(To read more on the multifamily market, click here.)

SAN JOSE-Sony Electronics is relocating and consolidating its operations here into the former Infineon Building on North First Street, freeing up its Zanker Road campus for sale and redevelopment. The buyer is the apartment development division of Newport Beach, CA-based the Irvine Co., which is planning an 1,800-unit apartment community for the 38-acre North San Jose site, which currently holds 620,000 sf of buildings.

If the required rezone of the Sony site from industrial and residential goes smoothly, Irvine Co. says construction could begin as early as 2008. The Sony campus sits across Zanker Road from Irvine’s North Park apartment community, a 2,700-unit development that is 66% built out and well more than 90% occupied.

Sony is relocating to 164,000 sf on six floors at 1739 N. First St., which puts it near Mineta San Jose International Airport and on the VTA light rail line. RNM Properties of San Francisco owns the building. Sony’s space is currently occupied by Infineon Technology and one of its spin-offs, which will be vacating in January in favor of McCarthy Ranch in Milpitas, which is owned by Irvine Co. In addition to backfilling Infineon, Sony plans to lease another 55,000 sf at a yet to be revealed location also within San Jose.

Sony is fitting itself into smaller digs “because business is changing and they don’t need the space they initially built out many years ago, which is pretty much how we are seeing a lot of companies transition as their global business models change,” Steven Brewster with San Jose’s economic development agency tells GlobeSt.com.

Irvine Co.’s plans for the Sony campus is in step with Vision North San Jose, a two-year-old development plan that covers about 5,000 acres on either side of the North First Street corridor from Brokaw Road to the city’s northern border. The plan calls for a dense mix of 32,000 high-rise homes, 26.7 million sf of new R&D office space, 1.7 million sf of retail space, parks, trails and open spaces in an area now dominated by sprawling corporate office parks. “We want to activate the area,” Brewster says.

The redevelopment of the corridor has been held up by litigation initiated by San Jose’s municipal neighbors, which are concerned about the impact the redevelopment will have on their infrastructure. Sony’s land sale to Irvine Co. is contingent upon a settlement of the lawsuit, which is said to be imminent. In a related matter, the City of San Jose has agreed to pay close to $40 million for infrastructure improvements and additions both inside and outside city limits.

Details on Sony’s negotiated lease rate and term at 1739 N. First St. and the sale price of its Zanker Road campus have not been released by the parties involved and were not immediately available on Wednesday. Rumors regarding the land sale put the price at $100 million, which would translate to $55,555 per apartment unit that Irvine plans to develop on the property. Max Gardner, president of the Irvine Apartment Communities, was unavailable Wednesday afternoon for comment. Both the land sale and the lease deal were brokered by Doug Beck of CB Richard Ellis.

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