SAN JOSE — Investors from Seattle have swooped into north San Jose to buy a big office campus, but the deal bids to offer a haven to smaller tech companies seeking space amid dramatic expansions by Silicon Valley’s digital titans, experts said Thursday.
North First Corporate Center has been bought for $60 million by WH Silicon Valley II, according to Santa Clara County property records. The buyer is an affiliate of Washington Holdings, a realty investment firm. WH Holdings paid cash in the Aug. 8 deal, the county documents indicate.
“This was a deliberate acquisition of single-story, fairly vanilla research and development buildings,” said Craig Wrench, president of Seattle-based Washington Holdings. “It’s a product type that is in declining supply with all the development of new Class A offices.”
The six-building campus consists of one-story buildings that contrast starkly with the gleaming office towers and iconic tech headquarters that have sprouted in recent years or are being actively planned by developers and digital behemoths.
What’s more, this campus features the kinds of buildings that could appeal to smaller tech and industrial companies that dot the land of the tech giants.
“Tinkerers, makers and researchers, they are the bedrock of Silicon Valley,” said Rob Shannon, an executive vice president with CB Richard Ellis, a commercial realty brokerage.
The new owners say they intend to maintain the property in pretty much its current state.
“There is still demand by smaller companies consisting of folks who innovate, discover and create, people who need to make something in some form, even if they do mass production elsewhere,” Shannon said.
And while it’s on a prime site in San Jose on Daggett Drive between North First Street and Zanker Road, the buildings on the 16.7-acre property won’t be bulldozed to make way for prime office space. CB Richard Ellis is seeking tenants for the mostly fully complex.
“We will be doing some light renovations to the buildings, but that’s it,” Wrench said.
“The types of tenants we are accommodating are folks who need to have their industrial process occur in a one-story building,” Wrench said. “They are building, crushing, burning things, creating things with lasers. There are a lot of small and mid-sized companies with very talented, very smart employees.”
Washington Holdings is also active in Santa Clara, where the company took ownership in 2013 of Mission Park, a complex near the corner of Montague Expressway and Mission College Boulevard. Washington Holdings bought the 46-acre site when it was a collection of office buildings that also were marketed to small- and medium-sized tech companies.
Since then, a portion of the Mission Park site was redeveloped with a 23,000-square-foot retail center and a 175-room Element Westin Hotel.
The quest for brand-new offices by Apple, LinkedIn, Google and Facebook, along with expansions by up-and-coming firms such as Palo Alto Networks, will likely intensify demand for offices suited for smaller firms.
“We hear a lot about vertical campuses and big block property transactions,” Shannon said. “But mega companies started out as smaller companies, and they can be in a variety of industries that are tied to the Silicon Valley machine.
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