Stockbridge Buying San Jose Office Building

By Jon Peterson

San Francisco’s Stockbridge Capital Group is buying the not-quite 87,000-square-foot West San Jose Triangle Building from The Carlyle Group, paying $41.8 million, or $480 a foot, according to sources with knowledge of the transaction.

The distinctive 5300 Stevens Creek Blvd. office building sits on the border of San Jose and Cupertino and is visible from Interstate 280. It is also a freeway exit apart from the proposed Apple Inc. campus.

Apple signed a lease with Carlyle for 52,040 square feet of the building in the third-quarter of 2012. The Cupertino-based electronics company has a seven-year lease with conditions that give it the right to leave before the full term, sources said. The building is 100 percent occupied.

Stockbridge is expected to earn a 6.3 percent yield, or capitalization rate, based on the existing net operating income.

Stockbridge did not respond to calls seeking comment. Washington, D.C.,-based Carlyle Group declined comment. Carlyle’s broker, Sacramento-based Palmer Capital Inc., did not return calls.

Palmer also handled the negotiation and sale of the building to The Carlyle Group by Invesco Real Estate.

The six-story building is among the most distinct in Silicon Valley, with black and brown window glass and upper floors cantilevered over a ground-floor plaza and supported by multiple concrete pillars.

Cornish & Carey Commercial Newmark Knight Frank considers 5300 Stevens Creek part of both the San Jose and Cupertino office markets because of its location. “The performance of the office buildings in both of these markets has been strong,” said Clark Steele, market research coordinator for Cornish in its Santa Clara office.

In West San Jose, the office vacancy has moved from 6.9 percent in the second quarter of 2012 to 5.63 percent now. Average asking rents have gone from $2.29 a square foot, full service, a year ago, to $2.50 a square foot currently.

In Cupertino, office vacancy has declined from 2.8 percent in the second quarter of 2012 to 1.73 percent now. Average asking rents have climbed from $3.13 a square foot full-service to $3.66 a square foot now.

Photo courtesy of Rofo.

West Coast Commercial Real Estate News