(Read more on the industrial market.)

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SANTA CLARA, CA-Bixby Land Co., an Irvine-based private REIT,has sold a 300,000-sf R&D park here in a new joint venture ithas formed with the Los Angeles-based real estate investment groupof Investcorp International Ltd., which is traded on the London andBahrain stock exchanges. The duo says the new partnership will lookto acquire additional office and R&D properties in the SiliconValley.

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In explaining the JV, Brian Kelley, a principal withInvestcorp's real estate group says the Silicon Valley has enjoyed11 consecutive quarters of declining vacancy rates and sevenconsecutive quarters of increasing rental rates. "The SiliconValley is becoming a supply constrained market as the increasingdemand for quality office and R&D buildings and limited newconstruction force upward pressure on rental rates," adds Bixby CEOBill Halford.

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According to the regional brokerage firm Cornish & Carey,R&D vacancy in the Santa Clara and San Jose markets has fallenfrom the low 20% range to the mid-to-high teens over the past twoyears as triple-net asking lease rates have jumped between 35% and45%, from the mid-$0.80s in San Jose and the low $0.90s in SantaClara to the mid-$1.20s and the high $1.30s, respectively. On theoffice side, vacancy in San Jose and Santa Clara has fallen to10.7% and 12.1% today from 13.8% and 17.9% two years ago, whileaverage full-service asking lease rates have jumped between 17% and31%, to $2.45 and $2.77, respectively, from $2.03 and $1.91 twoyears ago.

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The JV's first property is Airport Technology Park, originallyacquired by Bixby in September for $85.4 million and recapitalizedthis week into the JV at the same price. The park's five buildingsare located on 17 acres of land at 2770-2890 De La Cruz Blvd. Theproperty is 86% leased to two publicly traded companies,Macrovision Corp. and BAE Systems.

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Including Airport Tech Park, Bixby has acquired $263 million ofSilicon Valley properties over the past year or so. Mostrecently, it paid $36.4 million for a two-building,118,000-sf office/R&D campus in Santa Clara that is 100% leasedthrough mid-2009 by publicly traded Applied Materials Inc.

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InJanuary, it paid $72 million for the 223,866-sf mixed-useUniversity Station development in Santa Clara. Located across fromSanta Clara University and adjacent to a Caltrain station, thedevelopment is 90% leased. In October 2006, thecompany paid $70 million for Legacy Tech Center, a fully leasedfive-building, 302,000-sf R&D complex in San Jose leased toTivo Inc. and Foundry Networks.

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The Airport Tech Park partnership represents Investcorp's secondmajor transaction on the West Coast since the opening of its LosAngeles investment office this summer. InJune, Investcorp acquired a majority stake in SchnitzerWest's Bravern development, a 1.6-million-sf, under-constructionoffice, residential and retail development in Downtown Bellevue,WA. The total value of the transaction exceeded $800 million.

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