Four Apple-Leased Buildings in Cupertino Sell for $73.8MM

Apple, Cupertino, San Francisco, Graymark Capital, Cushman & Wakefield, Bay Area, Silicon Valley

By Jon Peterson

A high-net-worth individual has closed on the acquisition of four office/R&D buildings on Bubb Road in Cupertino totaling 109,779 square feet. The purchase price was $73.8 million, or around $672 per square foot, according to public reports.

The seller of the assets is San Francisco-based Graymark Capital. This company in partnership with PIMCO had acquired the buildings in 2017 for $44 million, according to public records. All four of the buildings have been leased to Apple for more than a decade. The technology company recently extended its lease in the properties.

Cushman & Wakefield represented both the buyer and seller in the transaction. Among those working on the sale were Eric Fox, Steve Hermann, Adam Lasoff and Seth Siegel. Cushman & Wakefield declined to comment when contacted for this story.

Throughout the time since the pandemic has hit, the commercial real estate market has been carefully assessing what the impact will be on values and transaction. This sale is an example of properties that have fared well during this time, an asset that is leased to a single tenant with a strong credit represents the type of real estate that is selling and attracting a great deal of offers even in the economic uncertainty of COVID-19, according to sources that track the sale of assets in the greater San Francisco Bay Area. Assets that have several tenants and even slightly lower credit have not been attracting as much interest from investors.

The four buildings in Cupertino are located between 10300 and 10460 Bubb Road. These assets were originally built between 1972 and 1979, although they were renovated over the past four years. The buildings cover a total of 7.53 acres. The parking portion in the buildings is at 3.6 spaces per 1,000 square feet.

Apple has been a major player in the Bubb Road corridor and most of the properties across Cupertino for a long time. The tenant has recently renewed leases in the Bubb corridor totaling 450,000 square feet. It now occupies more than 7.5 million square feet throughout the city of Cupertino.

The Cupertino office/R&D market has been one characterized by very low vacancy, according to industry resources. Over the past 20 years, the vacancy has averaged below five percent. The vacancy in the market was at 0.8 percent when the buildings on Bubb Road were put up for sale in February of this year. At that time, the average asking rental rate was $3.84 per square foot per month, a 26 percent increase from a year ago.

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