By Jon Peterson
Walnut Creek-based Vertical Ventures has put up for sale the 347,434 square foot Hellyer Oaks Technology Park in South San Jose located at 5215-5225 Hellyer Avenue, according to sources familiar with the property.
The seller has hired Colliers International Institutional Capital Markets as the listing agent on the sale. One of the people involved in the sale is Andy Zighelboim, an executive vice president in the company’s Silicon Valley office. Colliers declined to comment when contacted for this story.
Vertical Ventures is a Bay Area investor who usually enters partnerships as an operating partner. It had acquired the property for $36.2 million, or just over $104 per square foot, in February of 2017, as stated in public documents. It’s not clear what the pricing will be for the property this time around. The asset will likely attract a mixed of core plus to value-add kind of investment capital to the sale.
The property does have some room to add more tenants to the property in the future. The current occupancy of the property is now at 82 percent. Much of the demand for space in South San Jose has been in the range of 50,000 square feet or less, which is also the size requirements that the Hellyer Oaks property has. There is a total of 12 other spaces in the region in this size range that will compete with Hellyer Oaks.
South San Jose is a market that is known as a lower priced alternative to other markets in Silicon Valley. Its average lease rate is $1.31 triple-net. This compares to the average rates of $2.39 in North San Jose, $2.14 in Santa Clara and $1.89 in Milpitas.
Another advantage for South San Jose is its reverse commute patterns. This can be a big plus for employers when trying to recruit new employees. Hellyer Oak’s location fosters convenient reverse commute times from surrounding areas like Sunnyvale, Mountain View, Santa Clara, Cupertino, Fremont and downtown San Jose. Drive time from these areas range from 15 to 35 minutes, which is significantly less than what many commuters spend traveling within the Silicon Valley and the greater Bay Area.
Just two weeks ago, the Sobrato Organization, the venerable Silicon Valley developer and owner, sold a five-building, 433,522 square foot Valley Oak Technology Center also located in the south San Jose submarket. The company sold the complex to an entity associated with Beverly Hills, CA-based Kennedy Wilson for $81.2 million, or roughly $187 per square foot.