London Investment Firm AGC Equity Partners Closes on $780MM Deal to Buy Coleman Highline Buildings in San Jose

San Jose Silicon Valley Gensler Newmar Blackstone Verizon Hunter Storm Coleman Highline Roku AGC Equity Partners TikTok ByteDance
Courtesy of Coleman Highline

By Meghan Hall

As the Omicron variant makes landfall in California, investors are continuing to close deals that will shape the future of Silicon Valley’s office market. On December 1st, London-based firm AGC Equity Partners finalized its deal to acquire several buildings within San Jose’s Coleman Highline for $780 million, according to The Mercury News.

The three buildings, located at 1199 and 1193 Coleman Ave., total 657,934 square feet and were previously owned by Hunter Storm and Sansome Partners. 1199 Coleman Ave. is a seven-to-eight story building totaling 603,363 square feet.1193 Coleman includes 54,571 square feet.  A 10,000 square foot welcome center was also included in the deal. 

The buildings are currently occupied by Yahoo, whose lease is anticipated to run through 2037. When Yahoo signed the lease, it anticipated housing around 3,400 employees at the site. 

Streaming giant Roku is also headquartered at Coleman Highline, although its buildings were not a part of the current deal. An affiliate of Blackstone acquired Roku’s three office buildings and a parking structure at the end of 2020 for $275 million.

The deal, a sign of strength, comes even as Silicon Valley struggles with vacancy increases and flat asking rents. The office asking rate in the market continued to increase during the third quarter, rising to 15.3 percent, an increase of 190 basis points from the previous quarter, according to Cushman & Wakefield. Currently, some 13.6 million square feet are sitting idle. Subleases also continued to rise, accounting for 25.1 percent of all vacant space.

Absorption also remains low. Year-to-date, absorption in Silicon Valley totals 2.8 million square feet. In 2019 and 2020, there was 10.5 million square feet and 5.3 million square feet of absorption, respectively. 

As a result, rental rates also remained flat, finishing the quarter at $5.38 per square foot per month. However, northern submarkets of Palo Alto, Mountain View, Sunnyvale and Santa Clara saw slight upticks in their rental rates. Looking ahead, vacancy is expected to increase further as new projects are delivered and companies are slower than normal to pick up the slack. However, life sciences firms and big tech are anticipated to be the bellwethers of the local market, providing a silver lining for investors and landlords. 

West Coast Commercial Real Estate News