By Meghan Hall
An office and research building in San Jose has traded hands, selling to a New York City development company. In a deal that closed just this week, Machine Investment Group purchased 1010 Rincon Circle for $32.6 million, or about $359 per square foot. According to public documents filed with Santa Clara County, the property was sold by two entities associated with Mark Moshayedi, a Newport Beach, Calif.-based CEO of MSM Global Ventures.
The asset totals 90,900 square feet and sits on 4.8 acres. Machine Investment secured a $23 million loan to finance the purchase. The loan was provided by Zions Bancorp and California Bank & Trust.
1010 Rincon Circle is currently 100 percent occupied by Quanta Cloud Technology, a subsidiary of Quanta Computers, Inc., a Global Fortune 500 company publicly traded on the Taiwan Stock Exchange that has over 70,000 employees worldwide, according to a statement from Machine Investment Group.
The property is located right next to both Interstate 880 and the Montague Expressway. Numerous other commercial businesses are located nearby, including MaxLinear, Han’s Laser Corp. XPo Logistics, and others.
Machine Investment Group is a real estate platform that targets opportunistic, distressed and special situations across the United States. According to the company’s website, Machine invests in the middle market; to-date, the company has made 50 investments across 25 top U.S. metropolitan markets. Machine has also deployed $1.5 billion in capital and $500 million in distressed debt investments.
Silicon Valley commercial property fundamentals are expected to improve as the U.S. unemployment rate declines. However, during the third quarter, vacancy for office properties continued to increase, according to analysis released recently by Cushman & Wakefield. Over the last several months, vacancy has climbed from 13.4 percent to 15.3 percent, which translates to about 13.6 million square feet of space sitting open. Subleases also increased slightly, and accounted for 25.1 percent of all vacant space.
Despite increases in vacancy, rental rates have held steady, finishing at $5.38 per square foot on a monthly full-service basis. Rents are expected to remain flat in the short-term until deal velocity picks up and both sublease space and the number of open offices decline.