By Nancy Amdur
The Irvine Co. tossed another Silicon Valley property into its portfolio with its recent $136.8 million purchase of a 12-building office campus near the new Levi’s Stadium in Santa Clara.[contextly_sidebar id=”vIOlAhnGacSaOzE1x48bTXXXlWCGccgY”]The real estate investment and development company acquired the 427,500-square-foot Tech Park at Freedom Circle last week, paying about $320 per square foot, said Mike Lyster, a spokesman for the Newport Beach, Calif.-based Irvine Co.
“This is part of our ongoing investment in Santa Clara,” Lyster said.
Tech Park at Freedom Circle, which includes one- and two-story buildings, was recently renovated. It is 95 percent leased with Samsung Research America, Netflix and electronic textbook publisher Chegg among its tenants, Lyster said. Irvine Co. likes the property’s location at 2518-2560 Mission College Blvd. and 3910-3990 Freedom Circle, which is adjacent to Highway 101 and close to Interstates 880 and 280. Public transit, retail, restaurants and hotels also are nearby, along with Levi’s Stadium, home of the San Francisco 49ers. The seller was Legacy Partners, Inc., which bought the office campus with joint venture partner AllianceBernstein in 2013 for a reported price of approximately $107.3 million. Foster City-based Legacy Partners did not return a call for comment on the sale. HFF arranged the transaction but declined to comment further.
This is just the latest Santa Clara property for the privately held Irvine Co., which began its move into Silicon Valley nearly 20 years ago. The company owns and operates office and apartment communities throughout the area, including seven projects within five miles of each other in North San Jose, Sunnyvale, Cupertino and Santa Clara.
Location and potential tenant base helped draw the Irvine Co. to its latest acquisition. Santa Clara “is a good central location,” Lyster said. “It’s very close to the 101 freeway and there is strong interest from technology and other companies about locating in the area.”
“The [area] really resonates with employers looking for office space that helps them recruit and retain employees,” he added.
The Irvine Co. last year completed the 911,000-square-foot Santa Clara Gateway office campus at 5451 Great America Parkway. It is 70 percent leased with tenants including technology companies Dell, GlobalFoundries and Arista Networks, Lyster said.
Success of that project helped encourage the company to move forward with its mixed-use Santa Clara Square development, under construction at Bowers Avenue and Highway 101. The property will include about 1.5 million square feet of office space along with a 125,000-suare-foot shopping center. Tenants will include global networking company Ericsson, which leased 410,000 square feet and plans to move in late this year, and Whole Foods Market, slated to open a 50,000-square-foot store in 2016.
The Tech Park acquisition “is right in between those two projects, so we will integrate it into our office portfolio,” Lyster said.
Investors and employers have shown increased interest in Santa Clara in part due to the construction and recent completion of Levi’s Stadium, said Eric Fox, the executive managing director and principal at commercial real estate brokerage DTZ (formerly Cassidy Turley) in San Jose.
The stadium created “a lot of excitement,” he said. “If you look up and down Great America Parkway, and that goes for both sides of [Highway] 101, you’ve got a lot of new development going in” along with investors purchasing and rehabbing assets to “try to capture the rising market.”
“The entire region is doing very well right now,” Fox said.
Demand for well-located office space in Silicon Valley and a declining amount of Class A options is pushing tenants into Santa Clara and smaller submarkets such as Campbell and the San Jose Airport, which is increasing rents by double-digit percentages, according to a fourth quarter 2014 report from commercial real estate and investment management firm JLL. Of the approximately 4.3 million square feet of office space under construction in Silicon Valley, 67.1 percent was pre-leased, the report said.
Photo courtesy of Legacy Partners