Bill Halford, Bixby Land Company
- Jun 24, 2015
The Californian office market is dotted with hotspots where core industries such as technology (The Bay Area, Santa Monica), entertainment (Los Angeles) and biotech (San Diego) have raised the bar in terms of expectations from tenants. In this landscape of businesses asking for high-level amenities and spaces that provide value through a great look, Bixby Land Company is fitting assets with contemporary amenities, focusing heavily on common areas to achieve its goals.
Bixby recently completed the sale of a San Jose office property for more than twice the amount it acquired it for back in 2012. Although probably explicable by the overheating Silicon Valley office market, the deal retains a degree of uniqueness. Commercial property Executive discussed Bixby Land Company’s process regarding THE Campus as well as some insight into the company’s strategies and views on the market with CEO Bill Halford.
CPE: What is Bixby Land Company’s philosophy when it comes to new investment opportunities?
Bill Halford: The majority of our recent investments involve adding value through the inventive redesign and repositioning of dated office projects. A major shift has occurred in office usage. Companies place a premium on work environments where their employees can enjoy the outdoors without having to leave the property. Each property that we develop offers that experience, whether through outside areas where people can congregate, or interior work areas that open to the outside.
CPE: Your company recently sold THE Campus in San Jose at more than twice the amount it was acquired for. What were the first measures implemented at that asset, and did you expect such a sizeable return?
BH: A significant redesign was necessary to make the project competitive in the market. We made the commitment early to do a comprehensive repositioning of the property, and spent nearly a year on the redevelopment. We expected the project to draw major tech users, and the speed with which Verizon committed to 136,000 square feet in two buildings confirmed our investment strategy. From an investment standpoint, the development turned out very well.
CPE: What were your main challenges with THE Campus?
BH: The project was obsolete and 90% vacant when we bought it. The biggest challenge was the dated design and lack of onsite amenities. We fixed that with a complete redesign, including new elevations, reskinning the exterior, high volume atrium entryways, and outdoor areas that convey the ambiance of a luxury boutique hotel.
CPE: Will you immediately look to the Silicon Valley market for similar opportunities?
BH: We’re still looking at opportunities in Silicon Valley, though increased investor interest there has pushed prices to the point where deals are getting harder to pencil. We’re seeing good opportunities in Southern California right now.
CPE: Your portfolio is mainly comprised of class A and B+ properties. Is the possibility of investing in a lower-rated asset out of the question?
BH: The projects that we invest in appeal to companies that want image and a contemporary environment for their business. By definition these are projects in good locations, and in markets with good fundamentals.
CPE: Finally, what is your company’s outlook on the state of California’s office market?
BH: We’re bullish on office in primary markets. Job growth and the established demand for next generation office space is having a positive effect on office markets.