By Jon Peterson
New York City-based Nuveen Real Estate has acquired two life science office assets located at 5945 and 5941 Optical Court in San Jose. The two buildings total roughly 135,000 square feet and they were purchased for $51.5 million, or $377 per square foot, according to sources that were familiar with the sale.
The previous owners of the two properties were New York City-based DRA Advisors. This real estate investment firm was represented in the transaction by the San Jose office of Eastdil Secured. Those working on the sale included Greg Cioth and Paul Nelson, both managing directors.
Nuveen did not respond to phone calls seeking comment for this story.
The assets were first put up for sale during the pandemic in August. A closing occurred last week, which makes it one of the fastest deals to go from on the market to closing in Silicon Valley since the pandemic began. “This sale reflects how many institutional investors feel about life science in general and in the Silicon Valley in particular. A factor is that employees need to be in the office to do all the work that is necessary for life science tenants. The Silicon Valley region has been under the radar for life science when compared to other parts of the Bay Area,” says Ben Knight, a senior vice president with CBRE in its San Jose office. He was not involved in the Optical Court transaction.
DRA had been the owner of both buildings that were sold for a little more than three years. The manager had paid $14.2 million for 5945 Optical and $13.45 million for 5941 Optical, as stated in public records.
The two buildings are 100 percent leased to a total of two tenants. Roche Molecular Systems takes all of the space at 5945 Optical. San Jose-based Bio-Cube is the tenant in 5941 Optical. The leases have an average remaining lease team of around eight years with no expirations until 2026. When the leases come up for renewal, there will be a possible mark-to-market opportunity. The area near the two buildings has other life science tenants such as Kaiser and Stryker, a medical equipment supplier.
The core parts of the life science market in San Jose has remained very tight, according to sources that track that market. The region has near zero vacancies in its core areas. This has been caused by more tenant demand than there is space to accommodate the demand.