Westcore Picks Up 56,000 SF for $9M

The building was built in 1981 and is 91% leased to 10 tenants. The largest tenant, AlfaTech, occupies the 19,722-sf third floor. The other tenants lease between 1,000 sf and 3,000 sf and include ASM America, Kforce, Rising Solutions and Amphus. The seller was Santa Clara-based McCandless Properties.

Westcore's director of acquisitions Neil Johnson believes the property is well positioned to capitalize on the small tenant activity that has been occurring within the recovering Silicon Valley market as new businesses are created and existing users undertake gradual expansion. "As the area's economy and real estate market continue to recover and new supply of product is limited due to the lack of available land and elevated construction costs, we see the demand for multi-tenant office product growing substantially," he says.

The building is located in the North First Street Corridor submarket and adjacent to the Airport submarket, which has seen more than 380,000 sf of positive net absorption over the past three years. "By segmenting the North First Street and Airport markets into spaces less than and greater than 10,000 sf, only 19% of the overall vacancy is made up of spaces less than 10,000 sf, yet approximately 70% of the absorption--87,000 sf year-to-date--has occurred in this smaller size segment," says Johnson. "These small spaces are recession proof."

Mark Ziemendorf of Cornish & Carey represented both sides in the transaction. Westcore Properties currently has a Bay Area office and industrial portfolio in excess of two million sf, the majority of which was acquired in the second and third quarters of 2005. Since April 2005, the company has invested approximately $280 million in commercial real estate in the Bay Area. In 2006, Westcore Properties plans to invest at least $250 million, including $200 million in Northern California.