Exeter Property Group Buys Vacant San Jose Office Building for $36.2MM

Exeter Property Group, 1710 Automation Parkway, Western Digital, Soma Capital, Atlas Real Estate Partners, San Jose, Cushman and Wakefield
Image Courtesy of Atlas Real Estate Partners

By Meghan Hall

A newly vacant research and development building in North San Jose has traded hands, a sign of movement in the market as the pandemic continues to disrupt office operations. In a transaction that recently closed, Pennsylvania-based Exeter Property Group purchased 1710 Automation Parkway from Soma Capital Partners and Atlas Real Estate Partners. The deal closed at $36.2 million, or about $184 per square foot, according to public records.

Newmark Knight Frank’s investment sales team worked to broker the deal.

The 196,647 square foot R&D/flex building was previously 100 percent leased to Western Digital (WDC). Western digital has since moved out, leaving the property vacant. The building has been recently renovated.

Atlas Real Estate Partners and Soma sold the asset’s counterpart—located at 1704 Automation Parkway—in 2017. At the time, the 85,270 square foot building sold for $21.5 million. The property is 100 percent triple-net leased to Quantenna Communications Inc., who began its lease in the building in October of 2017. That lease is expected to expire in 2024.

According to its website, Exeter is one of the largest real estate investment managers in the world, with nearly $20 billion in assets under management. The firm targets a variety of asset classes, including mid-rise office property in top markets in the United States, Mexico, Canada, Europe and the United Kingdom.

Silicon Valley’s R&D vacancy rate has been rising steadily over the course of the last three quarters, finishing the second quarter at 10.6 percent, based on information from Cushman and Wakefield. Sublease space is also higher. Boston Scientific placing 226,000 square feet on the market, as have Cavium Networks/Marvel and HPE, who have put 224,000 square feet and 164,000 square feet on the market. All three subleases are located within the North San Jose submarket. Cushman and Wakefield has described the market’s performance thus far as “lackluster at best.” However, rents have thus far held up, and the brokerage firm believes that Silicon Valley and areas like North San Jose may rebound quicker than other markets, thanks to less dense, low-rise assets.

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