ByteDance, the Chinese internet technology conglomerate that is also the parent company of exploding social media platform TikTok is looking to take a big bite out of the San Jose sublease market. According to a report by the San Jose Mercury News, the company is planning to sublease 658,000 square feet, or two buildings in San Jose’s Coleman Highline development. The company will be taking space where Verizon once occupied the property at 1193 and 1199 Coleman Ave.
It was in July of 2019 that Verizon and developer Hunter Storm announced that the mobile and technology company was going to lease up the properties that were planned for development at that time. “We are embarking on the next chapter of Verizon Media’s journey here in Silicon Valley,” said Guru Gowrappan, Chief Executive Officer of Verizon Media at the time of that announcement. “This move will allow us to build a fully customized and sustainable new campus from scratch with employee’s being a part of this journey helping to design their workplace of the future. My goal is to bring new energy to our home and ensure it is best suited to the teams’ needs and culture.”
In October of that year, Hunter Storm broke ground on this Gensler-designed development that was planning to support more than 3,000 employees and include a 2,250-square-foot welcome pavilion and over 45,000 square feet of workplace amenities such as a fitness center and a café and marketplace.
Verizon Media was planning to occupy a large portion of the 1.75 million square feet that comprises the Coleman Highline campus. Roku, Inc. also leased 730,000 square feet of the project for its new corporate headquarters.
In October of 2020, New York-based Blackstone invested $275 million to acquire two buildings at the campus located at 1143 and 1155 Coleman Avenue. In December of 2021, London-based firm AGC Equity Partners finalized its deal to acquire the two Verizon-leased properties for $780 million.
The terms of the sublease have not been revealed at this time and the agreement has not been approved by all the parties, according to the reporting. This move, however, will provide a big boost for Silicon Valley commercial real estate, which has been hovering around 14.8 percent of availability and which saw roughly 69,000 square feet of positive net absorption in the second quarter, according to a recent, second quarter of 2022 Office Market Report by brokerage firm Newmark.
The average asking rate for Silicon Valley is $5.05 per square foot, according to Newmark. This represents a $0.01 per square foot increase over the quarter before and a $0.28 per square foot increase over the same quarter a year ago and also the fifth quarter in a row that leasing rates have increased.