By Meghan Hall
Four properties at the heart of Sunnyvale’s Peery Park have been purchased in a joint venture between Oakland, Calif.-based Harvest Properties and Newport Beach, Calif.-based Invesco Real Estate for $165 million in a deal that was finalized Wednesday, according to industry reporting. The properties, located at 470 Potrero and 648, 810, 870 W. Maude occupy 15 contiguous acres on across three parcels and are already entitled for future development.
The transaction was first reported by The Mercury News Thursday.
Harvest Properties and Invesco purchased the properties under an entity called Sunnyvale Owner, and Chicago-based Kinship Capital and Simeon Commercial properties were the sellers. The two companies had originally purchased the properties back in 2015. According to previous reporting done by The Registry, the two parcels located at 810 W. Maude and 470 Potrero Ave. were purchased for $55 million. Kinship was the main equity partner and majority owner of the properties, and Simeon Commercial acted as the local operating partner on the assets.
“Kinship Capital’s long-duration investment strategy and flexible capital allowed the joint venture to assemble these four parcels over time, and pursue entitlements for redevelopment in this thriving submarket within the context of the Peery Park Specific Plan,” said Nick Thomson, Principal, Kinship Capital in a press release. “The optionality this project afforded us allowed Kinship Capital to pursue a number of different business plans simultaneously.”
The parcels are currently developed with several old office and research buildings as well as vacant land. Harvest Properties and Invesco paid $120.5 million for the three buildings located at 474 Potrero and 810 and 870 W. Maude Ave., and $45 million for the vacant land at the southeast corner of West Maude and North Pastoria. The properties are already fully-entitled; city documents indicate that nearly 500,000 square feet of offices could be built on the sites.
Project plans show that two office buildings, each 162,000 square feet in size, could be constructed at 810-870 W. Maude and 480 W. Potrero. The buildings would each rise to be four stories in height. Plans also include a six level parking structure. 684 W. Maude, the empty lot, allows for 175,545 square feet of office space and another six level parking structure. The properties received entitlements from the Sunnyvale City Council almost exactly two years ago to the day, in April of 2017.
“We are pleased with the successful outcome with the sale to developers who will build this project,” said Ethan Meers, Principal, Kinship Capital in a prepared statement. “We are thankful for our partnership with SIMEON. This was an important opportunity for both companies.”
The four properties are located within the 450-acre Peery Park district, an area that is undergoing a wave of development that has only ramped up since the City of Sunnyvale adopted the Peery Park Specific Plan in 2016. The plan is meant to encourage higher density development in a formerly industrial area of Sunnyvale that has long been underused. The goal of the plan, to create a tech-oriented employment center, is well underway; in January of 2018 Synopsys leased 363,000 square feet of space, while Proofpoint inked a lease for 242,000 square feet. Irvine Co. has broken ground on Pathline Park, a 1.3 million square foot office development, and in February of this year Graymark Capital purchased an Apple-leased building at 785-787 N. Mary Ave. for $45.25 million.
Other tenants already in the area include Nokia, LinkedIn, Mercedes, and Volvo. While commercial real estate activity has decelerated across Silicon Valley during the first quarter of 2019, according to Colliers Internationals’ first quarter market report, the slowdown was expected due to the large number of deals signed at the end of 2018. Office availability rates in Sunnyvale, however, remain the lowest of any Silicon Valley metro, at 2.2 percent, and the shortage of quality office product will continue to be an issue as demand for large blocks of space continues to grow.