEdge. Situated at 1905 Dennison St., the 168,489-square-foot building is within walking distance of the 955 Kennedy St. facility. The company intends to redevelop both sites, the East Bay Business News reported.

In San Jose, Duke plans to develop a 302,775-square-foot facility. Located at 5853 and 5863 Rue Ferrari, the project is within 10 miles of the city’s downtown. The company also plans to build a 150,120-square-foot distribution center on the Richmond site. Located at 731 West Cutting Blvd., the development is just off Interstate 580. The Lathrop project is situated at 16825 Murphy Parkway, just off Interstate 5.

Duke will seek LEED certification for all of its upcoming developments. Once these projects are completed, the company’s Northern California portfolio will total more than 4 million square feet.

Michael Chukwueke, vice president, acquisitions and development for Duke Realty said in prepared remarks that Northern California is a strategic growth market for the company, which will continue to seek infill redevelopment opportunities in areas with low vacancy rates.

This month, Duke sold a Houston-area logistics property for $108 million. The 1 million-square-foot facility is fully leased to Amazon.

The post Duke Realty Expands Industrial Footprint in Northern California appeared first on Commercial Property Executive.

Icon/Echo. Image courtesy of Urban Catalyst

Urban Catalyst, a leading Opportunity Zone Fund in Silicon Valley, has launched its second real estate fund with the goal of raising $200 million. Urban Catalyst commences Fund II with the Icon/Echo multifamily and office project on its plate.

READ ALSO: Top 10 Office Deliveries of 2020

The introduction of Fund II comes just six weeks after the Dec. 30, 2020, closing of Fund I, which wrapped up having raised $131 million in commitments through a diversified group of 356 investors, including tech workers from neighboring companies. “We are building off of the success of our fundraising in Fund I and continuing that momentum into Fund II,” Erik Hayden, founder of Urban Catalyst, told Commercial Property Executive.

Like its predecessor opportunity zone vehicle, Fund II will contribute to the mitigation of Silicon Valley’s housing crisis with the creation of 300 apartment units at the Icon/Echo development. With a location at the intersection of Fourth St. and Santa Clara St. in downtown San Jose, just a stone’s throw from a Bart Station, the mixed-use, transit-oriented development will also feature 420,000 square feet of office space.

While Fund I will leave its mark on San Jose via seven ground-up developments consisting of multifamily, office, senior housing and hotel projects, Fund II’s development scope won’t be quite as broad. “For Fund II, we have only planned on including the Icon and Echo projects. Office and multifamily are the two most common types of real estate assets in Silicon Valley, which provides us with project-type diversity,” Hayden said.

Demand drivers

While many office developers are wary of moving forward with projects amid the pandemic-sparked remote work trend that may have more staying power than originally anticipated, Urban Catalyst has every reason to be confident about planning such a large office segment at Icon/Echo; San Jose possesses a unique factor that works in its favor in terms of long-term demand for office space. “Contrary to nearby San Francisco, where office work is prohibitive due to density, San Jose’s dispersed office districts may attract companies seeking their own buildings,” according to a fourth quarter 2020 report by Marcus & Millichap. “Firms that have a difficult time working remotely due to the nature of their business, in particular, may be the first to seek out new accommodations or take the opportunity to expand if their industry is not threatened by the pandemic,” the report noted.

As for the San Jose apartment market, the vacancy rate went on the upswing amid the pandemic as renters moved out of the metro when jobs went remote for the foreseeable future. As noted in the Marcus & Millichap Report, the short-term performance for apartments may be murky, but the long-term outlook is bright. Although Google committed to a one-year remote work period for its employees, the company is still planning an 80-acre mixed-use project with office and retail in the city. And Apple has touted the collaborative office environment as a hotbed for creativity. “Beyond the pandemic, Big Tech will begin to bring employees back into offices, supporting long-term demand,” according to Marcus & Millichap.

The post Urban Catalyst Launches $200M Opportunity Zone Fund appeared first on Commercial Property Executive.

5301 Patrick Henry Drive. Image via Google Street View

Hines has snapped up an office building in Santa Clara, Calif., marking another significant Silicon Valley office deal even as most workplaces sit empty. Said by multiple sources to have been leased to Apple since 2015, the 127,000-square-foot property at 5301 Patrick Henry Drive changed hands for $68 million, according to Santa Clara County records. 

The purchasing entity, HGIT Patrick Henry LLC, shares an address with Hines’ global headquarters in Houston. The seller, Crown Realty & Development, acquired the one-story property for $60.5 million in May 2016, according to CommercialEdge records.

The Mercury News reported in mid-2015 that Apple had agreed to lease the entire building along with a neighboring office property at 5440 Patrick Henry Drive. The space, totaling 318,000 square feet, would house up to 1,600 employees of the Cupertino, Calif.-based tech firm.

Built in 1982, the property was acquired by a consortium led by Insight Realty in December 2014 and underwent cosmetic renovations the following year. The building is located on a 6.9-acre site just south of State Route 237 and about 1 mile from Levi’s Stadium, the home venue of the NFL’s San Francisco 49ers.

Hines boosted its presence in Santa Clara last August, when Hines Global Income Trust, a REIT sponsored by the global property investor, acquired the sprawling Advanced Manufacturing Portfolio for $107.1 million. The four-building, 417,000-square-foot asset provides light manufacturing and R&D space near the intersection of Montague Expressway and Laurelwood Road.

Tech hub thaws

Santa Clara, a city of some 130,000 people within the San Jose metro area, is home to a cluster of major technology firms including Applied Materials, Intel and AMD. The region’s office properties continue to lure investors, despite a coronavirus-induced crisis which has led to historically low physical occupancy. Just 15.4 percent of the San Jose metro’s offices were occupied as of last week, according to access control data from Kastle Systems.

Last November, a South Korean investment group scooped up North First, a three-building, 317,612-square-foot office and R&D campus in San Jose for $160 million. The property forms part of Cisco’s global headquarters.

In the same month, Lane Partners purchased the six-building office and R&D campus serving as Fujitsu’s regional headquarters in nearby Sunnyvale. The property sold for $104 million as part of the Japanese firm’s phased relocation to a neighboring facility it owns.

In a recent report, CBRE ranked San Jose as the number one metro area in the U.S. for office development opportunity, bolstered by the city’s robust supply growth and absorption. The brokerage expects the city to have the fastest-growing economy following the current downturn, owing to its massive tech ecosystem, and noted that San Jose has strong preleasing of office buildings under construction at 62 percent.

The post Hines Picks Up Silicon Valley Office Building for $68M appeared first on Commercial Property Executive.

641 Walsh Ave. Image courtesy of Digital Realty

Digital Realty has unveiled plans for a new addition to its Santa Clara, Calif., connected campus at the epicenter of Silicon Valley. The company will develop a 430,000-square-foot data center that will provide 48 MW of critical IT capacity. For the project, the firm is partnering with Pelio & Associates, a local real estate company with more than two decades of data center development.

The site is an 8-acre parcel at 641 Walsh Ave., which is currently occupied by a 183,545-square-foot industrial warehouse built in 1946. The existing structure will be demolished to make way for the new facility, according to Marc Musgrove, director of corporate communications for Digital Realty.

In its place, the company will develop a four-story building designed to LEED Gold standards. The project will use sustainable materials including recycled concrete and steel. Additionally, the firm expects the data center to be powered by renewable energy directly from a solar array deployment on the facility’s roof.

The site is just across the street from the company’s 145,800-square-foot property at 2805 Lafayette St., close to Highway 101 and roughly 3 miles from San Jose International Airport.

Last month, the data center giant announced it will relocate its headquarters from San Francisco after 17 years in the city. The company’s new corporate office will be in Austin, joining the likes of Oracle and Hewlett-Packard, which have also relocated from California to Texas.

The post Digital Realty to Build New Silicon Valley Data Center appeared first on Commercial Property Executive.

652 N. King Road

Orton Development has completed the $29.5 million disposition of a 117,442-square-foot industrial complex in San Jose, Calif. Black Creek Group acquired the warehouse, according to Santa Clara County records.

The asset previously changed hands in September 2011 for $4.3 million, CommercialEdge data shows. The seller was East-West Bank, which came to own the park after it foreclosed on a $6.3 million loan taken out by a private investor, per public records.

Located at 464, 650 and 652 N. King Road on 11 acres, the asset is 5 miles east of San Jose International Airport and within 2 miles of interstates 680 and 880 and the Bayshore Freeway. The property comprises three buildings completed in 1966 and renovated in 2000 and 2013. The warehouses have an office build-out of 22.7 percent, a total of 13 grade-level doors, 14-foot clear heights and HVAC systems for climate control.

The tenant roster includes logistics provider Guaranteed Express Inc., grocery supplier Fresh & Best Produce and printing company Progressive Solutions.

Active buyer

Over the past year, Black Creek Group purchased several industrial assets nationwide. One of the largest transactions by sale price was the $109 million purchase of a 601,417-square-foot warehouse in San Diego, Calif. Morgan Stanley sold the asset after 15 years of ownership.

In the greater Bay Area market, the company acquired the 241,591-square-foot Bay Area Commerce Center – Hawthorne in Livermore, Calif. Crow Holdings sold the facility for $48.5 million last August.

