By Jon Peterson
New York City-based Blackstone will soon become the new owner of the two-building Coleman Highline office asset in North San Jose. The purchase price for the two buildings will be $275 million, or around $770 per square foot, according to a source with direct knowledge of the transaction. The actual sale of the property has not closed at this time.
Blackstone declined to comment when contacted for this story.
The seller of the property is Cupertino-based Hunter Storm Development. The developer had first placed the assets up for sale in July as a way to test the market interest in this property. The company would only sell the two buildings if it got back what it considered to be a fair price, according to Deke Hunter, president of Hunter Development. The two listing agents on the sale are Eastdil Secured and Preferred Capital Advisors.
Blackstone will be acquiring the property for its private real estate investment trust that goes by the name of Blackstone Real Estate Income Trust, as stated by sources familiar with the transaction. This investment entity is a perpetual-life institutional quality real estate investment platform that brings private real estate to income focused investors.
This REIT typically invests in stabilized income-producing commercial real estate nationwide involving major property types. It also does some investing in real estate related securities.
There were several factors that attracted Blackstone to the property, according to industry sources. One of them is Blackstone’s interest in investing in real estate tied to streaming video services. Both of the buildings in the transactions are 100 percent leased to Roku, a maker of devices for streaming television programming.
The second factor was that the property also has long term leases with Roku. They have another nine years left to run, according to published reports.
The two properties involved in the sale are located at 1143 and 1155 Coleman Avenue. The total square footage in the two buildings totals 357,106 square feet, and the properties are situated right next to the Santa Clara Caltrain station. This will be a major benefit to employees in the future once COVID-19 is more under control and the ridership resumes back to normal.
The planned sale in North San Jose is the latest example of investors showing more interest in office buildings that are leased to a single tenant with strong credit and services that are likely to thrive in the new environment brought on by the global pandemic. Office assets that have some vacancy and feature a multi-tenant occupancy are attracting less interest from investors, according to a number of sources with knowledge of the present market dynamics.