Alibaba Signs 166,000 SQFT Lease in Sunnyvale

By Meghan Hall

The Bay Area remains one of the top gateway markets for international companies looking to expand their presence in the U.S. with its well-educated workforce, proximity to other technology firms and access to venture capital funding. China-based technology firm Alibaba Group is no stranger to the Bay Area, but it is expanding its presence in the region after signing a 166,000 square foot lease at 525 Almanor Ave. in Sunnyvale. Currently, Alibaba already occupies one floor of the office building, which is centrally located near tech clusters in Mountain View and Palo Alto.  

The space Alibaba occupies is approximately 35,000 square feet in a building owned by Invesco Real Estate, and it is planning slowly expand into other portions of the building as leases expire and other current tenants move, according to a report by the San Jose Mercury News. The deal was arranged through brokers from CBRE and JLL, according to those with knowledge of the deal.

In recent months, Sunnyvale continues to be increasingly popular with major tech companies; LinkedIn leased 410,000 square feet at 445-465 N. Mary Ave. at the end of 2018, while Proofpoint and Nokia also inked large leases in the area over the course of the last year.

According to CBRE’s Fourth Quarter Silicon Valley Office Report, a surge in large block leasing, like the type of lease that Alibaba and other tech giants have secured, led to a record year in 2018. Six office tenants signed leases greater than 100,000 square feet in the fourth quarter in Silicon Valley, and at the end of the year Sunnyvale’s office vacancy rate hovered at around 2.2 percent. CBRE states in its report that the lack of suitable existing space, particularly in Class A buildings, as well as the rising cost of construction have further encouraged pre-leasing activity. CBRE predicts that the market could continue to tighten if tenant demand keeps at its current pace. Currently, there is only 1.3 million square feet of available speculative construction available in Silicon Valley, causing rental rates to rise and making companies like Alibaba look into their future a little sooner.