By Meghan Hall
The Silicon Valley has for many remained one of the strongest markets in the region, even with the uncertainty of 2020. A new wave of deals that closed this week seem to confirm this and has shown that investors are ready to deploy capital when valuable assets come to market. In five major deals, first reported by The Mercury News and confirmed by industry sources, investors purchased $936 million in office assets across the valley. The assets were all located in Silicon Valley and leased to big-name tenants.
In the biggest transaction, San Francisco-based Swift Real Estate Partners purchased 10 buildings for $346 million. The assets are located along Results Way in Cupertino and are currently leased to Apple. The property was leased to Apple in 2011 and is known as the Results Way Corporate Center. The Registry first reported mid-October that Swift was intending to buy the property from DWS. In all the asset totals 384,000 square feet.
Over in San Jose, the sale of the Coleman Highline buildings also closed for $275 million, or about $770 per square foot, according to a source familiar with the transaction. New York City-based Blackstone purchased the asset from Cupertino-based Hunter Storm development. The buildings are leased to Roku, with a remaining lease term of about nine years. According to the Registry’s previous reporting, the developer had first placed the assets up for sale in July as a way to test the market interest in this property. The company would only sell the two buildings if it recouped its investment for a fair price.
Third in size was a $160 million transaction for 125 Rio Robles in San Jose. The asset was acquired by SB 125 Rio Robles, affiliated with an investment group based in Korea known as Soulbrain Holdings. According to a source familiar with the market, two out of three of the buildings have been leased to ASML, which specializes in semiconductors. Paramount Advisory LLC was retained to provide services to help close the deal. According to a statement from the company, the firm helped raise $78 million for the deal. DivcoWest, the seller, initially purchased the three empty buildings in 2018 for $50 million. The developer and investor declined to comment for this story.
Also in San Jose, New York-based Teachers Insurance and Annuity Association of America (TIAA) acquired two buildings on Optical Court. TIAA paid $51.5 million for the assets, which are occupied by Roche Sequencing Solutions.
In the final transaction, located in Sunnyvale, a six-building, office and R&D campus totaling 313,740 square feet was purchased for $104 million, or $331 per square foot. Tenants include FDK America as well as several arms of Fujitsu, a Japanese multinational technology equipment and services company. The buyer was Lane Partners.
The Fujitsu Campus consists of one- and two-story buildings at 1230, 1240, 1250, 1260, 1270 and 1280 East Arques Avenue. Positioned on 26.27 acres, the campus is immediately adjacent to the Central Expressway and close to US-101 and the Lawrence Caltrain Station providing tenants with connectivity throughout Silicon Valley and the Bay Area. Additionally, the property is next to The Lawrence Station Area Plan, which encompasses 629 acres of development to include thousands of new housing units, retail amenities and outdoor recreational areas, according to a statement from JLL.
The transactions dwarf many sales that have occurred this year thus far. Some of the larger transactions of the third quarter, for example, included the sale of the Stevens Creek Executive Center in West San Jose for $54.5 million, and the sale of 3803 Bascom Ave. in Campbell for $16.3 million. According to a recent Cushman & Wakefield report, Silicon Valley tech and life science companies will remain critical to the health of the office market—especially as much of the economy remains unsteady due to COVID-19.