Owner-Users Displace Smaller Tenants
The North San Jose submarket is a top choice for developing companies as well as established Fortune 500 firms and a host of technology companies spanning a diverse cross-section of industries.
NORTH SAN JOSE—The Junction at Montague is a four-building 262,110-square-foot 16-acre office/R&D campus located at 2520, 2560, 2580 Junction Ave. and 541 E. Trimble Rd. Rockwood Capital and Four Corners Properties acquired the property in December 2015 and will use the loan proceeds from a recent refinancing to finalize a substantial repositioning.
This effort will create an open, creative office/R&D space with ample amenities, remodeling more than 65% of the portfolio. Once the renovation is complete, the portfolio is poised to capitalize on the transformation of North San Jose into not only a hub consisting of major technology employers, but also a live-work-play environment.
The tenant roster includes Infineon Technologies AG, a semiconductor design/manufacturing firm, and Avnet, a distributor of electronic components and subsystems. The Junction at Montague’s central location in the Golden Triangle provides ease of access throughout Silicon Valley via key freeway systems.
“At Junction @ Montague, the multi-functional buildings will attract all types of Silicon Valley tenants, ideal for both office and R&D use,” Megan Woodring of the CBRE finance team tells GlobeSt.com. “These available buildings range in size from 60,000 to 90,000 square feet, providing a high degree of functionality and divisibility, along with the ability to grow a tenant within the project. The variety caters to a wide range of tenant demands in Silicon Valley and we believe our clients will have near-term success leasing the project.”
Brad Zampa, Mike Walker and Woodring of CBRE’s San Francisco office arranged the five-year, floating-rate bridge financing at a competitive spread priced over the 30-day LIBOR on behalf of the joint venture including Rockwood Capital and Four Corners Properties. The refinancing was provided by a national mortgage REIT focused on investing in larger West Coast value-add debt opportunities.
“We were once again surprised by the depth of capital focused on the value-add debt space, with banks, life companies and debt funds all competing to finance this asset,” said Zampa. “Strength of sponsor, excellent location and the middle market loan size all played a role in creating a highly competitive, bespoke execution for our longstanding valued clients.”
The North San Jose submarket is a top choice for developing companies as well as established Fortune 500 firms and a host of technology companies spanning a diverse cross-section of industries. The demand is due to the high quality of tech-focused space, central location in Silicon Valley and an abundance of new residential and retail developments.
“Owner-users are changing the landscape of North San Jose, displacing smaller tenants and reducing available inventory from the market,” Woodring tells GlobeSt.com. “Tenant demand for space in North San Jose is expected to continue, causing rental rates to continue to rise and vacancy rates to compress. Since 2011, North San Jose R&D asking rates have increased an outstanding 115.5% from $1.00 triple net to north of $2.25 triple net.”