By Meghan Hall
Developers are continuing to plan for future development, solidifying plans and closing on deals even as the office sector has struggled. Locally-based The Minkoff Group has purchased a Sunnyvale project site at 100 Altair Way for $32.7 million, where it plans to develop a seven-story office building.
The Mercury News was the first to report on the sale. According to public documents on file with the Sunnyvale Planning Department, the new project would total 141,3000 square feet. Four levels of underground parking are also included in the plans.
Currently, the 0.3-acre property is developed with a 20-unit residential complex that is currently vacant, along with a former post office and commercial space. Combined, the buildings have about 40,000 square feet of area. Only minor permits have been issued for residential buildings since the 1980s, but recent updates to the Downtown Specific Plan now permit for office development. New permits issued by the City of Sunnyvale in December will allow The Minkoff Group to demolish the current buildings and move forward with its proposed development.
The project is one of a number of proposed developments part of Sunnyvale’s greater CityLine project. City plans indicate that downtown Sunnyvale will be revamped and include two separate components. The first part of the City’s plans will include 843 residential units, 260,063 square feet of commercial uses and more than 860,000 square feet of office uses within the Downtown Specific Plan area. The second portion of CityLine will include specific development proposals for another 793 residential units, about 165,000 square feet of commercial uses, and about 850,000 square feet of office. Transportation infrastructure and utility improvements are also part of the plans.
At the end of the third quarter of 2020, Silicon Valley’s office vacancy rate increased to 10.1 percent, up from 9.5 percent during the second quarter. The increase marked the first time since 2017 that vacancy hit double digits. Additionally, notes Cushman and Wakefield in a recent report, new office construction completions have far outpaced net absorption during 2020, whereas in the previous two years absorption outpaced deliveries.
New product under construction across Silicon Valley totals about 4.8 million square feet, of which 3.3 million square feet is speculative and 1.5 million square feet is build-to-suits. An additional 1.1 million square feet of spec space has been preleased. Looking ahead, Cushman & Wakefield believes that the availability and efficacy of COVID-19 vaccinations will serve as an indicator to office occupancy growth. The high-tech and life sciences sectors, which have established their stability, will continue to support the office industry as it moves towards recovery.