By Jon Peterson
Campbell-based South Bay Development Company is planning its first office development with Washington, D.C.-based The Carlyle Group in the city of Campbell that will be called Creekside@17.
“We had noticed how active Carlyle has been in the overall Silicon Valley market and we felt that this project would be a good fit for them. We are very pleased about starting up a relationship with them,” says Mark Regoli, a partner with South Bay Development.[contextly_sidebar id=”D5MwX733gJIwPDVhxS2n8oXM09tVaVhG”]A recent major deal by Carlyle was its $151.5 million acquisition of the 85-acre Plaza Del Ray mobile home park in Sunnyvale. In September, Carlyle formed another joint venture to redevelop the Pacific Skies Estates mobile park in Pacifica.
The all-in cost of the Campbell development will be in the neighborhood of $80 million, which includes the land acquisition costs of the property. South Bay has owned the land on this project since 2008.
Carlyle will be the majority owner of the property. South Bay does have some ownership as it contributed the land and will make an equity investment into the property as well.
Creekside@17 will have one five-story office building with floor plates of approximately 34,000 square feet, for a total of 172,772 square feet. The location is 6 miles from the Norman Y. Mineta San Jose International Airport, adjacent to a light rail station and next to a 158-room Marriott Hotel. Parking will be provided underground.
The leasing on the property will led by the Santa Clara office of Newmark Cornish & Carey. The listing agents are Phil Mahoney, executive managing director, and Todd Shaffer, a senior vice president. “I would expect that the property would attract technology type of tenants. The design of the building is flexible so that we could end up having one or two tenants in the property,” said Regoli.
South Bay will be creating new Class A space for the Campbell market. “This kind of office space in Campbell is very hard to create as there just isn’t a lot of land left to build. This is one of the reasons why there is very little of existing Class A space for tenants to lease in Campbell,” said Regoli.
Carlyle has plenty of capital sources where it could invest in a project like the Campbell development. Earlier this year, the real estate investment manager concluded a capital raise for its latest opportunistic commingled fund. This was $4.2 billion that it raised for Carlyle Realty Partners VII. Many of the investments for this fund are done with local operating partners, and some can involve providing equity for new development projects.
Carlyle is branching into the core plus sector of the investment business with its Carlyle Property Investors. The real estate investor is hoping to raise a total of $200 million for this fund by the end of 2015. This commingled fund has an open-ended structure, meaning it doesn’t have a specific time period where it can raise capital. The long-range goal for this fund is to raise $500 million a year for the next several years.