London investors grab San Jose buildings for $780 million

SAN JOSE >> A London-based investment company has bought three north San Jose office buildings for nearly $800 million in a deal that marks Silicon Valley’s largest property purchase of 2021.

AGC Equity Partners bought the trio of buildings in a section of the Coleman Highline office complex, located on Coleman Avenue near Champions Way across the street from San Jose International Airport, according to documents filed Dec. 1 with the Santa Clara County Recorder’s Office.

The investment firm paid $780 million for the three buildings, the county records show. That works out to about $1,185 a square foot, which is a sky-high value for office space in the Bay Area.

The purchase points to ongoing interest from bigtime investors in Silicon Valley and other sections of the Bay Area even in the face of economic uncertainties unleashed by the coronavirus.

“You are always going to have demand from investors when you have a great property like Coleman Highline with top-quality tenants,” said David Sandlin, an executive vice president with Colliers, a commercial real estate firm.

Yahoo is the tenant in the San Jose buildings that AGC Equity purchased.

Streaming giant Roku is a tenant in five other buildings in Coleman Highline that weren’t involved in this week’s transaction.

The site AGC Equity bought is expected to be a major employment hub for Yahoo. The company decided to relocate to San Jose after it exited a Sunnyvale complex that Google bought in 2019 for $1 billion.

AGC Equity bought buildings that together total roughly 658,000 square feet.

Thie just-completed purchase of the buildings in a section of the Coleman Highline mixed-use complex is by far the largest commercial real estate transaction in Santa Clara County during 2021, this news organization’s survey of South Bay property deals shows.

Before the San Jose transaction, the largest acquisition by value for 2021 was the purchase in March by Brookfield Partners totaling $630 million of two office buildings, a movie theater, and a parking garage in Mountain View.

Throughout 2020 and 2021, investors have demonstrated they have a robust appetite for top-notch commercial properties in Santa Clara County and other parts of the Bay Area.

Sandlin believes that will persist. He also argues that the demand to buy properties is underpinned by sturdy office rents in the region. As an example, Coleman Highline is fully leased to established tech companies.

“Demand for commercial real estate is surging in Silicon Valley and in San Jose,” Sandlin said. “The demand is being fueled by the office rents in the region.”