On the heels of a grand bargain with LinkedIn in Mountain View and Sunnyvale and a decision to take up an additional 612,000 square feet in Sunnyvale’s Moffett Gateway developed by San Francisco-based Jay Paul, the global technology company Google just purchased a nearly 150,000 square foot asset in San Bruno for $58 million, or nearly $387 per square foot in order to maintain a strong foothold in the north Peninsula city where its video company YouTube is based. The story was reported by the Silicon Valley Business Journal.
The seller was Rubicon Point Partners, which has owned the asset in a joint venture with Canyon Catalyst Fund and paid $44 million for the property in October of 2014. Canyon is the emerging manager investment platform funded by the California Public Employees Retirement System. The manager on this investment entity is Los Angeles-based Canyon Capital Realty Advisors. The purchase in 2014, which The Registry was first to report was from San Francisco-based Ellis Partners.[contextly_sidebar id=”3UuWofIvHs7BW8QAaQmuKRh87lACjA2N”]“I think that the San Bruno market is one that is attractive as it gets overlooked by many institutional investors, which should allow us to buy at a reasonable price. We have seen this situation occur in other markets in the Bay Area in the past like the Mid-Market area in San Francisco and downtown Mountain View,” says Ani Vartanian Boladian, a managing partner with Rubicon Point Partners at the time.
The Lakes at Bayhill located at 1150 Bayhill Drive in San Bruno, which is the name of the development, was first developed in 1976. The project covers 6.4 acres and has three Class-A buildings in a park-like setting. Its major tenant is Cord Blood Registry, which occupies 22 percent of the property. Other tenants are Google, Walmart.com and Oracle, they occupy roughly 57 percent of the property.
According to a recent, fourth quarter of 2015 San Francisco Peninsula Research & Forecast Report from Colliers International, the San Bruno/Millbrae office submarket of San Mateo county has direct vacancy for Class A office space at 2.58 percent. It is a relatively small submarket of the Peninsula that has a total 1.8 million square feet of total office inventory. Asking rates for both Class A and Class B, according to the report, are therefore remarkably close at $3.50 and $3.49, respectively.