By Meghan Hall
Sunnyvale is considered a top market for growing technology companies with massive office parks such as CityLine and Peery Park in the northern part of the city. The result has been not only compressed vacancy rates, but a unique tech cluster that continues to attract growing firms. However, the downtown Sunnyvale submarket is starting to make a name for itself, as seen in the current construction of Central Station, a four-story 125,000 square foot tech-oriented office development. According to a leasing brochure recently released by Colliers International, property owners SteelWave and Principal Real Estate Investors are now looking for tenants for the project.
SteelWave and Principal Real Estate Investors acquired the property in March of this year for $28.05 million, according to previous reporting done by The Registry. The seller was an entity associated with Los Altos, Calif.-based David Wen.
At the time of the transaction, Principal Real Estate Investor’s Jeff Uittenbogaard, Investment Director said, “SteelWave has an established track record in the Silicon Valley, and we have had a lot of success partnering with them over the years. This is a well-designed asset in a tremendous location.”
The building, which is located at 285 Sobrante Way and targeting LEED Gold certification, features 31,250 square foot floor plates, floor to ceiling glass, multiple patios and parking. Additionally, says Dave Sandlin, executive vice president at Colliers International, the project’s proximity to public transportation is pivotal.
“Aside from the building itself, the answer is CalTrain, CalTrain, CalTrain!” he said. “It’s within a short walking distance of the train, and Sunnyvale is a good train stop with multiple baby bullets.”
Sandlin continued, stating that the building’s design and perks, which also includes an amenities area on the ground floor, will also appeal to growing tenants seeking a prime location in Sunnyvale. “It checks all of the boxes. It doesn’t have any flaws that we can see because it was designed from the ground-up for the current tenants in the marketplace.”
However, its design and location close to Caltrain are not the property’s only perks. With surrounding development popping up on adjacent project sites, Central Station presents future tenants with a rare opportunity: the potential to expand without needing to move.
Directly adjacent to the project site at 275 Mathilda, The Irvine Company plans to build another 135,000 square feet of Class A office space. Similar to Central Station, the building will feature a modern glass façade and metal work, as well as two rooftop decks and floorplates of about 38,000 square feet. The project is expected to break ground early next year.
Sunnyvale Business Park, which is also owned by SteelWave and is located at 840 W. California Ave., will also likely see expansion in the coming years, Sandlin noted. Currently, the office and research and development business park features nine two-story buildings and one three-story building totaling more than 620,000 square feet.
“That’s huge,” said Sandlin. “Most times, right now, if a company needs 100,000 square feet, they will end up leasing a couple hundred thousand square feet now so they can lock it in and expand. Having the Irvine project right next to us and the Sunnyvale Business Park across the street is a positive. You not only have one stage of expansion, but a second stage as well.”
Additionally, Sunnyvale has a slew of multifamily projects in the pipeline popping up around the development. Within a three-mile radius of the project, there are currently 89 multifamily projects in the pipeline that have more than 50 units for a total of 15,629. Currently, 510 of those units are under construction. Central Station is also just blocks from major employers Twitter and 23&Me.
The building is estimated to be completed in Q4 of 2020, and Sandlin estimates that the steel will be up by the end of this year. Thus far, SteelWave and Principal Real Estate Investors are in talks with several potential tenants, two of whom are looking to lease the entire building. At this point in time, stated Sandlin, leasing the entire building to a single tenant is the goal.