TA Associates Buys Office Building in North San Jose

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By Jon Peterson

Boston-based TA Associates Realty has paid $165 per square foot or around $16.5 million to acquire the 100,420 square foot 2107 North First Street office building in San Jose, according to sources familiar with the transaction.

“This is a strong institutional quality building. There were a variety of buyers that were interested in the property. The asset is in a top-tier location. It’s directly adjacent to the Ebay building,” said Eric Doyle, a managing director with Jones Lang LaSalle in its Palo Alto office. He handled the listing on the sale. He would not comment on the cap rate on the transaction.

Jones Lang LaSalle had marketed the property for sale on behalf of Atlanta-based INVESCO Real Estate. The real estate investment manager offered no comment when contacted for this story. The company has a regional office in downtown San Francisco.

The buyer did not respond to phone calls when contacted at its regional office in Newport Beach.

2107 North First Street was originally built in 1984 by Irvine-based The Koll Company. The property is located in the North First Street sub market, according to Doyle.

The office building is now 90 percent occupied. “This is a multi-tenant building that has seen its occupancy move in the range of 90 percent to 95 percent, depending on when some tenants have vacated the building,” said Doyle.

Demand for investment deals has surged in the past few months as domestic and foreign institutional players have been eager to be part of the Silicon Valley and the broader Bay Area commercial real estate market.

Technology companies seem to posses an insatiable demand for limited office space in South Bay, and especially so when it is in proximity to mass transit. Just last month, San Francisco-based Swift Realty Partners spent over $183 a square foot to purchase two buildings in the northern part of Sunnyvale for $30 million, a stones throw from San Jose’s North First Street submarket. The properties are across the street from light rail, which is considered a plus for many technology companies, according to Cassidy Turley Commercial Real Estate Services’ Senior Managing Director Eric Fox.

The occupancy performance of 2107 North First Street is doing better than the overall sub-market occupancy. “In the North First Street submarket, we are seeing that vacancies are now in the area of low double digits. There is good rental demand in the sub-market as companies are looking at North San Jose after being pushed out of markets like Mountain View and Sunnyvale,” said Doyle.

According to its Web site, TA Associates is known as a value-added investment manager. It typically invests on the behalf of commingled funds that it has raised from a variety of institutional investors including pension funds.

The company has average size deals that are typically in the range of $20 million to $30 million. It focuses on properties that are located in supply constrained markets where barriers to entry are high. The Pacific region of the country is a main component of its investment strategy.

Photo courtesy of JC Law Office

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