The purchase price translates to an initial cap rate in the low4% range, according to local industry sources. One of the brokersin the deal, David Silver of Arroyo and Coates, declined to confirmthe name of the seller or the cap rate but did tell GlobeSt.comthat rent at the property is below market as is, meaning that thenew owners could begin to increase the pace of the return oninvestment even before their planned rehab begins, and then againafter it is completed.

"There were 34 offers on the property," says Silver, who had thedisposition assignment with fellow A-C broker Nathan Blair. "It washighly competitive because it is an A location and a high-qualityproduct right in the sweet spot for developers looking for arenovation/rehab play."

Located at 745 S. Bernardo Ave., the development consists offour three-story buildings. Next door is a Safeway grocery store.In addition, El Camino Real is two blocks away and many majortechnology employers have facilities in the area. There have beenno substantial renovations to the property since it was developed,Silver says.