In July, Black Creek paid $52.8 million for a 190,377-square-foot industrial asset in Springfield, Va. Amazon takes up more than two-thirds of the space and Goodman Distribution occupies the remainder.

The post Black Creek Pays $30M for San Jose Warehouse appeared first on Commercial Property Executive.

3960-3980 Fabian Way. Rendering courtesy of Cushman & Wakefield

Cushman & Wakefield has brokered the sale of a vacant, two-building office/R&D property totaling 24,000 square feet in Palo Alto, Calif.  Vice Chairman Kalil Jenab, Managing Principal Ben Paul and Financial Analyst Steven Jenab negotiated on behalf of the buyer, Graymark Capital. Managing Director Brad Martin from Stetson Earhart assisted the seller, a private investor.

The asset changed hands for $15.7 million, according to Santa Clara County records. The buyer received a $15 million acquisition loan from ReadyCap Commercial. 

Graymark will redevelop the property as part of a multi-million dollar capital improvement plan to reposition the complex to target life sciences users as well as tenants in the auto tech, food tech, robotics and artificial intelligence industries. The company selected the Cushman & Wakefield brokerage team involved in the sale to oversee leasing efforts for the repurposed property.

Located on 1 acre at 3960-3980 Fabian Way, the two single-story buildings were completed in 1959. The property was most recently occupied by a medical device company building a digital surgery platform. The site is a short distance from U.S. Route 101 and 14 miles northwest of downtown San Jose.

The property is less than 4 miles from an 85,420-square-foot building in Stanford Research Park that traded for $123 million in December. Harrison Street purchased the recently delivered asset from Stanford University.

The post Cushman & Wakefield Closes $16M Bay Area Office Deal appeared first on Commercial Property Executive.

2144 Oakland Road. Image courtesy of Newmark

TA Realty has finalized the $26.6 million acquisition of a newly built, 82,900-square-foot logistics property in San Jose, Calif. Panattoni Development Co. sold the fully leased asset.

The developer had purchased the 5-acre site at 2144 Oakland Road for $5.3 million in February 2017, according to public records. The company broke ground on the property in August 2018, with Alston Construction serving as the general contractor. The warehouse has four grade-level and five dock-high doors, 30-foot clear heights and ESFR sprinklers. 

The County of Santa Clara signed a full-building lease at the facility in the first quarter of 2019. The tenant has more than 12 years remaining on its contract, according to Newmark Vice Chairman Edmund Najera.

The property is a short distance from the Montague Expressway’s intersection with Interstate 880. The site is 3 miles northeast of San Jose’s international airport and 5 miles north of the city center.

Along with Najera, the Newmark brokerage team included Vice Chairman Steven Golubchik, Managing Director Jonathan Schaefler and Associate Directors Darren Hollak and Jack Phipps.

In November, Panattoni Development Co. and partner M. Payne Investments sold a 112,075-square-foot industrial building in Los Angeles for $37.3 million. Cohen Asset Management acquired the asset.

The post TA Realty Buys San Jose Warehouse for $27M appeared first on Commercial Property Executive.

3380 Coyote Hill Road. Image via Google Maps

Stanford University has finalized the $123 million sale of a newly constructed building in its Stanford Research Park in Palo Alto, Calif. Harrison Street acquired the 85,420-square-foot R&D/office property. Capital One provided a $69.5 million acquisition loan which matures in 2025, according to Santa Clara County records.

The new development is located at 3380 Coyote Hill Road. The 7-acre land parcel is subject to a 51-year ground lease held by Stanford University. The recorded contract does not include clauses for the renewal or extension of the lease, nor for the purchase of the land.

Devcon Construction serves as the general contractor for the STUDIOS Architecture-designed project. The property’s core and shell were recently completed, according to CommercialEdge data. In 2019, VMware signed a full-building lease at the property, which is across the street from its corporate headquarters. Additionally, the site is within 2 miles of Interstate 280 and 19 miles northwest of downtown San Jose.

In November, a joint venture between Harrison Street and The Sanders Trust sold an 11-property portfolio for $240 million. Lincoln Property Co. acquired the medical office buildings and inpatient rehabilitation facilities.

The post Stanford University Sells Office Asset for $123M appeared first on Commercial Property Executive.

5853-5863 Rue Ferrari

Cannae Partners has sold a two-building R&D/office campus encompassing 286,330 square feet in San Jose, Calif. Duke Realty acquired the property for $40.6 million, according to Santa Clara County records. Western Digital Corp. occupied both buildings until the beginning of December when its lease expired.

The asset previously changed hands in August 2019, when Gibson Avenue Capital sold it for $30.8 million, CommercialEdge data shows. Argentic originated a $42 million acquisition and development loan for the buyer at the time.

Located on 17 acres at 5853 and 5863 Rue Ferrari, the park was completed in 1992. Situated close to the intersection between highways 85 and 101, the site is 11 miles southeast of the central San Jose and 15 miles from the city’s international airport.

The buyer plans to demolish the existing properties and build a new, 303,117-square-foot speculative industrial project on the site, according to Silicon Valley Business Journal. The facility will have a 14,200-square-foot office component, 45 dock-high loading doors and 116 trailer parking stalls.

In August, Cannae Partners and Westport Capital Partners sold Sycamore Technology Park, a three-building office/R&D park encompassing 213,519 square feet in Milpitas, Calif. Vertical Ventures bought the property for $45.5 million.

The post Duke Realty Pays $41M for San Jose Asset appeared first on Commercial Property Executive.

2340 Cousteau Court in Vista, Calif. Image via Google Street View

Elion Partners, of Miami, has acquired four last-mile industrial distribution assets on the West Coast, aggregating 425,000 square feet, for a total of $83 million. Elion reportedly intends to continue an investment strategy focused on first-, middle- and last-mile logistics properties, targeting core urban logistics hubs near large population centers in infill coastal markets.

READ ALSO: Supply Chain Resiliency to Boost Logistics Demand

The individual properties are:

• 2340 Cousteau Court, Vista, Calif., in the San Diego metro; 134,299 square feet
• 6955 Consolidated Way in San Diego; 82,781 square feet
• 33401 Central Ave., Union City, Calif., in the Bay Area/Alameda County; 94,976 square feet
• 6700 Hardeson Road, Everett, Wash., in the Seattle metro; 112,924 square feet

The sellers were not disclosed, but it appears that there were multiple companies, possibly separate sellers for each asset.

The addition of these assets provides the company with immediate operational cost-saving efficiencies, Shlomo Khoudari, managing partner at Elion Partners, said in prepared remarks.  

Elion expanded to the West Coast in April with the addition of James Lambert, who joined the firm from Amazon Logistics, as senior managing director of industrial investments.  

Accelerated e-commerce adaptation combined with the need for supply chain resiliency and diversification have been the primary demand drivers for the asset class, according to Lambert. As retailers and manufacturers increase their level of safety inventory and look to diversify their supply chains, strategically located distribution centers will be vital to their success, Lambert added in prepared remarks.

Just a bit of recovery

Separately, Elion announced the purchase of a 93,636-square-foot last-mile logistics asset in Florida, a former Bennett Auto Supply distribution center, at 3141 S.W. 10th St. in Pompano Beach, for $12 million.

The San Diego industrial real estate market bounced back in the third quarter with positive absorption of 876,800 square feet, versus negative absorption of 901,000 square feet in the second quarter, according to a recent report from Cushman & Wakefield.

Nonetheless, rents remain down compared with 2019. Countywide, the average asking rent for industrial space was $1.13 per month per square foot, triple-net, versus $1.18 per month 12 months earlier, also according to Cushman & Wakefield.

The post Elion Partners Expands West Coast Last-Mile Portfolio appeared first on Commercial Property Executive.

Tasman at North First

DivcoWest has sold Tasman at North First, a three-building property in San Jose, Calif., for $160 million. A South Korean investment group acquired the 317,612-square-foot office and R&D campus. A JLL team brokered the transaction.

According to public records, the buyer financed the purchase with a $78 million loan from Kookmin Bank. The property previously changed hands in early 2018, when Cisco Systems sold the asset for $50 million, Yardi Matrix data shows.

Located at 10 and 80 W. Tasman Drive and 125 Rio Robles Drive, the Silicon Valley campus was completed in 1997 on 13.3 acres and is part of Cisco’s global headquarters in San Jose. The two-story, tilt-up concrete buildings underwent renovations this year and include 942 above-ground parking spots, a rooftop HVAC unit on each structure, as well as 14 electric vehicle parking and charging stations.   

Tasman at North First is adjacent to the VTA light rail Tasman Station stop and the Samsung Semiconductor Corporate headquarters. It is less than 8 miles from downtown San Jose and nearby several residential communities.

JLL Senior Managing Director Will Connors, Senior Director Daniel Renz, along with Managing Directors Mark Bodie and Scott Mathisen, worked on behalf of the seller. Managing Director Steven Chon and Senior Vice President Sofi Choi represented the buyer. In a similar Silicon Valley transaction that closed recently, Connors and Renz completed the $104 million sale of The Fujitsu Campus in Sunnyvale, Calif.

The post DivcoWest Completes $160M Silicon Valley Office Sale appeared first on Commercial Property Executive.

