Nike Leases Another 90,000 SF at Woodside

Woodside changed hands in September for $67.48 million. The seller was publicly held PS Business Parks and the buyers were a group of tenant-in-common investors and a value-add fund both represented by Santa Ana, CA-based Triple Net Properties LLC.

The park was about 75% leased at the time of the sale. The TIC, looking for a more conservative investment, acquired 384,000 sf in eight buildings that were 87% leased, though a goodly portion was unoccupied space leased to IBM. Triple Net's Value Fund 2003 acquired the remaining five buildings, which total 196,000 sf and were 59% leased at the time of sale.

Nike leased the 92,000-sf Columbia Building in September 2005. The lease was a key to the sale because the space was part of the more stabilized piece that the TIC acquired and also one of the IBM buildings. Nike is scheduled to occupy Columbia this month after a full renovation of the space. During the renovation process, Nike inked a lease for the 91,000-sf Edo Building as well, which it will occupy in November. Nike's exclusive broker, Grubb & Ellis executive Bradford Fletcher, tells GlobeSt.com the two buildings are connected by a sky bridge.

The Edo Building also is part of the chunk of Woodside acquired by the TIC. Triple Net's VP of asset management Darryll Goodman tells GlobeSt.com that while TIC portion is still 87% leased it is now much more occupied, which will enliven a portion of the park that had been very quiet.

Nike has been rapidly cannibalizing the properties surrounding its campus. In late 2004, Nike inked a six-year lease for another building bordering Woodside that was part of the 52-acre former IBM campus that Atlanta-based Wells REIT acquired in October 2003. Wells' acquisition included about 32 acres of excess land, about half of which was sold to Nike concurrent with the lease deal.

Nike could ultimately build on that property and then exit other leased properties, but Goodman expects Nike will in the long run need both its own additional buildings and surrounding leased properties to keep up with growth. "The way the park is set up, the Columbia and Edo buildings sit adjacent to one of Nike's parking structures, and then we have also have vacant two-story 43,000-sf building that is just a little ways beyond those buildings," says Goodman. "We're talking with a number of people about that building too, including Nike."

The value fund's portion of the park, meanwhile, is up to 70% leased, says Goodman. Earlier this year, the value fund sold off a development parcel that was included in the deal. An oncologist reportedly acquired the parcel and is developing a medical building on the property. Tenants in the value-add portion of the park include Omega Group Inc., Micro Accounting Systems, Kleinfelder Group and Bright Horizons Family Solutions.