Muller/CIGNA Snap Up Santana Row Asset

SAN JOSE—The Muller Company recently jumped on an opportunity to own an asset that’s in walking distance to Santana Row and has prominent freeway access. The firm recently acquired Century Plaza at a purchase price of $63.4 million.

Century Plaza is a 103,622-square-foot six-story office building located at 550 South Winchester. The new ownership is a joint venture between CIGNA Investment Management and the Muller Company. The seller was New York Life Real Estate Investors.

“We saw an opportunity to acquire a well-located property that would allow us to add value by executing a strategic business plan to reposition the asset as a first-class office destination,” said Jon M. Muller, a principal with the Muller Company. “The ownership plans to rebrand the property and invest approximately $4.1 million to upgrade the facade, landscaping, lobby, restrooms and corridors in order to maximize rents and create a modern class-A office building in the heart of Silicon Valley and steps away from Santana Row, San Jose’s renowned outdoor lifestyle and retail destination.”

The property was 82% leased at the time of the sale.

“There had not been any material investment in the building appearance or amenities for many years,” Muller tells GlobeSt.com. “Our venture plans on investing over $4 million to upgrade both the interior and exterior of the building, including outdoor gathering areas, to cement its position as a premier San Jose office property.”

Both the buyer and seller of the property were represented by Cushman & Wakefield. Those involved in the sale included Eric Fox, executive managing director, and Nick Lazzarini, managing director, in the San Jose office, along with Steve Hermann, Seth Siegel and Adam Lasoff in the firm’s San Francisco office.

The Muller Company has owned and operated property in the San Jose market for more than 20 years, and currently owns and operates Tisch Tower, a 173,032-square-foot 12-story office tower two doors from 550 Winchester, Muller tells GlobeSt.com.

“We see San Jose and in particular, the Santana Row area as a vibrant and growing market,” Muller exclusively says. “We’re excited about this new opportunity and hope to use it as a stepping stone for other acquisitions.”

The firm is enthusiastic about continued growth and area amenities, which includes Westfield Mall’s Westfield Valley Fair, a $1.2 billion retail investment, and Federal Realty’s continued commitment to class-A office product with more than 550,000 square feet in Santana Row, Muller adds.

Silicon Valley office market momentum remains strong as top tech companies continue to make aggressive moves for space both through leases and purchases across the South Bay, according to Savills Studley’s fourth quarter Silicon Valley edition of its office market report. During the final months of the year, several additional 100,000-square-foot-plus transactions were completed. As of mid-December, 22 leases in excess of 100,000 square feet had been signed during 2018.

“Silicon Valley ended 2018 with another round of aggressive big-block takedowns. As the availability of larger blocks of space dwindles further, companies are pushing into areas such as North San Jose and downtown San Jose. As a result of space shortages, even mid-sized companies are facing rental rate growth. Additionally in Menlo Park, Palo Alto and Sunnyvale/Cupertino, startups are being squeezed out of the market,” said Nate Currie, Savills Studley corporate managing director.

However, according to the report, the Silicon Valley office market is experiencing an increase in quality sublease vacancies for the first time in years. The market had a total of 4 million square feet of sublet space available at the end of 2018, up from 3.9 million square feet a year ago. Quality sublet spaces have also been lingering on the market for a longer period, the report observes.