Attention, Silicon Valley Landlords: Wal-Mart Expanding Again

860 California Sunnyvale Wal Mart The Registry real estate 2

By Sharon Simonson

Wal-Mart Stores Inc. can’t get enough of Sunnyvale.

The Arkansas-based mass-market retailer is eyeballing for lease a 107,000-square-foot office building now under construction at the Sunnyvale Business Park.

860 California Sunnyvale Wal Mart The Registry real estate 1The park is the same location where Twitter Inc. recently agreed to occupy 8,000 square feet at 400 W. California Ave. and where Wal-Mart itself recently leased another 75,000 square feet.

The location puts workers within a two-minute walk to the Sunnyvale Caltrain Station and a growing new-development node in the Silicon Valley city. The Sunnyvale station is served by Caltrain’s Baby Bullet express trains, a key distinction for commuters because of the shorter morning and evening travel times.

Walmart.com, a division of the company’s Walmart U.S. segment, employs 1,500 people in the Bay Area and is headquartered in San Bruno, said spokesman Dan Toporek in an email response to a query from The Registry.

“We expect to add about 800 people over the coming years in Sunnyvale and will mostly hire people to work on our global technology platform, which is the backbone for all of our ecommerce sites and operations globally,” he said.

The Sunnyvale location means a shorter commute for South Bay talent. “We are also a major proponent of enabling our team to use public transportation,” Toporek said.

Building contractors are expected to have the 860 W. California Ave. building to shell completion by November. The three-story building is expected to reach Gold level certification under the Leadership in Energy and Environmental Design program.

Principal Real Estate Investors LLC owns the Business Park, which has nine existing buildings with 520,000 square feet. The Wal-Mart building would be the 10th.

Principal Real Estate is the dedicated real estate group of Principal Global investors, which is a member of the Principal Financial Group.

Dave Sandlin, a senior vice president with Colliers International in its San Jose office, said he could not comment on any prospective transaction. That said, demand from tenants to be in the Sunnyvale park is robust: “All three of the directly available spaces in the project are under lease negotiations with highly recognizable named tenants,” he said.

Sunnyvale has been the recipient of increased tenant attention as rents have risen in Palo Alto and Mountain View and price-conscious companies have turned south and as fast-growing Silicon Valley technology giants Apple Inc. and Google Inc. have sopped up massive amounts of South Bay workspace to accommodate their growth, said Drew Arvay, a senior vice president and principal with Cassidy Turley Commercial Real Estate Services.

“Sunnyvale is the single most transitional market in Silicon Valley right now,” he said.

The city has been enthusiastic about adding new housing, which is attractive to employers, he said. The advantage to Wal-Mart in Sunnyvale is that the building is new and can be fitted out to meet idiosyncratic specifications.

The landlord sought rents for the space of $3.50 a square foot, which it seeks to lease on a triple-net basis, making tenants responsible for costs including building operations, taxes and maintenance of the premises and the structures. The landlord was offering $40 a square foot to help pay for tenant improvements, Arvay said. Arvay has specialized in the Sunnyvale office market. He is not involved in the lease transaction involving Wal-Mart.

Photos by Sharon Simonson

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