The 300,000 redevelopment that looked to reshape a portion of North San Jose known for its manufacturing past, has finally landed a tenant, nearly four years after the first phase of the redevelopment was completed. Philadelphia, Penn.-based Exeter Property Group, which purchased the property in October of 2021 for $192 million, landed Logitech, the computer accessory business, as the first tenant in the building. The company, which has corporate offices in Newark, Calif. and Lausanne, Switzerland, will be occupying 86,000 square feet in the property, according to sources with knowledge of the leasing deal.
The commercial real estate industry has tracked the evolution of The Assembly at North First for several years due to its location, size and development potential. The buildings that comprise the former LAM Research Campus are located at 3930, 3940, 3950 and 4000 N. First St., and 90 Headquarters Way, near Samsung’s North American headquarters and other major companies such as Cisco. Attractions such as @First, a 10-acre retail center with more than 84,000 square feet of amenities, is also nearby.
The redevelopment was announced nearly six years ago when ProspectHill Group, SKS Partners and Invesco Real Estate acquired the property in the summer of 2016 for $82 million and spent over $200 million reimagining the space into a modern, open floor, single story concept perfectly suited for the conditions that arose out of the global COVID-19 pandemic. At one point Google was in negotiations to lease up the entire property, however that never materialized putting financial pressure on the ownership, which ultimately sold the asset to Exeter.
The campus was designed by global architecture firm Gensler.
Exeter, is the real estate division of EQT Group AB and is one of the largest investment managers in the world. The company has 40 offices in North and South America, Europe, and Asia. The company has 250 million square feet of commercial property under management and $10 billion in equity capital, according to its website.
The lease represents much needed good news for the Silicon Valley commercial real estate market. The region as a whole has struggled getting employees back to the office, and as a result occupancy over the last two and half years has remained significantly lower than before the pandemic.
According to a recently released second quarter of 2022 Silicon Valley Office Market Update by brokerage firm Kidder Mathews, vacancy rates crept upward 2.5 percent year-over-year from 12.6 percent in 1Q 2022 to 12.9 percent in 2Q 2022. Gross absorption gained 18.7 percent from last year moving from 1.59 million square feet in 2Q 2021 to 1.88 million square feet in 2Q 2022, according to the report. Santa Clara and Sunnyvale were the most active markets with 597,014 square feet and 542,149 square feet, respectively.
While the year started off with some positive news as vaccination percentages increased and mask mandates were lifted, the macro-economic pressure of strained global supply-chain has increased inflationary and even recessionary trends, Kidder Mathews stated in its report. This is causing companies to tread cautiously into the second half of the year while at the same time re-thinking how much office space they may need in the future.