Shorenstein Sells San Jose Office Campus for $128M
- Jul 15, 2019
Drawbridge Realty Management has purchased the Rose Orchard campus. Shorenstein Properties sold the five-building, 315,000-square-foot office/R&D park in San Jose, Calif. A source familiar with the property told Commercial Property Executive that the property traded for about $128.2 million.
The 18-acre Class B complex’s five buildings are located at 110, 120, 150, 170 and 180 Rose Orchard Way. The park, completed in 1985 and also known as Rose Orchard Technology Park, is just south of the Southbay Freeway and less than 2 miles west of Interstate 880.
Drawbridge’s portfolio focuses on single-tenant, triple-net office and R&D properties. The portfolio totals about 3 million square feet in and around the San Francisco Bay Area, San Diego, Salt Lake City, Austin and Raleigh-Durham’s Research Triangle Park.
Shorenstein had purchased Rose Orchard from Rockpoint Group in 2015 for $70.2 million, according to Yardi Matrix data. The company then invested approximately $30 million in a renovation program that included upgraded entryways and lobbies and the addition of outdoor collaborative space. In 2015, the property was only about 30 percent leased, with four of the five buildings vacant, according to Shorenstein. Since then, three of the previously vacant buildings have been leased to new tenants, while an existing tenant has leased the fourth. As a result, the park is now fully leased.
Strong but temporarily slower
In March, Vertical Ventures was the recipient of $46 million in bridge funding for Hellyer Oaks, a 21-acre, 347,434-square-foot tech park in South San Jose. The San Francisco office of NorthMarq arranged the floating-rate, two-year, interest-only loan for the owner. Hellyer Oaks is of a similar vintage to Rose Orchard, having been completed in 1984 and renovated in 2012.
After a strong first quarter, the R&D space market in Silicon Valley has slowed a bit, with a small amount of negative absorption, according to a recent Newmark Knight Frank report. A large percentage of the numerous deals were user sales, lease renewals or subleases.
On the other side of the ledger, nearly 1 million square feet of space was demolished, which contributed to a slight increase in total availability, for the sixth quarter in a row. The San Jose market specifically has a total availability of 13.9 percent—on an inventory of 36.5 million square feet.