Campbell-based South Bay Development Company has just sold a property in North San Jose that it had owned for less than 2 years. The Silicon Valley developer sold the 146,000 square foot building located at 3011 N. First Street in San Jose to Menlo Park-based Sand Hill Property Company.
The price for the building was $31 million or nearly $212. The cap rate on this transaction was approximately 7.5 percent. This return is based on the current rent in the property.
South Bay had paid $22.7 million for the building, or $154 per square foot, in late 2013. The building is fully leased and serves as the headquarters of Intermolecular, Inc., and R&D productivity firm serving the semiconductor and clean energy industries. A new lease was signed in 2013.
North San Jose is one of the most active development and leasing areas of the South Bay. Located in the Golden Triangle submarket of Silicon Valley, it features such developments as the newly-constructed San Francisco 49ers Levi’s Stadium.
Recent deals and announcements in the North San Jose geography include New York Life’s $30.3 million January 2015 investment, or roughly $233 per square foot, for the 130,000 square foot 2665 North First Street office building. In September of last year Shorenstein Properties purchased the first phase of Champion Station, a four-building, low-rise office and R&D campus at 110-180 West Tasman Drive in North San Jose for a reported $100 million.
A year ago, CBRE stated that North San Jose, as the center of renovation activity, saw redevelopment of nearly 3 million square feet since 2011. Part of that activity gave South Bay Development the confidence to kick-start its own new spec project located on a 28.5-acre lot at the intersection of Highway 237 at First Street. Also, just up the street, Trammell Crow may be breaking ground this summer on a large Class A industrial development speculative development on 57 acres that the company and joint venture partner Principal Real Estate Investors acquired from Cisco Systems Inc. two years ago. The development could bring nearly 1 million square feet of industrial and office space into the market.