Shorenstein Sells Pair of Silicon Valley Office Towers

The two buildings total more than 400,000 square feet and were purchased by a global asset management firm for approximately $195 million.
Santa Clara Towers. Image via Google Street View

Shorenstein Properties LLC has sold Santa Clara Towers, a two-building, 445,000-square-foot Class A property in Silicon Valley, Shorenstein announced Friday. The terms of the transaction were not disclosed, nor was the buyer, an unidentified institutional investor.

However, Commercial Property Executive has learned that the buyer was a joint venture between Oaktree Capital Management and Hines, and the purchase price was about $195 million. 

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The properties are located at 3945 and 3965 Freedom Circle, along Highway 101 in Santa Clara’s Golden Triangle submarket, with convenient access to Route 237, Interstate 880 and San Jose International Airport.

The 221,000-square-foot 3945 Freedom Circle was completed in 1986 and underwent a cosmetic renovation in 2008, according to information provided to CPE by Yardi Matrix. The LEED Gold building is 16.1 percent vacant, and its tenants include Nissan Chemical and Marubeni Information Systems USA.

The adjacent 3965 Freedom Circle was completed in 1998 and totals 204,000 square feet. It, too, is certified LEED Gold; its anchor tenant is CA Technologies. Current amenities at the towers include ample parking, a newly renovated fitness center and an indoor pool. The new ownership plans a capital upgrades program set to reposition the two buildings, with improvements including a new amenity center.

Shorenstein’s Ninth Fund had acquired the mezzanine loan on Santa Clara Towers from Lehman Brothers in 2008 and took ownership of the property in 2010 through a deed-in-lieu. 

CBRE’s Russell Ingrum, Joe Moriarty, Scott Prosser and Jack DePuy represented Shorenstein in the deal.

Diverse submarkets

The Santa Clara Towers announcement came barely 10 days after Shorenstein reported the sale of City Center in Denver to Brookfield Properties for an undisclosed amount. (Though Brookfield purchased a majority interest in Oaktree about 11 months ago, the two companies were expected to operate independently.)

And last summer, Shorenstein sold a five-building, 315,000-square-foot office and R&D campus in San Jose, for about $128.2 million.

Overall, the Silicon Valley office market saw availability holding steady, even as asking rents rose, according to a fourth-quarter report from Savills. 

“With limited space in prime submarkets like Palo Alto and Mountain View, many tech tenants find themselves exploring cheaper rents for more space in the San Jose, Santa Clara, and Sunnyvale area,” the report states.

Santa Clara, in fact, has the highest office availability in Silicon Valley, at 19.8 percent. Still, that doesn’t seem to be hurting office rents there, which at an average of $4.12 per square foot per month are in the middle of the pack, according to the report.

*Updated on 02/21 to include Hines’ involvement in the deal, as well as the captial upgrades plan.