By Meghan Hall
A big-box retail store within close proximity to several Apple offices has been scooped up by a well-known Bay Area developer. In a transaction that recently closed, LBA Realty purchased a 5.8-acre site for $43.5 million. The seller was a limited liability company based in Los Angeles, Calif.
The Mercury News was the first to report on the sale.
According to public documents, the property is located at 2800 Kifer Rd. and is currently occupied by HD Supply Home Improvement Solutions. The building itself totals about 141,000 square feet.
The property is close to a number of major companies, including Apple, who has leased 300 and 3008 Kifer Road. Applied Materials, Qualcomm, Groupon and ServiceNow are just several of the major companies with offices in the immediate neighborhood.
What LBA Realty will do with the property is unclear; currently, there are no project plans for the site on file with the City of Santa Clara. However, retail is among one of the asset classes that current conditions have impacted most over the past several months, and investors and CRE firms alike are looking for ways to re-invent former retail sites.
A recent report released by brokerage firm Colliers International explained that even prior to coronavirus, retail was already in the midst of a massive shift. Now, more than ever, property owners will need to get creative on how to get their assets to thrive. Since the end of 2019, the Bay Area saw 481,000 square feet of negative net absorption and rents decreased by 2.2 percent region-wide to $22.53 triple net per year.
In Santa Clara County—where LBA’s newest buy is located—the full economic hit of the coronavirus has been yet to be realized. The County was the first in the nation shutter non-essential businesses. In Santa Clara and nearby Sunnyvale, availability ticked up to 4.86 percent, stated Colliers, and asking rents came in at $32.52 per square foot. As is the case across the Bay Area, essential retailers are faring better than entertainment-based and non-essential businesses.
For developers like LBA Realty, big-box retail stores provide plenty of ample space—often well located—for redevelopment opportunities. The Irvine, Calif.-based firm is currently pursuing an 800,000 square foot office and retail development in Silicon Valley. Dubbed “North Town San Jose,” the project will transform nearly 68 acres and former Lumileds’ site into a walkable, high-density mixed-use district. The firm is also working on Foundry31, a former factory-turned-office in Emeryville, Calif., and owns the El Dorado Hills Business Center.