Drawbridge’s Strategy is to Acquire Single-Tenant Corporate Assets
Rose Orchard has recently been modernized and the tenant mix aligns with the firm’s strategy of acquiring single-tenant corporate properties in key growth markets across the United States.
SAN JOSE—As a follow up to news from earlier this month, Drawbridge Realty acquired the Rose Orchard office campus from Shorenstein Properties LLC with a purchase price of $128.2 million. The newly renovated office campus is 100% leased and further expands Drawbridge’s national portfolio in addition to growing its Silicon Valley presence.
“Adding this high-quality campus to our portfolio and growing our presence in the Silicon Valley market is an exciting move for Drawbridge,” Bill Doyle, vice president, investments at Drawbridge, tells GlobeSt.com. “Rose Orchard has recently been modernized and the tenant mix aligns perfectly with the firm’s strategy of acquiring single-tenant corporate properties in key growth markets across the United States.”
Located at 110-180 Rose Orchard Way, Rose Orchard is adjacent to Route 237, within a five-minute walk to San Jose’s @First Marketplace, a food and retail destination. The property comprises five buildings totaling 314,455 total square feet.
The campus is anchored by Softbank-owned ARM Inc. which recently solidified its long-term presence at Rose Orchard by leasing a second building and signing long-term leases for both properties. Teradyne (LitePoint) uses its building as a corporate headquarters while Labcyte, owned by Bechman Coulter, conducts R&D at its campus location. Zscaler has outgrown its current building and will be relocating to a nearby larger complex in 2021, allowing Drawbridge to re-lease the 41,286-square-foot single-tenant building and potentially capture additional upside.
Rose Orchard is Drawbridge’s first acquisition utilizing recent new equity commitments of $240 million, providing discretionary capital to acquire $600 million of additional properties in target US markets. The new infusion of funds was led by Drawbridge’s co-owner, global investment firm KKR, which played an important role in procuring the new capital alongside others.
Will Connors of JLL’s Menlo Park office served as broker for Shorenstein Properties, while Drawbridge was self-represented in the deal.
As anticipated, Silicon Valley commercial real estate activity decelerated in the first quarter of 2019. The slowdown was expected, given the number of massive deals signed in fourth quarter 2018, clearing the market of prime available space, according to a report by Colliers International.
The unemployment rate in Santa Clara County rose slightly from first quarter to first quarter to 2.8%, however, remains below the year ago estimate of 3% and below the state average of 4.2%, according to California’s Employment Development Department. The technology sector is continuing to fuel the economy. In February alone, technology companies added 2,700 jobs in Santa Clara County.