The Fujitsu Campus

Lane Partners has purchased The Fujitsu Campus, a six-building office and R&D complex in Sunnyvale, Calif., for $104 million. JLL worked on behalf of the seller, WJFS, and procured the buyer. JLL’s debt team also worked with the sponsor to secure financing for the acquisition.

The 313,740-square-foot campus has served as Fujitsu’s headquarters since its completion in 1974. The company will relocate to a Fujistu-owned facility at 350 Cobalt Way, making way for an opportunity to reposition the campus.

Located at 1230, 1240, 1250, 1260, 1270 and 1280 E. Arques Ave., the property occupies more than 26 acres just off Lawrence Expressway and Bayshore Freeway, providing easy access to the entire Bay Area and Silicon Valley. The Fujitsu Campus is situated around 6 miles from The Norman Y. Mineta San Jose International Airport and 8 miles from downtown San Jose. The site is also adjacent to The Lawrence Station Area Plan, a 629-acre development that will feature rental housing, retail amenities and recreational areas.

JLL’s Capital Markets team included Will Connors, Daniel Renz, Michael Manas, Bart Lammersen, Kyle Caldwell and Toss Vallentine, while Jordan Angel led JLL’s debt team. Last week, another JLL Capital Markets team assisted NB Development Group in the sale of a creative office building in Boston. The office asset traded for $72 million. 

The post Silicon Valley Fujitsu Campus Sells for $104M appeared first on Commercial Property Executive.

Results Way Corporate Center. Image via Google Street View

Swift Real Estate Partners has acquired a 373,000-square-foot office campus leased to Apple in Cupertino, Calif., for $346 million, according to Santa Clara County records. DWS Group, the asset management affiliate of Germany’s Deutsche Bank, sold the Class B asset after holding it for nearly 7 years.

Built in 1979, the Results Way Corporate Center is located at 5 and 6 Results Way and includes two pairs of buildings spanning 146,000 square feet and 227,000 square feet, respectively. Apple leased the two-story campus in mid-2011 to accommodate as many as 1,300 employees that it could not house at its original headquarters at 1 Infinite Loop. The tech giant opened its new “spaceship” headquarters complex in Cupertino in 2017.

READ ALSO: San Jose Unveils New Plans for Google Megaproject

DWS (then Deutsche Asset & Wealth Management), purchased the campus on behalf of one of its international clients in December 2013. Embarcadero Capital Partners sold the office asset, along with a 31,627-square-foot retail building at 16 Results Way, for $165 million, according to Yardi Matrix.

The campus, formerly the headquarters of Measurex, was fully renovated prior to Apple’s move-in, winning LEED Silver certification. Apple occupied the property under a triple net lease. The iPhone maker’s newer, doughnut-shaped campus at 1 Apple Park Way is located less than 5 miles to the northeast of Results Way.

Swift snaps up more assets

The Registry reported last week that a sale to Swift Real Estate Partners was in the works. Based in San Francisco, the commercial real estate investment firm owns properties across the West Coast, including half a dozen in the Bay Area prior to the latest acquisition, Yardi Matrix data shows.

Swift has boosted its portfolio over the past year with a series of office acquisitions, most recently the purchase of Columbia West Building, a 137,349-square-foot asset in Bellevue, Wash., for $72 million. This past March, the company acquired the 347,000-square-foot Hellyer Oaks Technology Park in San Jose, Calif., in a $55.6 million deal. Last November, Swift paid $193 million to pick up a three-property office portfolio totaling 516,890 square feet in Pasadena, Calif., from PGIM Real estate.

Apple has been expanding its presence in Silicon Valley in recent years. In August of last year, the company bought a two-building, 300,000-square-foot office complex in Cupertino from American Realty Advisors for $290 million. More recently, the firm leased 147,500 square feet at 5407 Stevens Creek Blvd., part of the Stevens Creek Boulevard Office Campus being developed by Peery Arrillaga in Santa Clara, Calif.

The post Swift Real Estate Buys Apple-Leased Campus for $346M appeared first on Commercial Property Executive.

1111 Comstock St. Rendering courtesy of Prime Data Centers

Prime Data Centers has revealed plans for the development of a new, 121,000-square-foot facility in Santa Clara, Calif. The company will begin site work within the next two months and expects the property to be fully operational and accept tenants by the fourth quarter of 2021.

The development site is a 1-acre parcel at 1111 Comstock St. The four-story, carrier-neutral data center will provide 9 MW of power. The building will have access to new dark fiber routes that interconnect all major facilities in Silicon Valley.

The facility will benefit from 40 percent lower prices for energy because of its location outside the larger San Francisco metropolitan area. Security features include a pan-tilt-zoom and motion detection camera system, mantrap entry as a measure to prevent tailgating, multi-factor authentication and biometric access. The property will have a shared office component and storage space next to a loading dock.

Situated a short distance from Bay Area’s busy tech corridor, the facility will have ultra-low latency workloads. There are at least 13 other data centers within a 1-mile radius of the site, including properties owned by Digital Realty, Equinix and CoreSite, according to Data Center Map. Additionally, the San Jose International Airport is within 3 miles of the facility.

In September, Vantage Data Centers announced plans to expand its footprint in Northern Virginia and Silicon Valley. The company will develop two facilities with a combined power capacity of 68 MW.

The post Prime Data Centers To Build Silicon Valley Facility appeared first on Commercial Property Executive.

Image courtesy of Unibail-Rodamco-Westfield

Unibail-Rodamco-Westfield, a global developer and operator of flagship shopping destinations, has completed the installation of solar panel arrays at three of its properties. Westfield Valley Fair in Silicon Valley, Calif., Westfield UTC in San Diego and Westfield Garden Plaza in Paramus, N.J., are now solar-powered.

The Valley Fair shopping center had nearly 3,800 solar panels installed in partnership with Pacific Gas and Electric. The collaboration boosted the existing solar power system to more than 8,000 panels and a capacity of 2.5 megawatts that can generate almost 3.9 gigawatt-hours of clean energy annually. The property is touted as one of the most productive shopping centers in the country, featuring a lineup of luxury boutiques and global brands such as Nordstrom, Macy’s, Louis Vuitton, Prada, Cartier and Balenciaga.

The UTC facility was also upgraded, with more than 2,800 new solar panels added to the existing system in partnership with San Diego Gas and Electric, and now totals some 3,500 panels. The system’s capacity rose to nearly 1.2 megawatts and can generate more than 1.9 gigawatt-hours per year. The outdoor retail resort’s tenants include Apple, Allen Edmonds, Kendra Scott and Vineyard Vines. The property also features a 23-story residential tower with 300 units.

The solar power system at Garden State Plaza was installed with Public Service Enterprise Group and consists of roughly 3,500 panels with a capacity of more than 1.3 megawatts that can generate 1.7 gigawatt-hours of energy yearly. The property has more than 300 shops and is anchored by Nordstrom, Macy’s, Neiman Marcus and Lord & Taylor.

The company now has seven shopping centers equipped with solar power installations. Its largest is the Westfield Topanga & The Village in Los Angeles, a facility that in 2018, had 15,000 solar panels installed, with a generating capacity of 4 megawatts, which made it the largest installation of its kind at any retail destination in California.

Sustained focus on sustainability

URW has launched a global environmental sustainability initiative, dubbed Better Places 2030, which signs up the company to achieve a 50 percent reduction of its carbon emissions by 2030 on a global scale. Measured emissions include direct and indirect ones—coming from construction, tenant energy consumption and other property operations, as well as employee and visitor transportation.

The company’s attention to sustainability has, so far, materialized into 10.6 megawatts of solar installations across the U.S. that can generate 16.7 gigawatt-hours of renewable energy. The use of solar panels also means a reduction of its carbon dioxide emissions by 11,800 metric tons per year.

READ ALSO: Giving Back to the Community

URW’s sustainability strategy includes several other factors, such as the integration of smart transportation infrastructure, which comprises public transportation connectivity, short-distance carpooling programs and electric vehicle charging stations. In addition, the company’s carbon-reduction strategy includes waste management, water conservation and LED lighting system—its LED retrofit projects in the country are estimated to save almost 40,000 megawatt-hours every year.

The U.S. Environmental Protection Agency has awarded URW the Excellence in Green Power Use, which made it a Green Power Partner. The recognition stands for outstanding use of green power through a diverse portfolio, including power purchase agreements, REC purchases and self-generation rooftop and carport solar projects. Combined, these purchases amount to nearly 147 million kilowatt-hours each year.

The post Westfield Upgrades Shopping Centers With Solar Power appeared first on Commercial Property Executive.

San Jose Diridon Station. Image by Dick Lyon via Wikimedia Commons

Google’s proposal for a massive mixed-use development at the western edge of downtown San Jose, Calif., has taken a step forward with the city’s public release of revised plans and environmental documents for the roughly 80-acre project. The search giant’s resubmitted application offers new details of the Downtown West Mixed-Use Plan, which calls for as much as 7.3 million gross square feet of office space, 4,000 units of new housing and up to 500,000 square feet for retail, cultural and arts uses.

READ ALSO: Google to Pump $3.3B Into European Data Center Expansion

Google’s updated project submittal, available on the city’s website, is accompanied by a 1,350-page draft environmental impact report. The Mountain View, Calif.-based firm formally submitted its proposal for the project in October 2019.

