$3 BILLION, 3 WEEKS
Investors grab choice buildings amid coronavirus
SAN JOSE » Real estate investors have embarked on a remarkable buying binge for Bay Area office buildings in recent weeks and amassed a shopping basket of choice commercial properties whose combined value tops a head-spinning $3 billion.
Office towers in downtown Oakland, San Francisco and South San Francisco, along with a new mixeduse campus in north San Jose as well as office buildings in Silicon Valley,
are among the high-profile properties investors bought over a three-week stretch that began on Oct. 15.
The dramatic buying activity suggests that real estate investors — even amid the coronavirus and its uncertainties — have yet to slake their thirst for topnotch Bay Area properties with well-heeled tenants or for sites with plenty of redevelopment potential.
“The Bay Area remains the most compelling market in the world for investors seeking exposure to industries and tenants at the heart of technological innovation,” said Eric Fox, an executive managing director with Cushman & Wakefield, a commercial real estate firm.
All told, investors have paid at least $3.13 billion for office properties in the Bay Area in just under three weeks, according to this news organization’s survey of some high-profile transactions in four key markets in the region.
“These deals show that national and international investors are very interested in good assets with long- term leases,” said Erik Hallgrimson, a vice chairman with Cushman & Wakefield. “The transactions are really a combination of trophy buildings and properties with good redevelopment potential.”
The largest single transaction known to have occurred in the Bay Area in recent weeks was the billion- dollar purchase of an office campus of towers and other buildings in South San Francisco. The most recent major transaction was a Nov. 2 deal in which a major investor bought three buildings in a north San Jose mixed-use center.
“Real estate investment capital follows human capital, so it is not a surprise that the Bay Area is continuing to attract investment as its base of global technology firms continues to grow and strengthen,” said Joe Wallace, president of the Northern California division of CBRE, a commercial real estate firm. “The long-term prognosis for the Bay Area remains outstanding, despite shortterm uncertainty.”
Among the major office purchases over the approximately three-week period were:
• $1 billion for the Genesis campus of two office towers, a smaller office building, and an amenities building in South San Francisco near Oyster Point.
• $650 million for the Transamerica Pyramid in San Francisco’s Financial District.
• $ 450 million for a mixed- use complex on Lakeside Drive in downtown Oakland that includes an office tower that will be the future headquarters for PG&E.
• $ 346 million for a 10- building office campus on Results Way in Cupertino, a complex that is leased to tech titan Apple.
• $275 million for two office buildings, an amenities building, and a parking garage in north San Jose’s Coleman Highline mixeduse complex on Coleman Avenue near the city’s international airport.
Over the three weeks, investors were particularly busy in Silicon Valley, paying a combined total of at least $1.03 billion for large office buildings and campuses in Santa Clara County.
“People believe in Silicon Valley’s future,” said David Sandlin, an executive vice president with Colliers International, a commercial real estate firm. “Even with COVID-19, the future is bright in Silicon Valley.”
In a single day on Oct. 29, investors paid $661.5 million in multiple transactions by different buyers for office complexes in north San Jose, south San Jose, Cupertino and Sunnyvale. The Sunnyvale purchase involved a big Fujitsu campus on East Arques Avenue that is a prime site for redevelopment.
Real estate experts predict that investors won’t soon lose their hunger for an array of Bay Area office properties.
“The Bay Area commercial real estate market continues to lead the way as a safe harbor to park capital in the United States,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use and planning consultancy. “This trend should continue through the end of this calendar year and beyond.”