Lane Partners owns a real estate portfolio in Silicon Valley totaling approximately 2 million square feet, according to its Web site. In November of last year, the Menlo Park-based investor partnered with PIMCO to make that stake larger, and it acquired a half a million square foot portion of what is called the Peery Park portfolio in Sunnyvale. Last week, however, the firm decided to sell a portion of those holdings to a Chinese investor for a reported $60 million.
The two buildings that were sold total approximately 96,000 square feet and are located at 500 and 501 Macara Ave. The Chinese investor paid roughly $620 per square foot for the pair and one of the attractive aspects of that is that the tenant is Apple.
Lane Partners’ has more of these in its portfolio. Three of the sixteen properties the company purchased with PIMCO are also occupied by Apple.
The price per square foot on these locations is at the upper end of the scale of recent transactions. Chicago-based Kinship Capital and San Francisco-based SIMEON Commercial Properties have acquired two office buildings on Maude and Potrero Avenue at $500 per square foot earlier this year; Lane Partners was the seller on those, as well.
At the end of last year Kilroy Realty paid $374 per square foot for a 267,000 square foot Chesapeake Commons office building in Sunnyvale located at 1310-1325 Chesapeake Terrace Drive.
It is a very tight sub-market of the South Bay. “Vacancies are very low, almost non-existent, and tenants don’t have many options for this kind of space if they want to stay in Sunnyvale. We are expecting very strong rental rate growth for this property type in Sunnyvale this year,” said Kalil Jenab, a vice chairman with DTZ in its East Palo Alto office earlier this year.
The Kilroy purchase was partially driven by the property’s FAR of 30 percent to 35 percent. There are many office projects in its vicinity along Highway 237 area that have been allowed for much higher FARs, as high as 70 percent.
Foreign investors from China have been making strides into the Bay Area real estate market. From condominium projects like the Lumina in San Francisco to hotels and office developments on the Peninsula, investors from Asia have shown a strong appetite for our market, and this is just the latest example of that.