Possibly Brilliant Timing for Buyer of Oracle/Sobrato Tower; PWC Possibly on the Hunt

Rumor is that there is a Big Four firm on the troll to take down 150-200K SF of Class A office space in Downtown San Jose. The likely suspects consist of Deloitte, KPMG, PWC, and Ernst and Young. “Friends” inside E&Y indicate it is not them, KPMG is not a likely candidate, and Deloitte’s lease obligations would indicate it’s not them either. That leaves PriceWaterhouseCoopers. We’ll assume it’s them until somebody emails us and says otherwise.

While the vacancy rate of Downtown San Jose is close to 20% for office space, there remain few options for a 150-200K square foot user when it comes to Class A Office Space in the CBD. The only two “real” options are Legacy Partner’s RiverPark Two Tower, a 300,000 SF Class A tower under construction, or what will likely be Legacy’s other tower, the former Oracle/BEA/Sobrato building located at 488 N. Almaden Blvd. (we’re speculating Legacy is the buyer, but I suppose we will find out shortly).

Other options that might work for PWC, but that are relatively shelved include Boston Properties project over by Highway 87, and the site at 2nd and San Fernando that was dreamed about a decade ago by Kimball/Small/Rockefeller. Given where construction prices are today and those projects are not even close to being out of the ground yet, those are likely not viable options.

Going back to the two real options, should Legacy not buy the Oracle/BEA/Sobrato building at 488 N Almaden, then they will have real competition on their hands. The buyer of that building will likely scoop it up for around $250 per SF and possibly less. That number would likely represent a lower or similar basis to Legacy’s RiverPark II Tower it is constructing.

What is interesting to note though is that Legacy Partners was the original developer of the RiverPark project. It sold the project to MetLife Insurance Co. and repurchased the project about three years ago. The parking structure was already in place (it was constructed at the same time Tower I was constructed), and Legacy had kept in storage for a long time many of the materials, windows, skin of the RiverPark II building it had planned to construct originally but never got around to. As a result, when they decided to break ground on the second tower, it made it a lot easier to proforma than had they wanted to build from the ground up.

Regardless, it’ll be intersting to see how this requirement shakes out and where PWC (assuming it is them) lands.

Similar Posts:

• Legacy Partners Buying Oracle/BEA/Sobrato Tower at 488 Almaden?
• Sobrato-Oracle Building at 488 N Almaden To Go Full Circle?
• Oracle/BEA Tower On The Market
• Legacy Partners Drops Sobrato-Oracle-BEA Tower Deal
• AIG, The Bailout, and Legacy Partners

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