By Jon Peterson
A Southern California investor operating as San Jose First Street LLC has paid not quite $12 million, or $105 a square foot, to buy Civic Center Tower at 675-695 N. 1st St. in San Jose.
Commercial mortgage special-servicing company LNR Property LLC sold the 114,150-square-foot San Jose high-rise office building and a neighboring retail property, according to Santa Clara County assessor records. The amount borrowed against the property in 2007 was $16.5 million, or $150 a square foot.
“My client felt there was a lot of value in this transaction,” said Anton Qiu, a principal with TRI Commercial in its San Francisco office who represented the buyer. “I’m now in contract negotiations to bring in some new tenants. The new owner is taking a long-term view and plans to hold on to the property for a long time.”
The purchase was made all-cash.
The buyer hopes to capture an initial yield in the range of 6.5 percent based on new leases struck at current market rates, Qiu said. Assuming no new tenants before then, occupancy in the property will go down to 75 percent in November after the Santa Clara County Housing Authority leaves 8,600 square feet. The property was 83 percent occupied at sale.
Colliers International’s San Jose office marketed the property for sale. “There was a good amount of interest,” said Nate Jones, a senior associate with Colliers. At one point there were 10 or 11 firms interested. It ended up being six investment groups actually made bids on the property.”
Jones and Andy Zighelboim, a senior vice president with Colliers, marketed the property.
The 13-story office building has 109,850 square feet and was developed in 1966. Chicago Title Co. leases 25 percent of the square footage, which it uses for its Santa Clara County offices. Other existing tenants include State Bank of India on the ground floor and several law firms and other professional tenants.
The corner retail building, at 695 N. 1st St., has approximately 4,300 square feet and is vacant. In the past it was a bank branch.
The new owner has appointed TRI Property Management to manage the property. Qiu is the asset manager and will oversee the leasing and management. Qiu has represented the Southern California family of investors for more than four years in the purchase of more than 400,000 square feet of Northern California commercial, office, retail and mixed-use properties.
Michael Joseph and David Silberstein of Meacham/Oppenheimer Inc. Corfac International are assisting with the leasing.