Campbell-based South Bay Development Co. has acquired 30.75 acres in North San Jose from Cisco Systems Inc. for an undisclosed price.
The property is entitled for 620,000 square feet of office campus development and is situated at North First Street and state Highway 237, a Main-and-Main location for corporate Silicon Valley. The property could also be re-entitled for retail, including a large commercial center or a regional mall.
Cisco has owned the land since at least 2003, according to public records.
“We feel we are getting a good price at an historic low point for land values” in Silicon Valley, said South Bay partner Mark Regoli, who said he was bound by a nondisclosure agreement not to disclose the sales price.
“We believe we are buying at a basis that will allow us to develop and build at a very attractive price. A company could be in a brand-new building for less than buying an existing buiding and retrofitting it,” he said.
Highway 237 is a heavily trafficked east-west link between the Peninsula and the East Bay. It has proven an exceptionally attractive location for technology companies in this cycle, drawing stalwarts and relative newcomers including Dell Inc., which opened a 240,000-square-foot research center facing 237 and is expanding to another 150,000 square feet nearby; Polycom Inc., which has its new corporate headquarters at America Center, which also faces 237; Microsoft Corp. and Hewlett-Packard Co.
The location has approximately 1,350 feet of frontage on Highway 237 and 2,330 feet of frontage on North First Street.
It is immediately across 237 from the new Brocade Communications Systems Inc. corporate headquarters and the Target-anchored @First Shopping Center, including a new 160-room Hyatt hotel.
The acquisition positions South Bay as a major contender for burgeoning Silicon Valley and Bay Area companies needing large swaths of office development. Demand for large-scale blocks has been robust in this recovery, and leasing velocity has slowed in some locations, notably the Peninsula, because the market lacks large spaces for lease or purchase.
South Bay has retained Jones Lang LaSalle to market the development site. JLL represented Cisco in the disposition of the property.