Another North San Jose transaction just created a new ceiling for office sales in Silicon Valley. San Francisco-based TMG Partners and Boston-based Alcion Ventures sold the roughly 155,000 square foot office building located at 2851 Junction Ave. in San Jose for a reported $86 million, or $553 per square foot. The property was sold to Hines, which is an active player in Bay Area real estate.
The deal comes after TMG and Alcion purchased the property for nearly $42 million at the end of 2012 in a scenario that seems reminiscent of other TMG-led deals in the Bay Area—the companies invested in renovating the building, leasing it up and selling it for a healthy profit.
TMG and Alcion have had a history of working together in the Bay Area. The two firms made several deals together in 2012, paying $16.2 million, or $145 a square foot, all cash for the 111,300-square-foot property located at 3055 Orchard Drive also in North San Jose. The buyers had planned to spend an additional $2 million to $3 million investment to renovate and reposition the property.
TMG and Alcion had also acquired The Hamm’s Building at 1550 Bryant St. in San Francisco that same year for $37 million, or $201 a square foot. They planned a $15 million upgrade of the former brewery, which has a singular 12-story tower and is also situated in the wildly popular South of Market district. This building was sold the following year for an undisclosed sum.
In December of 2012 the firms also went into a partnership to acquire a two-story, 80,878-squarefoot office building at 3003 Bunker Hill Lane in Santa Clara.
North San Jose has been at the epicenter of recent transactions in Silicon Valley. Earlier this week, South Bay Development confirmed the sale of the 146,000 square foot building located at 3011 N. First Street in San Jose to Menlo Park-based Sand Hill Property Company. The price for the building was $31 million or nearly $212. The cap rate on this transaction was approximately 7.5 percent. This return is based on the current rent in the property.
South Bay Development still feels very confident about this geography and is putting money where its proverbial mouth is with a nearly 600,000 square foot spec development the company is developing on a 28.5-acre lot at the intersection of Highway 237 at First Street. Official ground breaking occurred this Wednesday.