North San Jose is Geared for Added Growth

SAN JOSE—Job growth in the MSA continued last year with an increase of 3.2% or 35,500 non-farm jobs year-over-year. That percentage increase is greater than the rest of the Bay Area including San Francisco.

However, it is still slower than just a few years ago with the region now at full employment and in-migration slowing. And no surprise, the strongest job growth driver continues to be the tech sector. The San Jose MSA unemployment rate tumbled further during 2018, closing at 2.5% from 3.1%, which compares to the higher national figure of 3.7%, according to a report by Cushman & Wakefield.

A property in the thick of that North San Jose job growth is 2125 O’Nel Dr., a 108,446-square-foot office/R&D building. It was originally developed in 1984 but underwent significant renovations in 2012. In its current condition, the two-story building is well configured for any technology user with a need to house multiple functions under one roof. This will be important as the existing tenant’s lease is set to expire this year.

The building was purchased by Embarcadero Capital Partners, a Peninsula-based private real estate investment, management and development firm. The seller was PSAI Realty Partners and the purchase price was undisclosed.

Cushman & Wakefield’s Northern California Capital Markets group consisting of Eric Fox, Steve Hermann, Adam Lasoff, Seth Siegel and Ryan Venezia represented the seller. Erik Hallgrimson of the firm’s San Jose office along with Craig Fordyce of Colliers International provided local market advisory.

“At the time of sale, the building was 100% leased to a single tenant having just under a year of term remaining, although they have signed a lease at another property in order to accommodate expansion,” says Fox. “The near-term lease expiration provides the buyer with a rare value-add opportunity to reposition the asset along with the benefit of having some secure in-place cash flow.”

Fox noted that the area provides a strong infrastructure and “is geared for growth”. 2125 O’Nel is situated on 5.21 acres and comprises part of the Bayshore Centre, a two-building complex located within the North First Street corridor in Silicon Valley’s Golden Triangle.

The property’s centralized location provides access to major highways and freeways, Mineta San Jose International Airport and a VTA light rail station. There are also multiple high-density residential developments and retail amenities near the property.

“The property’s functionality, centralized Silicon Valley location and visibility from Highway 101 are among its most desired traits,” Fox tells GlobeSt.com. “The site is proximate to major roadways and public transportation—locations with freeway proximity and visibility are in high demand as tenants seek out opportunities to promote their brand and attract employees. The city of San Jose as a whole has become more desired as a landing spot for some of the region’s largest technology companies.”