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SAN JOSE, CA-CarrAmerica has landed a long-term tenant for a vacant 86,000-sf office building in North San Jose that it acquired about 12 months ago. The building is located at 3533 North First St. and the tenant is Polycom, a publicly held communications company headquartered in Pleasanton, CA. The 10-year lease commences in the second quarter of 2007.

CarrAmerica, a formerly public REIT that was taken private earlier this year, acquired the building around the start of the year for $10.3 million (For that story, click here. The seller was Net IQ, which continued to occupy the building rent-free into the second quarter, when it relocated to leased space elsewhere in San Jose. Polycom will use the building to house operations currently located in 102,000 sf at 1565 Barber Ln. in Milpitas, CA.

Completed in 1984, 3553 North First Street is located on the corner of North First Street and Rio Robles, between two other CarrAmerica properties (3571 North First Street and Rio Robles Technology Park) and one-half block south of a Light Rail substation. Amenities including tennis, bocce and basketball courts; a fitness center with shower facilities; a cafe; and an outside patio with a built-in barbeque.

Polycom initially was considering consolidating all of its operations in a single building but ultimately decided to maintain two facilities in order to mitigate the potential loss of employees due to the hardship of a longer commute. Although 20% smaller than its existing location, the North San Jose building’s efficient design will allow Polycom to relocate its entire operation and still have room for growth, says David Gordon, one of the Studley brokers who advised Polycom in its search for space and negotiated the lease. Colliers International represented CarrAmerica.

“This transaction reflects a larger trend in Silicon Valley where companies are moving from the older facilities–that during the tech boom’s tight real estate market were their only choices–to newer upgraded facilities at comparable rents,” he says. “While some companies are opting to remain in the older facilities at significantly lower costs, Polycom was excited to take advantage of softer market conditions to significantly improve its operations.”

The negotiated lease rate was not released by the parties involved and not otherwise immediately available. At the time of acquisition, CarrAmerica estimated that, when leased up, 3533 North First St. would provide a stabilized GAAP return of 9.9%.

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