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SANTA CLARA, CA-Bixby Land Co. has acquired another Silicon Valley asset, paying $36.4 million for a two-building, 118,000-sf office/R&D campus on six acres that is 100% leased through mid-2009. Looking to capitalize on a recovering market, the Irvine-based private REIT has acquired nearly 1 million sf of office/R&D properties in Silicon Valley in the past 13 months, three in Santa Clara and one in San Jose.

Citing increased demand that is lowering vacancies and increasing rental rates in the R&D/office market in the Silicon Valley, Mike Severson, Bixby’s vice president of acquisitions and development calls the resurgence in the technology sector is “a healthy indicator of future increases in commercial property values in the Silicon Valley” and “an opportunity for Bixby to…capitalize on the market and in-place income.”

To that end, Bixby has acquired some $263 million worth of property in little more than a year, its most recent acquisition being the smallest of the lot. In September, the company paid $85 million for Airport Technology Park, 300,000-sf, five-building, two-story campus also in Santa Clara that sits across from the San Jose Airport. Two publicly traded companies, Macrovision Corp. and BAE Systems, lease 86% of the two-story complex.

In January, it paid $72 million for the 223,866-sf mixed-use University Station development in Santa Clara. Located across from Santa Clara University and adjacent to a Caltrain station, the development is 90% leased. In October 2006, the company paid $70 million for Legacy Tech Center, a fully leased five-building, 302,000-sf R&D complex in San Jose leased to Tivo Inc. and Foundry Networks.

The situation that has been emboldening Bixby persists, according to the latest data from Cornish & Carey Commercial, a major middleman in the South Bay market. R&D vacancy in the Santa Clara and San Jose markets has fallen from the low 20% range to the mid-to-high teens over the past two years as triple-net asking lease rates have jumped between 35% and 45%, from the mid-$0.80s in San Jose and the low $0.90s in Santa Clara to the mid-$1.20s and the high $1.30s, respectively. On the office side, vacancy in San Jose and Santa Clara has fallen to 10.7% and 12.1% today from 13.8% and 17.9% two years ago, while average full-service asking lease rates have jumped between 17% and 31%, to $2.45 and $2.77, respectively, from $2.03 and $1.91 two years ago.

Bixby’s latest acquisition, 3111 and 3141 Coronado Dr., is 100% leased by Applied Materials Inc. on a triple net lease that runs through July 2009. Applied Materials is a public company that creates and commercializes the nano-manufacturing technology involved in the production of semiconductor chips and flat panel displays. The lease was brokered by Eric Fox and Joe Moriarty of CPS and Peter Castleton of Voit Commercial.

“Rents are continuing to push higher with demand outpacing the supply of new product, making the Silicon Valley a market that Bixby will continue to invest in for the foreseeable future,” Severson says.

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