Australian real estate and investment group LendLease serves as the development manager for Downtown West, as part of a partnership with Google to develop 15.1 million square feet of mixed-use projects valued at $15 billion in the San Francisco Bay area. Nearly two dozen other companies serve as design and consulting partners on Downtown West, with SITELAB urban studio as the lead urban designer. Engineering firm ARUP and architects Heatherwick Studio and Kohn Pedersen Fox Associates are also part of the team.

The planned development is located steps away from Diridon Station, a major transit hub that the city aims to redevelop into the largest multimodal station on the West Coast. About 1 million square feet of the 7.3 million-square-foot office component is located on the site of the San Jose Water Co. building at 374 W. Santa Clara St.

Green features

Sundar Pichai, CEO, Alphabet Inc. and Google. Image courtesy of Google

The development is also envisioned to include 100,000 gross square feet of event space, as many as 300 hotel guestrooms and limited-term corporate accommodations totaling up to 800 guestrooms. Google aims to provide 15 acres of parks and open space, along with new infrastructure.

Design features of the project will include electrification of all buildings, meaning that no natural gas will be used to power any properties with the exception of restaurant kitchens. The plans also call for an on-site photovoltaic system that will generate at least 7.8 megawatts of electricity.

San Jose’s City Council is slated to consider the Downtown West proposal in early 2021, after shifting the target date from the end of 2020 due to the city’s ongoing response to COVID-19. The public health situation could cause further delays. Public engagement activities are all being conducted online.

Google and LendLease agreed last year to partner for the next 10 to 15 years to redevelop land owned by the tech firm in Mountain View, Sunnyvale and San Jose. The projects will include at least 15,000 new homes, accommodating all income levels, as well as retail and hospitality space.

The post San Jose Unveils New Plans for Google Megaproject appeared first on Commercial Property Executive.

250 Holger Way

Bailard has completed the $38.3 million acquisition of a 76,410-square-foot office building in San Jose, Calif. KBS sold the property, which is part of District 237, its 415,492 square-foot office/R&D complex.

The seller purchased the entire park in 2013, when EQ Office sold it for $239 million, according to Yardi Matrix data. The company financed the deal with a $140 million acquisition loan from Massachusetts Mutual Life Insurance Co., which matured this past April.

The asset Bailard acquired occupies a 4-acre parcel at 250 Holger Way, in Silicon Valley’s North San Jose submarket. The two-story building was completed in 2002 and renovated in 2019. The property is fully leased to CDK Global, a company that provides software for the automotive industry.

The CBRE team that facilitated the deal included Joe Moriarty, Scott Prosser, Jack DePuy, Russell Ingrum, Brad Zampa and Mike Walker. Bailard was represented in-house. Greenberg Traurig attorneys Bruce Fischer and Howard Chu, along with paralegal Robyn Foianini provided legal counsel for the seller.

In June, KBS completed the $95.2 million disposition of two properties in District 237 totaling 142,710 square feet. Exan Group acquired the assets, which are fully leased to Raytheon.

The post Bailard Pays $38M for Silicon Valley Office Asset appeared first on Commercial Property Executive.

Image by Brett Sayles via Pexels.com

Vantage Data Centers has kicked off construction on two data centers at its Northern Virginia and Silicon Valley campuses. The expansion projects are expected to come online in 2021 and will add 68 MW of critical power to meet growing customer demand.

The Northern Virginia facility is dubbed VA12 and will provide 36 MW in a 250,000-square-foot building slated for completion in the first quarter of 2021. VA12 will feature efficient power and water usage, free cooling with outdoor air and renewable energy sources on site. The data center is the second development in a five-property campus spanning 42 acres in Ashburn, Va. Upon full build-out, the digital park will total 1 million square feet and 146 MW of IT capacity.

In Silicon Valley, Vantage started construction on the third and last facility in its second digital park in Santa Clara, Calif. Dubbed CA23, the building will span 200,000 square feet, offering 32 MW of power. The company already delivered two data centers at the three-facility campus, which will provide 77 MW when finalized. Upon completion, Vantage’s footprint in Santa Clara will consist of nine facilities providing a total of 154 MW.

During the first half of 2020, data center inventory increased by 131 MW in the seven primary U.S. markets, while another 373.6 MW of capacity was under construction. The lion’s share of new projects was clustered in Northern Virginia, with 239 MW in the pipeline. Additionally, in Silicon Valley, Stack Infrastructure decided to tear down one of its existing data centers to build a new facility.

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Chateau La Salle. Image via Google Maps

Greystone has provided a $52.3 million Fannie Mae refinancing for Chateau La Salle, a 434-site manufactured housing community in San Jose, Calif. The 10-year debt was structured with fixed-rate, full-term interest-only payment on a 30-year amortization period.

Located at 2681 Monterey Highway, the property is a mile from several retail and dining choices, including big-box stores such as Target and Costco. Additionally, the asset is almost 4 miles southeast of the metro’s downtown and some 5 miles from several golf courses. Completed 1980 on 58 acres, the community comprises 434 pads, with common-area amenities including a pool, a fitness center, laundry facilities and tennis courts.

Greystone’s Managing Director Tim Thompson arranged the Fannie Mae financing for the private investor. Earlier this month, Walker & Dunlop originated a $3.6 million Fannie Mae acquisition loan for Capital Square 1031 to purchase an age-restricted manufactured housing community in Port Charlotte, Fla.

The post Greystone Secures $52M Refi for San Jose Manufactured Homes appeared first on Commercial Property Executive.

Image via Pixabay

By 2025, San Mateo County is estimated to have more than 45,000 electric vehicles (EVs). To meet the increasing demand for charging stations, Peninsula Clean Energy, San Mateo’s official electricity provider, has launched a $28 million program through which it plans to install electric vehicle charging infrastructure at commercial places, multifamily communities and other public locations. The initiative marks the largest EV effort in the U.S. tied to a single Community Choice Aggregation agency.

Dubbed EV Ready, the program’s goal is to install 3,500 charging ports in San Mateo County over the next four years. The funds associated with this mission are split into $24 million in project incentives–$12 million from Peninsula Clean Energy and the other $12 million from the California Energy Commission under the California Electric Vehicle Infrastructure Project (CALeVIP)—and $4 million in free technical assistance for eligible properties, support of workforce development in the county and other associated costs.

READ ALSO: Future Prospects: Healthier Buildings, Futuristic Transport

The program will provide advanced design strategies that support more EVs at a lower cost, including Level 1 and power-managed Level 2 charging stations. The plan will roll out in phases—the initial phase of incentives supports multifamily properties and low-power workplace solutions, while the second one, supporting DC Fast Charging and Level 2 charging at a broader range of properties, will come with the opening of CALeVIP Peninsula-Silicon Valley Incentive Project in December this year.

The post Major EV Charging Infrastructure Program Begins in California appeared first on Commercial Property Executive.

Advanced Manufacturing Portfolio, Santa Clara, Calif. Image courtesy of Hines

Hines Global Income Trust, a public, non-listed REIT sponsored by Hines, has acquired the Advanced Manufacturing Portfolio, a massive industrial and manufacturing campus in Santa Clara, Calif. The 417,000-square-foot  asset was acquired for $107.1 million from DRA Advisors, according to a filing with the Securities and Exchange Commission.

The AMP, a four-building campus providing light manufacturing and research and development space, is fully leased to 10 tenants. Located in the heart of Silicon Valley, the site provides proximity to major technology tenants as well as a premier high-tech talent pool.

READ ALSO: Industrial Real Estate Faces Short-Term Decline in NAIOP Report

Demand for light manufacturing and R&D space has grown in Silicon Valley in recent years but there is not enough space to meet the demand, said Sam Cheikh, managing director in the Hines Bay Area office, in prepared remarks. Cheikh added that the international real estate firm believes in the long-term supply and demand fundamentals of the product type, which has proven to be resilient to economic downturns.

Janice Walker, COO of Hines Global Income Trust, said the transaction further diversifies the REIT’s global portfolio and provides investors with exposure to a well-located, strategic asset in Silicon Valley.

The acquisition, which marks the third industrial and logistics closing for Hines Global in 90 days, increases the REIT’s industrial presence worldwide. In July, Hines Global acquired a logistics asset in the U.K. from AEW UK Investment Management’s AEW UK Core Property Fund for £20.635 million ($25.7 million). The 207,115-square-foot property in Wakefield, West Yorkshire, is fully leased to Integrated Third Party Logistics.

Hines is a longtime investor and developer in the industrial sector with a global track record of 314 projects in 12 countries. The firm has acquired 38 million square feet of space and developed 45 million square feet around the globe and has 8 million square feet of industrial projects under construction or in design.

DRA Advisors Deals

DRA Advisors, an investment advisor specializing in real estate investment and management for institutional and private investors, has $10 billion in assets under management across various sectors. The firm has about 405 industrial properties totaling 56 million square feet.

Last month, a joint venture of DRA Advisors and The Kane Co. Inc. acquired The Manchester Logistics Center, a 725,000-square-foot facility in Manchester, N.H., that is home to True Value’s Northeast regional distribution operations. In December 2019, DRA Advisors acquired a 16.3 million-square-foot industrial portfolio consisting of 106 warehouses in 16 markets in the Southeast, Southwest and Midwest from Sealy Strategic Equity Partners LP for $908.5 million.

