NY-Based Brookfield Asset Management Buys San Jose Property for $47.5MM

Brookfield Asset Management, San Jose, Silicon Valley, Cavium, Orchard Parkway, Bay Area
Image courtesy of AAI Design

In a relatively quiet second quarter of 2017, one New York-based investor has decided to make a bet in San Jose and acquire the roughly 118,000 square foot property at 2300 Orchard Parkway. Brookfield Asset Management purchased the building for $47.5 million, according to public records, or roughly $403 per square foot, in a transaction that closed on April 4th, 2017.

Brookfield purchased the building from Boston-based TA Realty Associates, which owned the property in its Realty Associates Fund IX. The sale was part of a larger, 45-property, 8.6 million square feet portfolio transaction for which Brookfield paid $854.5 million. The San Jose asset was the only Silicon Valley property in the portfolio, according to a release from the company.“With this sale, we have successfully monetized a significant number of assets in Fund IX, including all of the remaining industrial assets,” said Tom Landry, Managing Partner at TA Realty. “We believe the outcome of this transaction represents an attractive risk-adjusted return on invested capital, and we look forward to distributing the proceeds to our investors.”

The location will be occupied by Cavium, Inc., a provider of highly integrated semiconductor processors that enable intelligent networking, communications, storage, video and security applications. Kidder Mathews’ first quarter of 2017 Northern California Real Estate Market Review confirmed the technology company signed a lease at the property. It lists the lease as the second largest one in the time period, following Applied Materials’ lease of 128,000 square feet at 1140 E Arques Avenue in Sunnyvale.

Cavium currently occupies roughly 110,000 square feet in a building right next door at 2315 North 1st Street, and it is unclear if this is a an expansion or a consolidation for the company. Cavium also has a location in Mountain View, located at 2700 Zanker Road.

Brookfield Asset Management, San Jose, Silicon Valley, Cavium, Orchard Parkway, Bay Area
Image courtesy of AAI Design

The property was recently remodeled by San Jose based AAI, which is owned by Nelson, a national architecture and design firm, which acquired the San Jose design firm in the fourth quarter of 2016. AAI worked on the repositioning of the 2-story, 1997 vintage property by redesigning both the interior and exterior of the property.

According to AAI’s Web site, the redesign of the entry facade included contemporary charcoal aluminum panels, a painted steel canopy and a 2-story clear glass curtain wall that allows passersby a glimpse into the newly designed lobby. The new landscape design includes new entry paving and lighting, a large outdoor amenity space with outdoor BBQ, steel and wood arbor and large glass garage doors that lead directly into the new break area and fitness area. The interior remodel involves complete demolition of all interior partitions.

Cavium leased the property just two weeks after the redevelopment was completed, according to AAI.

The Orchard Parkway neighborhood of northern San Jose has been active during the region’s recovery from the Great Recession. A number of buildings were updated, renovated and repositioned with some notable transactions occurring in the last few years. One of them was Bixby Land Company’s contemporary office development at THE Campus, on the corner of Trimble and Orchard Parkway, which signed Verizon Corporate Services to a 136,000 square feet lease in two of the four buildings at the property.

A recent sale transaction in the neighborhood was the 155,613 square foot office building located at 2851 Junction Avenue, just two miles away, which New York City-based Blackstone Real Estate Partners purchased for $76 million, or $490 per square foot, in November of 2016 as part of a larger portfolio it acquired from Hines Real Estate Investment Trust. The property is fully occupied by TSMC North America (Taiwan Semiconductor Manufacturing Company) for another 12 years. In January of this year Blackstsone hired JLL to explore disposition of this property, which will now be subject to the $403 per square foot comparison.

Brookfield Asset Management, San Jose, Silicon Valley, Cavium, Orchard Parkway, Bay Area
Image courtesy of AAI Design