UPDATED OCT. 15, 2014
By Jon Peterson
Menlo Park-based Landbank Investments just cleared the final approval hurdle for a major new office development in Sunnyvale totaling more than 777,000 square feet. The city council of Sunnyvale approved the developer’s project called Central & Wolfe Campus after a three-and-half hour deliberation by a vote of 5-2.[contextly_sidebar id=”fzax15jYuMktlvVv9EhEKvzR3oA0UIJT”]The development is located at the southeast corner of North Wolf Road and East Arques Avenue.
“We are very excited about this development and are hopeful for a successful development with this project going forward,” said Scott Jacobs, chief executive officer for Landbank ahead of momentous decision that was granted to his company the early hours of October 15. He declined to comment on the development cost of the project.
The first part of the development will be to demolish the existing buildings located on the site that totals 17.84 acres. “We have been talking with Webcor about this, and we are thinking that this part of the project would be started sometime during the first or second quarter of next year,” said Jacobs. There are a total of nine single-story concrete existing industrial buildings on the site totaling 266,000 square feet. It should take about three months to complete the demolition.
Landbank has plans to turn the site into an office campus setting totaling 777,100 square feet. This space will be covered in three buildings each totaling six stories. The entire development process should take about 21 months to complete. If all goes according to play, Landbank is looking at a March 2017 delivery of a fully-occupied campus.
Landbank is prepared to start the development without a tenant, if necessary. “We would start the project on a spec basis if we have to. We are planning to talk with very large major national technology type tenants about taking space in our project. The flexibility that we have allows for the space to be occupied by one to three tenants,” said Jacobs.
According to a recent Cushman & Wakefield report for the second quarter of 2014, flight to quality in Silicon Valley has been the prevailing theme as the top 12 leases of the first half of the years were attracted to class A space. Average asking rates have continued to increase through the second quarter, the report states, with the market-wide average asking rate of $2.84 per square foot per month, a 2.5 percent increase from first quarter figures and 11.8 percent higher than the same time the previous year.
The developer is a big believer in the kind of space that its providing for the marketplace. “I think that for the A-quality space we will be producing, there is no vacancy for it currently in Sunnyvale,” said Jacobs.
Landbank at this time is not sure if it will be bringing in a financial partner into the development. “We are now working with Erik Doyle of JLL as our advisor on this part of the project. We might bring an equity source into this deal or just use our own capital on it,” said Jacobs.
The city of Sunnyvale believes there will be several community benefits to come out of this project. According to board meeting documents, this will include around $4.6 million for the payment of housing mitigation fee for the square footage of the additional building square footage. There also will be a financial contribution of $2 million for landscaping, beautification or park improvements within the city with an annual escalation of four percent of this amount to reflect project cost increases.