By Jon Peterson
Mountain View-based Google has closed on its $88 million acquisition of the 196,000 square foot (roughly $448 per square foot) 900 and 1000 Cherry Avenue in San Bruno, according to sources familiar with the transaction. The buyer declined to comment when contacted for this story.[contextly_sidebar id=”VXXkhf0RlWbWhf0ImkAgHWiqdlDunBXD”]The seller of the property was Hartford, Conn.-based Cornerstone Real Estate Advisers, who has owned the buildings since October of 2007, when it purchased the complex for $68.5 million, or $349 per square foot. The real estate manager awarded the listing for the sale to the San Francisco office of HFF. Steven Golubchik, a senior managing director in that office, did not respond to phone calls seeking comment for this story.
Cornerstone had owned the property for one of its commingled funds. The real estate manager has both core and value-add commingled funds that it manages for pension fund and other institutional investors around the country and on a global basis.
There are two office buildings involved in the sale. Both are fully leased to Google through 2022, and one of them serves as the world headquarters for YouTube. The properties have some of the top quality amenities that many technology tenants demand today. This includes an Immersion Room that simulates a 360-degree video stream, two full-service cafeterias, kitchen/pantry suites with lounge areas on each floor, a fitness center with lockers and showers, bike room with storage and a multi-functional conference room for corporate events and executive retreats.
San Bruno is relatively small submarket of the San Francisco Peninsula. According to a recent, second quarter report by commercial real estate services firm Colliers International, the San Bruno/Millbrae office inventory is approximately 2.8 million square feet. Of that, just under 800,000 square feet is represented by Class-A product. While the overall vacancy is around 6 percent, Class-A vacancy in the second quarter is at 12 percent, and it had gone up in one quarter from 10 percent, according to the same report. Given the size of the sub-market, one or two moves could have a notable impact on the market overall.
The rest of the San Mateo county/Peninsula market has been experiencing decreasing vacancy and increased lease rates over the recent past driven primarily by the surging technology market. “At the midpoint of 2015, the seemingly bottomless tech boom has placed the local commercial real estate market in its strongest position in a generation. Lease rates continue to defy gravity and users find fewer options for expansion as vacancies dwindle,” the report concluded.