By Meghan Hall
Mountain View’s Platinum Triangle is jam-packed with big technology firms, many of whom occupy multiple buildings in the area, forming a highly sought-after innovation cluster. The market attracts tenants and investors alike. Los Angeles-based Kilroy Realty, one of the region’s biggest developers of office space, has placed one of its more modest office assets on the market. Kilroy is offering 331 Fairchild Drive in Mountain View up for sale, and guidance pricing is in the $90 million range, according to a source familiar with the property.
The 87,565 square foot property is currently 100 percent leased to Itasca, Ill.-based firm Knowles Electronics, who has a remaining lease term of 3.25 years. Knowles Electronics, founded in 1946, is a global supplier of micro-acoustic, audio processing and specialty component solutions geared toward mobile electronics and communications equipment for the medical, military, aerospace and industrial sectors. According to NKF, Knowles Electronics’ current rental rate is 25 percent or more below market, providing any new owner with future upside.
Kilroy Realty built the property in 2013, and the building itself sits on just over five acres. The office building itself features 29,000 square foot floor plates, 16-foot clear heights and on-site amenities such as outdoor patio space, barbecue areas and on-site showers.
Perhaps most advantageous to Knowles, and the property’s potential new owner, is 331 Fairfield’s location. The property is surrounded by major credit tenants, including Google, who has 7.8 million square feet in the vicinity, Apple, who occupies 4.7 million square feet, and Facebook, who follows closely behind at 4.6 million square feet. Also nearby is Microsoft, who has taken 1.6 million square feet of space.
Kilroy Realty also owns 680-690 Middlefield Road in Mountain View, a 340,913 square foot office campus currently leased to Synopsys. Constructed in 2013, the $200 million campus was the first ground-up development for Kilroy in Northern California, who has since rapidly expanded its presence in the Bay Area. Kilroy Also owns Terra Bella; located at 1300 Terra Bella Ave. in Mountain View, the 114,175 square foot office project was acquired by Kilroy in 2016.
In South San Francisco, the firm is currently spearheading progress on the 2.5 million square foot Oyster Point development. In San Francisco itself, Kilroy is working to redevelop the City’s Flower Market, located in Central SoMa, into up to 2.3 million square feet of office and retail.
At the end of 2019, Mountain View had a full-service asking rent of $6.92 per square foot, nearly a dollar per square foot lower than at the end of 2018. Mountain View also had a slightly higher availability rate at the end of 2019, which came in at 9.23 percent, compared with an availability rate of 3.55 percent at the end of 2018. Overall, however, the Silicon Valley office market has remained strong and continues to be influenced by high levels of interest from both tenants, investors and owner/users.