Spear Street Earns Impressive Return on Two-and-Half-Year Santa Clara Investment

Spear Street, San Francisco, Santa Clara, DTZ, Stadium TechCenter, Deutsche Asset & Wealth Management, Silicon Valley, Golden Triangle, 237 corridor
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Stadium TechCenter in Santa Clara

An investment in a complex of three, fully-leased buildings at 5450-5480 Great America Parkway in Santa Clara, just landed San Francisco-based Spear Street Capital $44MM in gross profit—this does not take into account the money the company spent on improvements.

Deutsche Asset & Wealth Management acquired the buildings on June 26th for $147.5 million, just two and a half years following an investment made by Spear Street Capital of $103.5 million. The purchase price equates to roughly $480 per square feet.

Approximately a year go, DTZ announced that Hortonworks had signed a deal to take the entire 65,000 square foot office building within the Stadium TechCenter in Santa Clara, as the property is known. The other two buildings are occupied by Dell Computer and Arista, a networking software company.

According to a report by the San Jose Business Journal, Stadium TechCenter I, a new 226,500 square foot development by Spear Street, and the fourth building in the block, which is under construction and should be ready for occupancy in January of 2016, was part of the deal, although the details of the arrangement were not clear at time of reporting.

Santa Clara is seeing a slew of development activity this year, especially in the northern part of the city, close to the Golden Triangle Silicon Valley submarket. Earlier this year, The Irvine Co. spent $136.8 million to purchase of a 12-building office campus near the new Levi’s Stadium in Santa Clara from Legacy Partners. The 427,500-square-foot Tech Park at Freedom Circle sold for about $320 per square foot primarily because of the age and condition of the buildings.

According to a first quarter 2015 Colliers International Silicon Valley Research & Forecast Report, leasing activity slowed down in Santa Clara overall during that quarter. The market in proximity to the 237 corridor, however, which spans the northern part of Sunnyvale, Santa Clara and San Jose, has seen a rise in activity and even speculative development coming back, of which the Stadium TechCenter I is one such project.

However, with an overall vacancy rate in Santa Clara of roughly 16 percent, there seems to be some room for improvement. This is the third highest vacancy among the Silicon Valley submarkets, according to the Colliers report.

Photo courtesy of Spear Street Capital

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