By Jon Peterson
Boston-based TA Associates has purchased the fully vacant R&D property in South San Jose for $11.6 million, according to public records. The asset is located at 5729 Fontanoso Way and totals 78,119 square feet. The per square foot price came to just over $148.
The seller of the property was Denver-based EverWest Real Estate Investors. This company also has a regional office in the Bay Area located in San Jose on East Santa Clara Street. The listing agent on the sale representing both the buyer and seller was Cushman & Wakefield, which works on the deal out of its San Jose and San Francisco offices. Representatives from the firm declined to comment when contacted for this story.
The property has historically been leased to single tenants. It was first developed in 1999, according to industry sources, and since that time some of the tenants were Cisco, Electro Glass and Hospira. The property had been vacant since February of this year. The building was first put on the market for sale last year, and the asset had some interest from tenants. This changed once COVID-19 became a reality, however, and it was taken off the market. It was then brought back up for sale in the third quarter of this year.
TA Associates is known as a manager of value-add commingled funds. So, buying an empty building is not a novel experience for the real estate manager. It has a history of buying office, industrial and retail assets in many markets around the United States. The property in South San Jose will likely be leased to a single tenant in the future, according to sources familiar with the property. The building has very high ceilings with 24 foot clearance. Half of the building is office space and the other half is a combination of lab and warehouse space. The property takes up five acres of land.
The sale of the 5729 Fontanoso property was impacted by its vacancy, and the pricing takes into account the cost difference between an empty and leased R&D building in this submarket. The sale of this asset came in at $148.50 per square foot. Leased buildings in the same region have been sold for around $300 per square foot.