By Meghan Hall
In a move that will allow Apple to expand close to its Cupertino offices, Apple has signed two important leases, taking a total of 234,000 square feet in San Jose and Santa Clara.
In the first lease, returned to San Jose’s iconic Triangle Building. The tech giant has chosen to lease all of the six-story, 86,000 square foot building and is renovating the property to its needs. In a second, 148,000 square foot transaction, Apple has leased a building that has yet to be developed in Santa Clara, according to The Mercury News, who first reported on both transactions, citing public documents and industry sources.
Apple originally moved into the Triangle Building years ago, when it signed a lease in 2012 with then-owner The Carlyle Group for 52,040 square feet of space. The Cupertino-based company agreed to a seven-year lease with a condition that allowed the firm to leave before the lease rolled, according to previous reporting done by The Registry. Recent industry reporting had indicated that Apple has not continuously used the building since signing its original lease; this newest least would indicate a more permanent return to the space it had originally intended to take.
The property is located at 5300 Stevens Creek Boulevard. The Carlyle Group sold the property to Stockbridge Capital Group in the summer of 2013 for $41.8 million, or about $480 per square foot, and is Apple’s current landlord.
The larger of the two leases was for a yet-to-be constructed office building, just up the road from the Triangle Building. The property is located at 5407 Stevens Creek Boulevard and is to be developed by Peery Arrillaga. The new building is just adjacent to another, 187,000 square foot building located at 5409 Stevens Creek Boulevard that was also constructed by Peery Arrillaga and subsequently leased to Apple.
The leases show Apple’s continued commitment to remaining in Silicon Valley, even as it looks East to cities in Colorado and Texas for expansion. Occupancy surged at the end of the fourth quarter in the submarket, notes Cushman & Wakefield in its latest office report, and net absorption hit a positive 2.2 million square feet at the end of the fourth quarter of 2019. In Santa Clara, overall asking rents for Class A space hover at around $4.64 per square foot, while in West San Jose, rents are slightly higher, at $4.90 per square foot. While the construction pipeline for new office assets in Silicon Valley remains robust, rents are still expected to rise and vacancy will continue to tighten.