SAN JOSE, CA—Irvine, CA-based Bixby Land Co. has sold a recently repositioned office campus on River Oaks Parkway at Zanker Road here for $52.1 million. The sale follows Bixby’s successful development of the office complex into a contemporary work environment, an investment strategy that the developer continues to execute throughout the state.
Bixby aggregated the three-building project in two separate acquisitions for $19.5 million back in 2011. Following a comprehensive redesign that transformed the project into a dynamic work place, Bixby leased the entire 165,000-square-foot campus to Nimble Storage for use as the data storage firm’s US headquarters.
“We developed a vibrant, collaborative work environment with the image and amenities that today’s companies demand,” says Bill Halford, president and CEO of Bixby Land Co. “This is a fitting time to realize our investment objective following the successful renovation and leasing of the project.”
Halford tells GlobeSt.com that his firm spent between $10-million to $11-million on development to transform the property. He tells GlobeSt.com that the sale completes Bixby’s investment strategy for the property. “Bixby had the foresight to acquire the three-building project from two separate entities at a time when the market recovery was not nearly as visible as it is today,” he says. “There were far fewer creative office redevelopments on a spec basis when these buildings were acquired.”
He explains that the firm’s intent all along was to execute a more comprehensive redesign that was common in the market, with the belief that there was/is a broader market for tenants willing to pay for a higher level of design and amenities. “Leasing the project to one tenant was the intent all along,” he says, “and selling the fully-leased investment to an institutional owner was foreseen as the most likely exit strategy for Bixby.”
The centerpiece of the development is the signature Bixby Retreat, a spacious 30,000-square-foot outdoor living room for collaboration and relaxation. Accented with draught-tolerant landscaping, the outdoor area provides the ambiance of a private park for employees. Bixby also transformed the building elevations, redesigned the lobbies, installed new roofs and upgraded the HVAC systems.
Halford previously told GlobeSt.com that when tenants consider creative-office space, they are less concerned about details that real estate executives take into account like window line, ceiling height and floorplate size and are more concerned about how the space makes them and their employees feel. “They say, ‘Will my employees like it?’ and ‘Is it interesting enough to where I can use it as a recruiting and retention tool?’ The other stuff is really arcane and isn’t what users want anymore. What’s most desirable is being in the right geographic area and how the space functions. Is it livable? Is it more like your house than an office building? Does it make work enjoyable and create an environment where employees want to be there and collaborate?”
The Bixby Retreat concept is really an outdoor living room that extends the interior work environment to the outdoors, Halford adds. “Since you’re in California, why would you want to be stuck in an office building?”
Bixby was represented by Mark Penrod and Andy Zighelboim with Eastdil Secured, while American Realty Capital represented itself in the sale.
Bixby also recently completed a 136,000-square-foot lease with Verizon at THE Campus, a four-building office project that was completed earlier this year in San Jose. The company also expects to begin development in the next 60 days on the redesign of a 405,000-square-foot office project in Santa Clara, CA.