Real estate brokers decide it’s better to own than rent
Silicon Valley Association of Realtors paid $10.5M for new office building
CUPERTINO >> A South Bay real estate organization has decided to take the advice its member agents often give to their clients when they hunt for a new home: It’s better to own than to rent.
The Silicon Valley Association of Realtors has bought an office building near the corner of Bubb Road and Stevens Creek Boulevard in Cupertino, a city whose office properties have climbed in value amid massive expansions by tech giants such as Apple and Amazon’s Lab 126.
The association paid $10.5 million in cash May 25 for the one-story building at 10040 and 10050 Bubb Road. The deal was arranged by brokers from commercial realty firms Kidder Mathews and Newmark Knight Frank.
“It’s time to buy,” said Rose Meily, a spokeswoman for the realtors group, which intends to relocate to the new one-story office. “It’s always better to buy than to rent.”
The new offices total roughly 16,000 square feet.
“It’s a great location for the association,” said David Sass, a senior vice president with Kidder Mathews. “It has excellent freeway access, and it’s the center of their universe.”
The realty association has been at its current location, leased offices at 19400 Stevens Creek Blvd. between Miller and Finch avenues, since 2005.
However, the wide-ranging quest in recent years by Cupertino-based Apple to find an array of buildings for operations in its hometown has intensified the pressure on rents and availability of office spaces.
Demand from Apple and other tenants left the vacancy rate for Class A offices in Cupertino at 3.2 percent during the first quarter of 2018, compared with an average rate of 14.3 percent for all of Silicon Valley, according to a new report by Colliers International, a commercial realty brokerage.
“It’s been our goal for the last few years to buy our headquarters location,” Meily said.
The association has 4,800 members is one of the largest by membership in the South Bay. Its primary markets are Menlo Park, Atherton, Saratoga, Palo Alto, Los Altos, Mountain View, Cupertino, Sunnyvale and Los Gatos.
“This is right in the middle of our service territory,” Meily said.
The realty group noted that Apple’s expansion in Cupertino and nearby cities have caused upward pressure on the local market in multiple ways.
“Office rents are going higher and prices are going up as well,” Meily said.
Prior to the completion of the vast Apple Park campus in Cupertino, the tech giant leased and bought numerous properties in locations outside of its hometown, such as Sunnyvale, Santa Clara and north San Jose.
Some experts predicted that Apple was using the offices as merely placeholder sites. But a spot check of the notable leases, along with information provided by real estate industry insiders, indicates that Apple has decided to hang on to many, and perhaps most, of the leased spaces.
The real estate association will be moving about 13 employees to the new offices, which are roughly two miles and a nine-minute drive from its current headquarters. The group is sharing the site with a company that has one of the suites.
“We should be moving to the new offices by the end of the year,” Meily said.