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Coleman Highline. Image courtesy of Hunter Storm

Sansome Partners and Hunter Properties have secured a $155 million loan package for the refinancing of a segment of Coleman Highline, an approximately 1.7 million-square-foot mixed-use development in the pandemic-resilient tech town of San Jose, Calif., according to the Commercial Observer. Goldman Sachs and Deutsche Bank originated the financing for the Silicon Valley asset.

READ ALSO: CMBS Delinquencies Appear to Stabilize—For Now

Coleman Highline is a sprawling live-work-play destination that will ultimately feature eight mid-rise office towers totaling approximately 1.5 million square feet, three amenity buildings encompassing an aggregate 53,000 square feet, a 175-key Element hotel, a public retail building and 1,600 residential units. As noted in the Commercial Observer article, the refinancing came in the form of CMBS debt that is part of the $630.8 million DBJPM 2020-C9 Mortgage Trust transaction.

Moody’s Investors Service details the Coleman Highline financing in its August 17, 2020, credit opinion on DBJPM 2020-C9 Trust, which is backed by a pool of 30 loans secured by 146 commercial properties. Of the $155 million Coleman Highline financing, a $30 million fixed-rate loan with an interest rate of 2.8 percent is part of the pool, with the remaining $125 million consisting of five pari passu senior notes to be contributed to future securitizations.

Coleman collateral

According to Moody’s, the Coleman Highline financing is secured by Phase II of Coleman Highline, which consists of the approximately 194,800-square-foot Building 3 and the 163,300-square-foot Building 4 office structures, as well as the 22,900-square-foot Building A2. “The properties are Class A office buildings designed to the highest quality standards by Gensler. Building A2, the amenities building, features dining options, conference rooms and an auditorium,” according to the Moody’s document.

Hunter Properties’ development arm Hunter Storm LLC delivered all three structures in 2020 at a development cost of $249.1 million, and all three are leased to streaming platform Roku Inc. under a triple-net lease agreement featuring an expiration date in 2030 and the option for one seven-year extension. Roku now maintains a global headquarters at Coleman Highline encompassing two additional buildings from Phase I for a total footprint of roughly 738,000 square feet.  

Moody’s cites a handful of strengths supporting the Coleman Highline financing, including asset quality, tenancy, sponsorship and the all-important location. “The Coleman Highline property benefits from being positioned across a pedestrian bridge from the Santa Clara Caltrain station, the most widely used mode of public transit between San Francisco and San Jose,” in Moody’s opinion. Additionally, the property sits within the San Jose Airport submarket, which, according to a report by Cushman & Wakefield, was one of only two submarkets in Silicon Valley to see an increase in office rents in the second quarter of 2020.

The post Silicon Valley Office Asset Obtains $155M Refi appeared first on Commercial Property Executive.

Sycamore Technology Park. Image courtesy of NorthMarq

In a $45.5 million deal, Vertical Ventures has purchased Sycamore Technology Park, a three-building office/R&D campus in Milpitas, Calif., from a joint venture between Westport Capital Partners and Cannae Partners.

READ ALSO: Will the Bay Area Office Market Need to Reinvent Itself?

NorthMarq’s Nathan Prouty led a team that secured roughly $40 million in bridge financing for Vertical Ventures’ acquisition, to fund the planned capital improvements and for future leasing costs. The seller was represented by Cushman & Wakefield’s Eric Fox, Steve Hermann, Seth Siegel, Adam Lasoff and Ryan Venezia. Cushman & Wakefield’s Gregory Davies, Eric Hallgrimson, Steve Horton and Kelly Yoder from the San Jose team will continue to lease the project.

Located within Oak Creek Business Park at 475, 501 and 525 Sycamore Drive, the business park was constructed in 1983. The campus totals 213,519 square feet and is currently 84 percent leased to two tenants. Fox told Commercial Property Executive that wireless network provider Spidercloud takes up 23.6 percent of the space, while medical testing company Spectra Laboratories occupies another 60.5 percent.

“This is in the heart of Silicon Valley and you have a life sciences tenant and an internet business and before them it was a chip company and a disk drive company in this building,” Fox told CPE. “The buildings fit a variety of industries and are well-suited for a lot of technology companies or life science businesses.”

The new owner is planning to invest more capital into the campus by pursuing market-ready renovations to the unoccupied tenant spaces. Vertical Ventures pursued a similar strategy with another office/R&D park in San Jose, Calif. The company invested more than $5.4 million in capital improvements at the Hellyer Oaks Technology Park before selling it to Swift Real Estate Partners for $55.6 million in March. Christopher Aust, head of acquisitions for Vertical Ventures, said in prepared remarks that the Sycamore campus is in a very desirable Milpitas submarket and they would add significant value through the renovations and asset management.

A previous repositioning

Fox told CPE that the joint venture of Westport and Cannae acquired Sycamore Technology Park back in the fall of 2016 alongside another portfolio of four similar buildings nearby. The four-building portfolio had three of its buildings sold to end users and the remaining building was repositioned and leased to MKS Instruments in March, according to Fox.

Following the success of the four-building portfolio, the sale of Sycamore Technology Park represents the last step in the repositioning business plan of Westport and Cannae, Fox told CPE.

The post Vertical Ventures Buys San Jose Office Campus for $46M appeared first on Commercial Property Executive.

Stevens Creek Executive Park. Image courtesy of JLL

Machine Investment Group, a newly launched New York-based real estate investment platform focused on opportunistic, distressed and special situations, acquired Stevens Creek Executive Park, a five-building, mixed-use property in San Jose, Calif., for $54.5 million in a joint venture with Miramar Capital Advisors.

READ ALSO: CRE Transaction Activity Returning, CBRE Reports

JLL Capital Markets arranged $33.3 million in acquisition financing for Machine and Miramar. California Bank and Trust provided the three-year, interest-only loan. The San Francisco JLL Capital Markets Debt Placement team was led by Alex Witt, Brandon Roth and Spencer Bergthold. Witt said in a prepared statement that despite the uncertainty caused by the COVID-19 crisis, California Bank and Trust delivered accretive financing for the acquisition. The fact that the joint venture was able to obtain non-recourse bank financing at a time of limited liquidity for similar assets, speaks to the quality of the sponsors’ reputation and their business plan, he added.

Machine’s first transaction

The purchase of the fully entitled 9.23-acre site at 4300-4400 Stevens Creek Blvd. was the first transaction for Machine, led by Andy Kwon and Eric Rosenthal, previously senior leaders of real estate investing at Garrison Investment Group. Rosenthal said in prepared remarks Machine will focus on opportunities within all major and specialty property types located in emerging and existing institutional markets. He added the properties should be in growth markets with diverse demand generators offering attractive yields and advantageous entry points.

Stevens Creek Executive Park is a multi-tenant property with about 137,500 square feet of office and 28,000 square feet of retail space. The unidentified previous owner had received entitlements to build 582 multifamily units, 10,000 square feet of retail and additional office space. The site is centrally located in San Jose within the Cupertino Union School District and less than 2 miles from both Apple’s global headquarters and the Santana Row luxury shopping district. The property also has excellent transportation access.

Kwon said in a prepared statement the team’s first acquisition is consistent with their track record at Garrison where they successfully pursued middle-market investment opportunities. During their time at Garrison, Kwon and Rosenthal personally invested more than $1.5 billion of equity together. He said Machine and Miramar purchased the San Jose property at an attractive basis and are considering possibilities for its best use, including both market-rate and affordable multifamily residential as well as large-scale mixed-use redevelopment. Kwon pointed to the favorable demographics in San Jose, which has one of the fastest-growing economies in the U.S. and continues to attract high-paying jobs.

The post JV Acquires Silicon Valley Mixed-Use Property for $55M appeared first on Commercial Property Executive.

Hornsdale, South Australia. Image courtesy of Tesla

Pacific Gas and Electric Co. (PG&E) and Tesla have joined forces to advance the technology of utility-scale battery storage. The two companies have started construction on a massive lithium-ion battery storage system (BESS) at PG&E’s electric substation in Moss Landing in Monterey County, Calif. Once operational, the Moss Landing substation will be one of the largest utility-owned, lithium-ion energy storage systems in the world.

The installation has been long in development, approved by the California Public Utilities Commission in November 2018 and by the Monterey County Planning commission in February 2020. The BESS will have the capacity to store and dispatch up to 730 megawatt-hours of energy to the electrical grid at a maximum rate of 182.5 megawatts for up to four hours during periods of high demand.

To achieve such capacity, the system will comprise 256 Tesla Megapack battery units on 33 concrete slabs. Transformers and switchgears will be installed along with the Megapacks to connect energy stored in the batteries with the 115-kilovolt electric transmission system. In addition, the agreement between PG&E and Tesla includes an upsize option that can increase the system’s capacity up to six hours or 1.1 gigawatt-hour total.

Some 50 PG&E employees and contractors will be involved in the system’s development, which will abide by all COVID-19 safety protocols. The design, construction and maintenance of the project are handled by PG&E and Tesla, and PG&E will own and operate it once finalized.

