Boston Properties Sells San Jose Office with Development Opportunity for $207MM

Golden Triangle, Silicon Valley, Boston Properties, Innovation Place, San Jose, JLL, Jones Lang LaSalle

Another Golden Triangle sale in Silicon Valley announced yesterday highlights the burgeoning office market there and the need for companies to secure as much space as possible in a way to ensure their business continuity.

[contextly_sidebar id=”Ek3Ej3P9RlhBqq3p500KI0SUxUmdPIKJ”]During its regularly scheduled third quarter 2015 analyst call, Boston Properties announced that in early October it entered into an agreement to sell its Innovation Place property for $207 million. Innovation Place is a 26-acre site located in North San Jose with one occupied and three vacant existing office buildings and a total of approximately 574,000 square feet (approximately 463,000 square feet of which are vacant) located at 3100-3130 Zanker Road, according to the firm’s statement. Google Maps indicates that Lockheed Martin is the tenant in one of the buildings.

The site also has a surface parking lot for 1,699 cars, which in time could hold an additional 537,000 square feet of office/R&D development and two parking structures for approximately 3,000 cars.

The buyer was not named in the release by the company, however, the San Jose Business Journal indicated it was Broadcom. The semiconductor firm occupies a building across the street, at 3151 Zanker Road, and industry sources told The Registry earlier this year that the firm was in the market for office space where it would consolidate its various facilities across Silicon Valley.

Fellow chip maker Avago Technologies, a former semiconductor unit of Hewlett-Packard, has made a $37 billion offer to purchase Broadcom. This merger is currently on track, according to a research report by Yahoo Finance. Broadcom had just days ago reported its third quarter results. The firm’s stock for the year is up 19 percent, according to Wall Street Journal. Net income in the reported quarter increased to $429 million from $98 million in the year-ago quarter, although revenue for the reported quarter was roughly $2.2 billion, down 3.2 percent year over year, according to Yahoo Finance.

The North San Jose submarket of Silicon Valley has the highest vacancy among the submarkets in South Bay. A JLL second quarter 2015 office report pegs it at 27.4 percent, which is more than double the average vacancy of the Silicon Valley market, which is at 13 percent. Class A space is performing a little better at 24 percent vacancy in North San Jose, compared to 12 percent across Silicon Valley. The submarket has 500,000 square feet of construction under way, which represents around 10 percent of the 5 million square feet in development, according to the same report.

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