Nearly three years after purchasing The Campus, located at 375-441 Trimble Road at the intersection of Trimble and Orchard Parkway, Bixby Land Company has found a suitable buyer that will help it nearly double its money on the 250,000 square foot redevelopment in North San Jose. According to a report from the Silicon Valley Business Journal, an entity owned by the MetLife Real Estate Advisors will be purchasing the four building campus for $96 million, or $384 per square foot.
The Orange County, Calif.-based developer purchased the Trimble Technology Park, as it was known before the rehab, a the corner of Trimble and Orchard Parkway in October of 2012 for nearly $29.5 million. It then poured another $26 million over the next 18 months into renovating the buildings on the property, according to the company, in order to bring it up to the standards of the new technology companies’ demands.[contextly_sidebar id=”xh5ezVQSEAPondqH86nYkIyd70MnC1Dg”]“THE Campus offers progressive companies a dynamic office setting with appealing architectural elements and abundant on-site amenities,” said Bill Halford, president and CEO of Bixby Land Company at the time.
Architect Kelly Simcox at Studio G Architects of Campbell, Calif. designed the project.
Just months after completing the renovation, Bixby singed Verizon Corporate Services to 136,000 square feet. Earlier this year Veldhoven, Netherlands-based ASML, a provider of lithography systems for the semiconductor industry, took the remaining 91,000 square feet in the campus, making it fully leased.
Orchard Parkway has been an important bellweather for the North San Jose submarket. Over the last several years, more than 1.3 million square feet of redevelopment has occurred on the curvy road that is still the home to Fairchild Semiconductor, the seminal Silicon Valley technology firm. Companies like Bixby, LBA Realty, Lane Partners, DivcoWest, Ridge Capital Investors and Contrarian Capital Management, among others, were able to enter the market, buy properties below replacement cost, finance renovations and hope for profits in the ensuing years. For some that time has arrived.
In early 2014, the first positive indications were showing that their bets were starting to pay off. Then-Santa Clara-based ProteinSimple, a developer of protein analysis technologies, inked a nine-year lease to occupy the 98,000 square feet at 3001 Orchard Parkway beginning in September of last year. Vander-Bend Manufacturing agreed to occupy a 209,000 square foot retrofit at 2701 Orchard Parkway as it relocated from Sunnyvale. Getting Verizon to commit to the location was a nod to the dreams of the developers.
According to a DTZ first quarter 2015 Silicon Valley Office Snapshot report, the office market in the South Bay is poised to surpass many of the records set during the dot-com era. Occupancy keeps growing across the region, and subsequently, the asking rents are increasing at the same time. Although the vacancy rate in North San Jose was recorded at 28 percent, the asking rents for Class-A office in the submarket are at a respectable $3.22, compared to an average for all classes at $2.81.
Two notable sales transactions occurred in the submarket at North First Street during the first quarter of this year, showing a wide range of asset quality. New York Life Investments purchased the 123,000 square foot 2665 N. First Street property for $30 million or nearly $243 per square foot, while a 124,000 square foot building at 2150 N First Street sold for $23.7 million, or $191 per square foot.
MetLife declined to comment when contacted for this story. The real estate investor acquired the property in San Jose for its commingled fund, MetLife Core Property Fund, according to sources familiar with the property. This is a core open-ended commingled fund managed by MetLife. The open-ended structure means that capital raising period is always open. This compares to closed-end commingled funds, which have a specified time period to raise the capital. The Core Property Fund has a gross asset value of a little more than $2 billion, according to sources that track this information. One of the larger investors in the fund with a $150 million commitment is the California State Teachers Retirement System. The commingled fund looks to buy a mixture of apartments, office, industrial and retail assets across the country.