READ ALSO: How Energy Storage is Navigating the Pandemic

The two parties anticipate the system will be fully operational in the second quarter of 2021 and, during its 20-year life, it will save more than $100 million. The BESS will increase energy reliability by addressing capacity deficiencies as the local energy demand rises. It will participate in the California Independent System Operator (CAISO) markets, providing energy and ancillary service to the CAISO-controlled grid, posting the ability to serve as an operating reserve that can quickly be dispatched to ensure there is sufficient generation to meet the required load.

Expanding fleet

While this system marks a big step in the evolution of utility-scale battery storage, it is not the only installation on PG&E’s agenda. In May this year, the company has signed additional contracts for battery energy storage projects totaling more than 1,000 megawatts of capacity that are to be deployed throughout its service area through 2023. Of these, the most notable one is a transmission-connected 300-megawatt BESS, also to be located in Moss Landing, which will likely clock in at 1.2 gigawatt-hours of capacity. Other smaller third-party contracts include a 75MW transmission-connected project near Morgan Hill, Calif., and a 2MW project at the Gonzales substation in the Salinas Valley. Moreover, the utility also owns a 20MW battery system located at the Llagas substation in Gilroy, Calif.

Currently, the world’s largest operating battery storage system is the Hornsdale Power Reserve in South Australia. The installation—commissioned in late 2017—also uses Tesla batteries and has a capacity of 150-megawatt/193.5 megawatt-hours.

The post PG&E, Tesla Kick Off Giant Storage Project appeared first on Commercial Property Executive.

5300 Chiron Way. Image courtesy of BioMed Realty

BioMed Realty has secured $165 million in financing for 5300 Chiron Way, an approximately 300,000-square-foot life sciences building within the real estate company’s Emery Center of Innovation in Emeryville, Calif., in the San Francisco Bay Area. Acting as exclusive advisor to BioMed, Newmark Knight Frank arranged the financing through an unidentified lender.

READ ALSO: Life Sciences Real Estate Thrives Amid Pandemic

BioMed added 5300 Chiron to its portfolio in March 2019, when it acquired the asset from Novartis for $135 million, with plans of transforming the property and adjacent parcel into a multi-tenant lab and office destination. Originally developed in 1999, the six-story building is currently home to science and material innovation company Zymergen, which signed a 12-year lease in October 2019 to occupy the property in its entirety.

The asset, bolstered by BioMed’s strong reputation and Zymergen’s cutting-edge technology, proved highly attractive to the lending community. “We had an assortment of domestic and foreign banks, along with several debt funds, pursuing the opportunity,” Ramsey Daya, vice chairman with Newmark Knight Frank, told Commercial Property Executive.

With proceeds from the loan in hand, BioMed will invest capital in the planned conversion of 5300 Chiron into a specialized high-tech location to accommodate Zymergen’s new headquarters. The project will mark the first stage in the creation of what Daya described in a prepared statement as one of the most ground-breaking urban infill life science campuses on the West Coast.

All eyes on life sciences

Life sciences real estate has become one of the most sought after and discussed investments during COVID-19, buoyed by strong performance, limited lab availability and the anticipated need for additional lab space in a post-COVID-19 economy, according NKF’s new 2020 Life Sciences: National Overview and Top Market Clusters report. The capital markets’ heightened interest in the sector is clear. “From our perspective, the lending community’s appetite for life sciences has grown considerably with several new entrants into the market over the past 90 days,” Daya told CPE. “With a focus on biotechnology, along with a new charge of biomanufacturing, tenant demand has risen and so has lender interest.”

The post BioMed Realty Lands $165M in Financing for Bay Area Asset appeared first on Commercial Property Executive.

100 Headquarters Drive. Image courtesy of KBS

Office transactions largely ground to a halt after California’s stay-at-home order went into effect in March, but the lockdown didn’t stop a Miami-based real estate fund manager from scooping up a pair of Raytheon-leased buildings within a Silicon Valley office and R&D complex for $95.2 million.

EXAN Group acquired the two buildings within the District 237 complex in North San Jose from private equity real estate heavyweight KBS, paying roughly $667 per square foot for the Class A assets, which span a total of 142,710 square feet. The low-rise buildings at 100 Headquarters Drive and 200 Holger Way were part of the KBS Real Estate Investment Trust II portfolio.

READ ALSO: Swift Real Estate Partners Strikes $56M Deal in San Jose

EXAN’s deal to acquire the properties was awarded in April, according to an account by the Silicon Valley Business Journal that cites information from the brokerage. That was after the coronavirus prompted city officials across the Bay Area to roll out a shelter-in-place order on March 17, followed by California imposing a statewide lockdown on March 20.

In a prepared statement, Juan Jose Zaragoza, EXAN managing partner & founder, indicated that the company had deployed overseas capital for the purchase of the buildings.

Repositioning an office park

District 237. Image courtesy of KBS

KBS picked up the assets from EQ Office in 2013 as part of its $239 million purchase of the eight-building Corporate Technology Centre portfolio. The company then sold off three of the buildings (400, 450 and 475 Holger Way) for $97.4 million in 2018, before renovating and rebranding the remaining five buildings as District 237.

Completed from 1999 to 2001, the original Corporate Technology Centre measures a total of 610,083 square feet across a 32.7-acre site. The repositioning effort by KBS created 100,000 square feet of premium spec space and lured three global companies to the five-building office campus, including defense contractor Raytheon, NXP Semiconductors and CDK Global.

Raytheon leased the two buildings at 100 Headquarters Drive and 200 Holger Way this past February, with plans move into the new facility during the first quarter of 2022, a company spokesperson told the media at the time.

District 237 is adjacent to the @First retail center and has more than 3,000 feet of frontage along Highway 237. The property is located within 10 minutes of the San Jose International Airport and 15 minutes of the city’s central business district. CBRE’s Joe Moriarty, Scott Prosser, Jack DePuy, Russell Ingrum, Brad Zampa and Mike Walker brokered the sale by KBS.

Another San Jose deal

In April, CBRE Global Investors reportedly agreed to buy the recently completed, 369,000-square-foot office complex, called 237@First, less than a mile away from District 237. The company is said to be paying just under $200 million for the six-story buildings at 4353 and 4453 N. First St.

EXAN has built a $1.3 billion portfolio of primarily commercial properties in the U.S., its 2019 corporate brochure indicates. The company’s office holdings include nine properties valued at about $1 billion and totaling 1.4 million square feet. An EXAN affiliate purchased 1701 Rhode Island, an office property fully occupied by WeWork in Washington, D.C., for $119 million last year.

The post KBS Sells Silicon Valley Office Buildings for $95M appeared first on Commercial Property Executive.

Shawn Milligan, Partner, KT Urban. Image courtesy of KT Urban

Bolstered by its trained workforce and high-paying tech jobs, the Bay Area has been a magnet for businesses, but the sudden economic slowdown has put a serious damper on its office market. The sector paused not only due to uncertainties regarding the economic impact of the COVID-19 outbreak but also because of remote work proving to be feasible for many companies.

However, “entrepreneurial investors with a longer-term view see this as a tremendous opportunity,” Shawn Milligan, a partner at KT Urban, told Commercial Property Executive. Despite temporary disruptions, KT Urban submitted a site development permit to the city of San Jose for Woz Way Offices, a 1.8 million-square-foot transit-oriented, mixed-use development. In the interview below, Milligan shares his views on the current office market conditions and talks about investor sentiment in the Bay Area.  

READ ALSO: COVID-19 Is Remaking the Workplace, CFOs Say

How is the Bay Area office market holding up during these unprecedented times?

Milligan: It’s really difficult to tell how the office market has been impacted by COVID-19 at this point. We still have a couple of weeks before the lockdown gets lifted for most people and the political climate is such that we won’t see a return to normal for several more months.

How has investor interest in the Bay Area office market changed over the past five months?

Milligan: The market has definitely paused. A lot of big, institutional investors have put their pencils down until we get more transactional data on leasing and sales. Entrepreneurial investors with a longer-term view rightfully see this as a tremendous opportunity.

To what extent have your office projects been impacted by the COVID-19 outbreak?

Milligan: Unfortunately, the lockdown shut everyone down here in the Bay Area. The construction industry was finally able to get back to work on May 4. While KT Urban has experience building complex, commercial projects, we currently don’t have any projects under construction. Our core competency is primarily in the land acquisition and entitlement phase. 

Rendering of Woz Way. Image courtesy of C2K Architecture

KT Urban’s Woz Way Offices project might seem a courageous move during these challenging times for the office sector. What are your plans?

Milligan: This isn’t the first time that Silicon Valley has been impacted by a Black Swan event. These are very painful times for many members of our community, but we’ll get through this. We’re believers in the Valley’s ability to reinvent itself and come back stronger than before. We’re not courageous. Courageous are the people on the front lines battling this pandemic every day. We’re going to control what we can control and, for us, that means moving the entitlements forward during these difficult economic times.  

When do you expect office space demand to pick up again and reach pre-pandemic levels?

Milligan: Nobody really knows. When fear is replaced by greed, demand will begin to accelerate again and we’ll start on the road to recovery. I’m not smart enough to know when this will happen or when we’ll reach pre-pandemic levels.

Some experts say that strength in the tech sector could support the Bay Area office market’s recovery. Do you agree?

