Globespan Will Buy its 205,000-SF Build-to-Suit for $35M

Now, the company has turned around and bought the building, which is still under construction, for $35 million. Come September, Globespan will occupy 120,000 sf of the facility and lease the rest to multiple tenants. The company is also looking for a sub-tenant for most of the 100,000 sf it currently occupies in nearby Red Bank, NJ, where it has nine years left on a 10-year lease. It will retain 25,000 sf there as a training center.

"It wasn't just a simple office lease," notes Globespan Virata CFO Bob McMullan. "It was a lease on a build-to-suit, followed by oversight of construction and build-out, followed by a purchase, which will be followed by direct lease deals and sub-leases."

"When Globespan bought Virata, they became a much stronger company," says Geoffrey Schubert, senior vice president of CB Richard Ellis, who arranged the initial lease and eventual acquisition of the Old Bridge building and is charged with finding tenants for both the Old Bridge and Red Bank buildings. CBRE's New Jersey operations are based in Paramus.

"They not only survived the telecom debacle, but have flourished," Schubert continued. "This purchase is a signal that they intend to be around for quite some time."

Globespan Virata will initially bring 400 employees to the Old Bridge site. Company officials estimate that they will expand to about 600 employees by the fall of 2003. Besides its former headquarters in Santa Clara, CA and a technical staff in Raleigh, NC, Virata still has extensive operations in the U.K. and in Israel, and is expected to relocate a number of those employees to the Old Bridge site.

The new building features a two-story lobby designed by Gensler Associates, and 42,000-sf floorplates. According to Schubert, Globespan Virata "will seek rents in the high twenties for the 85,000 sf it will not initially occupy in the Old Bridge facility, and about the same from sub-tenants in the Red Bank building. The southern Middlesex and northern Monmouth market is still rich in telecom companies, so I'd anticipate they'd be likely tenants. Engineering and insurance firms are also likely prospects."

Globespan's direct and sublease space will compete, however, with 350,000 sf that AT&T is trying to sublet in nearby Middletown, and as much as 350,000 sf that Telcordia SAIC will vacate in the near future in Red Bank. Both of those buildings date to the mid-80s, however, and may need some infrastructure upgrades.