Irvine Company’s steel and glass structures dotting US Highway 101 in Santa Clara will soon have a new tenant. Seattle-based Amazon will be subleasing 164,000 square feet of space from Swedish telecom giant Ericsson at 2795 Augustine Drive, where it will take all of the leasable space in the 181,600 square-foot structure. The Silicon Valley Business Journal reported the news on the deal.
In May of 2014, Ericsson announced that it was occupying 410,000 square feet at the development, taking most of Irvine Company’s west side of the Santa Clara Square campus. It was projected at the time that the company would have as many as 2,100 employees at the site, consolidating operations across Mountain View and San Jose. Along with the Amazon sublease, Ericsson is also looking to shed additional 93,000 square feet at the property, according to the report.
The draw for the company was the proximity to transportation—the site sits practically on the corner of Highway 101 and Bowers Avenue—but also the amenities that the new Irvine Company-designed campus was promising to bring. Whole Foods became a major retail tenant in the development, and at full completion the development also was going to offer 2,000 residential units at the site.
Irvine’s $2 billion Santa Clara Square investment also would ultimately 1.8 million square feet of office, 125,000 square feet of specialty retail space and about 30 acres of open space, parks and landscaping.
However, Irvine’s project has had a number of vacancies since first developments were delivered. Part of this could be attributed to the supply in Santa Clara, which today counts the highest availability rate in Silicon Valley at 27.3 percent, according to a recent, second quarter of 2017 Research & Forecast Report by Colliers International. The second highest is San Jose, which comes in at 13.4 percent, so deals are likely to be had in Santa Clara, even as the greater Santa Clara county unemployment inches lower and lower, sitting at 3 percent, according to Colliers.
Amazon has been slowly growing its presence across the Bay Area. The company leases nearly 2.5 million square feet of space throughout Silicon Valley in Cupertino, San Jose, Newark, Palo Alto and Sunnyvale, according to the Silicon Valley Business Journal report. Earlier this week, The Registry reported that the company was in talks to take space at WeWork’s newly subleased 456,760 square foot buildings at The Village at San Antonio Station in Mountain View. Whether the Ericsson sublease nullified that opportunity remains to be seen.