Milligan: Yes, I believe in the American spirit of this country and the entrepreneurial spirit of this valley. Some technology companies won’t survive this shock, but the tech sector in general will emerge a winner. There is no doubt in my mind.

Do you expect the health crisis to change investor behavior across this market?

Milligan: Not really. There are markets that may see less demand in the short term due to health concerns. However, investors will continue to look for well-located properties with strong market fundamentals.

What are your predictions for the Bay Area office sector going forward?

Milligan: I believe that most people’s predictions will be wrong. For example, there’s a lot of talk about people working from home permanently after the lockdown is lifted. Let’s see how that works out.

The post Will the Bay Area Office Market Need to Reinvent Itself? appeared first on Commercial Property Executive.

Using data from the U.S. Green Building Council’s official website, we sorted a list with the highest-scoring projects and found that throughout the state, in 2019, more than 70 projects—ranging from wellness facilities to large office towers—received the acclaimed Platinum level of certification. Of these, nearly 30 don’t have scorecards available to the public, and as such those weren’t included in our analysis. Drilling down further, we extracted the LEED-certified building list with office developments that have scored the most score points and compiled the list below with details about each project.

55 Second Street (KPMG Building) – San Francisco

KPMG Building

The 25-story tower located at 55 Second St. in the Financial District achieved the highest score of 89 points and also boasts an Energy Star rating of 94. Previously, the KPMG Building had a LEED Gold certification issued in 2010 while under Hines’ ownership. 

The trophy tower, which was sold last year to Paramount Group Inc. for $408 million, or $1,054 per square foot, was completed in 2002. It had been originally proposed by Jaymont Properties in 1989, but the recession in the early 1990s postponed it for about a decade, and it finally broke ground in May 2000.

The 387,000-square-foot office asset features nearly column-free floorplates with large windows overlooking the city; multiple accessible outdoor terraces; motion-sensing, energy-efficient LED lighting; reduction of HVAC usage to prime business hours; usage of outside air during cooler times of the day; recycling and composting programs; and bicycle parking and electric vehicle charging stations. Notable tenants in the building include KPMG, Anki, Intercom and Arent Fox.

Moffett Towers II – Buildings 3, 4, 5 & Amenities Building – Sunnyvale, Calif.

Moffett Towers II – Building 3

Moffett Towers II is a five-building, 1.8 million-square-foot development at the former 47.4-acre Lockheed Martin site in Sunnyvale. It is the largest spec campus targeting LEED Platinum certification in Silicon Valley. Last year’s Platinum certification was awarded to the second phase of construction, which was completed last May. Specifically, Building 5 scored 87 points, Buildings 3 and 4 had a slightly lower scorecard with 82 points, and the amenity building received 86 score points.

The campus was designed by DES Architects + Engineers and built by Jay Paul Co.—also the building’s owner. The structures feature a pattern of glass and metal panels with clear glass elements that maximize the indoor-outdoor connectivity. It also contains more than 40 percent of landscaped open space and an urban forest with more than 200 mature trees. The Amenities Building is equipped with a solar panel array that produces 155,000 kilowatt-hours per year.

All three buildings in the second phase of construction are leased by Facebook. The first two buildings of the office campus are occupied by Amazon.

221 North Mathilda Avenue – Sunnyvale, Calif.

221 North Mathilda. Image courtesy of SmithGroup

The 146,000-square-foot building is built on the site of a former orchard at the intersection of Mathilda Avenue and West California Avenue, which is why some call it Grove 221. To reflect the site’s history, artist Stephen Galloway created a 2,000-square-foot laminated glass work of art depicting trees on the building’s east façade.

The three-story project holds the LEED Platinum award with 87 score points. It was built by Spear Street Capital with the design of Detroit-based SmithGroup. Sustainable design features include energy-efficient building systems, architectural solar shading, water conservation fixtures, ample outdoor amenities such as public open space and greenscreen cladding on the parking garage.

The property serves as the headquarters of genetic testing startup 23andMe. In March 2019, Stockbridge Capital Group acquired it for $183 million.

1200 Page Mill Road – Palo Alto, Calif.

Innovation Curve Technology Park. Image courtesy of Form4 Architecture

Built on the site that housed Facebook’s headquarters between 2009 and 2011, 1200 Page Mill Road is now one of the first LEED Platinum-certified developments in Stanford Research Park. Dubbed the Innovation Curve Technology Park, the business campus affiliated with Stanford University is built on a 13.5-acre site and comprises four buildings organized around a central courtyard. The fourth building on this campus, a 76,560-square-foot asset, received LEED Platinum certification last year with a scorecard of 85 points.

The Sand Hill Property Co. project was designed by Form4 Architecture with curved elements that go beyond their lyrical aesthetics to serve a functional purpose, providing shade for the building. Vertical glass fins and horizontal light shelves also help mitigate solar heat gain, while interior solar-controlled skylights reduce the need for artificial light. Other sustainable features include high-efficiency mechanical and electrical systems, cool roofs, solar panels and locally sourced materials.

Apple Wolfe Campus, Buildings 1, 2 & 5 – Sunnyvale, Calif.

Designed by HOK Architects and leased entirely by Apple, this 18-acre redevelopment located at 222 North Wolfe Road in Sunnyvale, Calif., less than five miles from Cupertino, Calif., prioritized sustainability and received the LEED Platinum award for four of its five buildings (the 289,232-square-foot Building 3 received the certification with a scorecard of 83 points in April 2020). Comprising three six-story connected buildings, the first three buildings were awarded the LEED Platinum rating in 2019 with 83 and 84 points. In other words, the three-clover-leaf structure and the smaller building all hold USGBC’s highest rating.

READ ALSO: Top 5 California Markets for Office Deliveries

To achieve this level of sustainability, this Jay Paul Co. asset, also dubbed Apple’s Campus 2, was designed to achieve net-zero energy cost and eliminated surface parking using under-building podium parking and a standalone garage. This allowed for the preservation of 53 percent of the site area. In addition to this open green space, the project also features more than 90,000 square feet of rooftop gardens. These are filled with native wildflowers and perennials that collect and treat rainwater runoff in bioswales. Solar heat gain and glare are avoided through the concrete sunshade overhangs. The campus has a dedicated shuttle service, transit service, an on-site bicycle parking and bicycle repair shop, as well as two miles of on-site walking and bicycling paths.   

VMware – Phase 4 – Palo Alto, Calif.

VMware. Image courtesy of Form4 Architecture

Two of VMware’s other buildings won the LEED Platinum certification with a scorecard of 83 score points each. Located at 908 Arastradero Road and at 3401 Hillview Ave. in Palo Alto, Calif., VMware’s buildings are part of the company’s ‘campus in the forest’ that consists of 18 1970s-era buildings spread across 105 acres in Stanford Research Park. The expansive VMware establishment maintained the existing trees and planted 2,500 additional trees as well as native plants, turning the former six-building park into a Zen oasis with nature trails, outdoor gardens and water features, with a special focus on sustainability and energy efficiency.

The buildings, designed by Form4 Architecture, boast a 48 percent improvement on baseline building performance ratings; 13 percent of the buildings’ energy needs are met on-site through solar photovoltaic panels, and 35 percent stems from power purchase agreements. Other sustainable systems installed reduce 50 percent of potable landscape water use, in addition to a 35 percent reduction in baseline indoor water use. The campus has 56 electric vehicle stations on-site.

2000 University Avenue & 1900 University Avenue – East Palo Alto, Calif.

University Circle – 2000 University Circle

Two of Columbia Property Trust’s six-story assets that comprise the campus dubbed University Circle totaled 83 and 82 score points, respectively, for their recertification—the first LEED certifications date back to 2010 and were at the Gold level. The properties are part of a three-building campus that the REIT acquired in 2005, designed by Hoover Associates and built between 2001 and 2003.

The building at 2000 University Ave. also has an Energy Star rating of 83, while the one at 1900 University Ave. scored 95 points under the Energy Star rating in 2019. The campus has recycling and composting programs in place, as well as electronics and battery recycling. Tenants in the building include DLA Piper, Vista and Bank Leumi.  

501 Second Street – San Francisco

501 Second Street

The seven-story property owned by The Swig Co. was built in 1925, designed by architects Maurice Couchot & Jesse Rosawald and renovated in 1985 and 2007. Last year it was awarded its second LEED certification with a scorecard of 83 points.

The 207,809-square-foot office asset features high ceilings and large windows, an outdoor terrace for tenants, bike storage, locker rooms and a shower room. The building’s tenants, which include WRNS Studio, Stride Health, VMware and One Medical Group, are involved in a recycling program.

1221 City Center – Oakland, Calif.

1221 City Center. Image courtesy of TMG Partners

The 1976-built 24-story property, designed by Cesar Pelli and developed by Turner Construction, scored 82 points for its second LEED recertification. It is one of the three buildings in the Bay Area that has access to BART via a direct entrance to the 12th Street Station through the building lobby.

Acquired by TMG Partners and KKR in late 2018 for roughly $225 million, the asset features 360-degree views, extensive glass window lines, an on-site car wash, bike storage, locker rooms and showers. Tenants in the building include Wells Fargo, The Clorox Co. and Brown & Toland Physicians.

