Brocade Buys San Jose Land for New HQ in $223M Deal

Brocade Communications, a Silicon Valley network communications manufacturer, has bought three parcels of land in San Jose, Calif., where it plans to build a new headquarters in a sale and development deal worth at least $223 million. The San Jose-based company paid MFP/Hunter @First Office Partners L.L.C. $50.9 million for the unimproved building parcels, according to a filing the Securities and Exchange Commission. As part of the transaction, Brocade hired MFP/Hunter@First Development Partners L.L.C.–a subsidiary of the seller–to develop 562,000 square feet of office space in the three buildings and a parking garage. The filing states Brocade will pay the developer $173 million in installments over the next 27 months for the construction. “Depending on the market or other circumstances, Brocade may evaluate entering into a sale-leaseback transaction with respect to the property and buildings at a later date,” according to the filing. Brocade also has a four-year option to buy a four-acre parcel for approximately $26 million. The company’s lease on its corporate headquarters at 1745 Technology Drive in San Jose expires in 2010. Officials at Brocade did not return calls by press time today for more information. The new headquarters could reportedly house up to 2,200 employees. Also known as Hunter Properties, the Cupertino, Calif.-based developer bought the 39-acre site at North First Street and Highway 237 from Palm Inc. for $70 million in 2007, according to Palm Inc. SEC filings. Hunter principals Deke Hunter and Ed Storm planned at the time to develop 880,000 square feet of office/R&D space and 250,000 square feet of retail and hotel space at the site, according to a Cushman and Wakefield second-quarter 2007 report on the Silicon Valley market. An Oct. 26, 2007, report in the Silicon Valley/San Jose Business Journal noted the developers were planning a 160-room hotel and a Target as part of the retail space. Storm and Hunter could not be reached today by press time to update their plans for the entire site.