3003 Oak Road – Walnut Creek, Calif.

3003 Oak Road (PMI Plaza)

A Westbrook Partners asset, the seven-story building, also known as PMI Plaza, was built in 2002 and obtained the LEED Platinum award with a scorecard of 82 points. Among the features that earned recognition are ultraviolet germicidal lamps to improve indoor air quality, energy-saving window film, bicycle storage, electric vehicle charging stations, outdoor seating areas and the largest electric system on a commercial office building in Contra Costa County, Calif.

Notable tenants at PMI Plaza include PMI Mortgage Insurance, MassMutual, Arch Capital Group and Spectrum Credit Union.

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California’s self storage market has extremely high barriers to entry. Most metros in the state provide limited opportunities for new development due to restricted zoning regulations and land availability. As a result, almost every major metro in California is underpenetrated. As of March, there were some 16 million square feet—9.5 percent of existing stock—of storage space under construction or in the planning stages in the top California markets tracked by Yardi Matrix.

Although select metros saw an uptick in development activity in March, construction is expected to taper across California in the coming months, due to the novel coronavirus outbreak. While most cities in the state are allowing essential construction to continue, required safety measures for construction sites will likely slow deliveries.

The table below highlights the top five markets in California for underway and planned projects as a percentage of total stock, using Yardi Matrix data.

5. Los Angeles

Image via Unsplash.com

Despite several economic and demographic headwinds, strong demand for rental housing continues to persist in Los Angeles, which underscores the need for self storage space as well. High costs of living and a shortage of affordable housing may prompt residents to rent smaller apartments, further driving demand for self storage.

As of March, there were around 4.7 million square feet of storage space under construction or in the planning stages, accounting for 7.3 percent of the metro’s existing inventory and representing a 30-basis-point increase over the previous month. Los Angeles’ supply still lags behind demand—the storage inventory per capita is at 4.6 net square feet, below the 6.5 national figure.

However, limited supply is positively impacting rental rates in the metro. In California, Los Angeles registered the highest year-over-year rent growth in March—up by 1.1 percent for standard 10×10 non-climate-controlled units and 2.7 percent for climate-controlled units of similar size.

4. San Francisco

Thanks to its robust economy, San Francisco is one of the nation’s top attractions for both talent and employers. Despite elevated housing costs, the metro gained 18,791 residents in 2018, up by 0.4 percent and slightly below the 0.6 percent national rate. Demand for self storage is high, but there is little opportunity for new development due to strict zoning regulations. The metro has storage-space stock of more than 30.8 million square feet. Its per-person inventory is 5.5 net square feet, below the national average.

There were some 3.3 million square feet of self storage space under construction and in the planning stages as of March, representing 10.7 percent of existing stock. The metro’s new supply pipeline stagnated month-over-month and given the ongoing health crisis, this trend is expected to continue. Counties in the Bay Area have halted all construction except the development of health-care facilities that relate directly to the fight against COVID-19.

3. San Diego

Image via Pixabay.com

San Diego’s self storage market is benefiting from the metro’s healthy economy and steady population growth. The metro gained more than 240,000 residents between 2010 and 2018, a 7.7 percent uptick. Strong economic fundamentals boosted development activity across all asset types including residential, office, industrial and self storage.

In March, San Diego registered a substantial increase in self storage development activity. The metro’s new-supply pipeline accounted for 11.8 percent of existing stock, up by 150 basis points over the previous month. There were seven projects underway and 17 in the planning stage, totaling 2.1 million square feet. A cluster of projects is lined along Interstate 5, a major thoroughfare that provides access to the city’s downtown area and the San Diego International Airport.

2. San Jose

As the only California metro recognized in our national ranking earlier this year, San Jose’s new-supply pipeline has since slightly contracted due to a new wave of completions. The metro continues to be largely underpenetrated, as the per-capita inventory is still at 4.7 net square feet. As of March, San Jose had 1.5 million square feet of storage under construction and in the planning stages, which accounted for 16.4 percent of the metro’s existing stock.

San Jose’s economic profile is predominantly determined by giant tech employers such as Apple and Alphabet and other tech startups. Office-using jobs account for more than half of all employment, positioning San Jose among the metros least impacted by the COVID-19-related lockdowns. 

1. Sacramento

Image via Pixabay.com

The Bay Area’s spillover effect pushed Sacramento’s growth. The metro added more than 24,800 residents in 2018, a 1.1 percent increase and nearly double the 0.6 percent national figure. Despite healthy economic fundamentals, Sacramento’s self storage market is slightly oversupplied—the per-person inventory is 7.8 net square feet, above the national average of 6.5 net square feet.

Nonetheless, when it comes to self storage development in California, Sacramento proved most active in March. The metro ranks first with 10 projects underway and another 26 in the planning stages, totaling 2.8 million square feet. The new-supply pipeline represented 16.9 percent of Sacramento’s existing inventory. Despite being oversaturated, the development pipeline was up by 160 basis points month-over-month.

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1565 Barber Lane. Image courtesy of Cushman & Wakefield

Empire Square Group has acquired 1565 Barber Lane, a fully leased, 102,668-square-foot R&D facility in Milpitas, Calif. A joint venture between affiliates of Westport Capital Partners and Cannae Partners sold the Silicon Valley asset for $41.1 million. Cushman & Wakefield represented both parties in the deal. According to Yardi Matrix data, the partnership acquired the Class B property in 2016, in a $78 million portfolio transaction.

Developed in 1980 within the 466,000-square-foot Oak Creek Business Park, the two-story building underwent substantial renovations in 1996, 2009 and 2019. Yardi Matrix data shows the facility features 80,000-square-foot floor plates and a parking ratio of 3.4 spaces per 1,000 square feet.

Located in the northeast corner of Silicon Valley’s Golden Triangle, the 5.5-acre property is some 6 miles north of downtown San Jose, adjacent to Interstate 880. The facility is also accessible via public transportation, having several bus and light rail stations within walking distance.

Cushman & Wakefield’s Eric Fox, Steve Hermann, Adam Lasoff, Seth Siegel and Ryan Venezia, with the firm’s Northern California Capital Markets group, arranged the transaction. The brokerage team recently assisted Swift Real Estate Partners in the disposition of an 87,000-square-foot office asset in Sacramento, Calif.

The post Empire Square Pays $41M for Silicon Valley Facility appeared first on Commercial Property Executive.

Gene Williams, Senior Vice President & Co-Leader, Valuation Advisory Services, Kidder Mathews. Image courtesy of Kidder Mathews

Kidder Mathews has added Gene Williams to its Valuation Advisory Services division. The industry veteran appraiser will serve as senior vice president & co-leader of the data center valuation group and work out of the firm’s Silicon Valley office. The move comes two months after the company announced a leadership shuffle and promoted president & COO Bill Frame to the role of CEO.

Prior to joining the company, Williams held a senior director position at Cushman & Wakefield for three years. Before that, he spent 10 years as first vice president and director at CBRE. Williams has also served as regional manager at Dana Commercial Credit and as vice president at First Interstate Bank. He has over three decades of experience in commercial real estate appraisal and is recognized on a national level for his data center valuation expertise.

Williams holds a CCIM designation and an MAI certification, having served as the president of the North California Chapter of The Appraisal Institute. He earned a bachelor of business administration degree in real estate and finance from the Baylor University Hankamer School of Business.

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The Quad. Image via Google Street View

New York Life Real Estate Investors has come through with $132.9 million in financing for The Quad, a 410,000-square-foot office complex in Santa Clara, Calif. The borrower, TMG Partners, has recently acquired the multi-structure, transit-oriented asset from JP Morgan Chase.

READ ALSO: The Debt, the Deficit and Commercial Real Estate

Located just across from a light rail station and blocks from the 68,500-seat Levi’s Stadium, The Quad features seven two-story buildings and a host of amenities. The property, which is newly renovated, offers such extras as a sprawling outdoor courtyard, coffee shop, fitness facility and food truck court. Currently, the campus is approximately 73 percent occupied, with longtime tenant Silicon Valley Bank serving as anchor with 50 percent of the square footage for its corporate headquarters. Other names on the roster include GoDaddy, Perspecta and Knowles Corp.

New York Life was drawn to providing financing for The Quad due to the property’s potential for stabilization, given its recent upgrades, coveted list of amenities and ongoing improvements in the area. Additionally, the property’s flexible floorplates render it capable of housing a variety of tenants with varying size needs. TMG relied on Eastdil Secured to orchestrate the mortgage loan with New York Life.

Weathering the storm

The usually strong Silicon Valley office market is no match for the coronavirus-induced recession that is afoot; although, the U.S. office sector is not expected to suffer as it did in previous downturns, given that job losses have been concentrated in the retail sector so far, CBRE noted in a first quarter 2020 report. Santa Clara recorded a vacancy rate of 10.9 percent in the first quarter and saw positive net absorption of 65,500 square feet.

Looking ahead, a return to economic health in the U.S. may not be far off, which bodes well for the office sector. “The unique nature of this downturn could result in an unusually swift economic recovery that could begin as early as the third quarter of 2020,” according to the CBRE report. “Assuming the coronavirus peaks this summer in the U.S. as health officials project, the fiscal and monetary stimulus paired with pent-up private demand could help the U.S. economy return to growth by year-end and drive stronger than previously expected growth in 2021.”

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