488 Almaden Boulevard

Oracle has put up its tower at 488 Almaden Blvd. on the market for sale. BEA paid about $335 per square foot for the building last year in hopes of moving workers from its north first street campus over but instead Oracle has decided to turn around and put the vacant building back on the market.

The 388,000 SF Class A building is located on Almaden Blvd. in Downtown San Jose. Built by Sobrato Development about 7-8 years ago at a cost of nearly $100M the property is on the market unpriced, though it is very likely that it will trade for below its replacement cost. The building was previous to BEA in play with NVIDIA, but that deal fell apart partly due to the economic incentive package not being sweet enough, and likely because the move from Santa Clara to Downtown would have represented a relatively cumbersome move from a logistics and personnel standpoint. NVIDIA instead acquired San Tomas Commerce Park across the street from its existing campus and intends on building a 2M square feet campus.

Given recent acquisitions, a likely buyer for the tower could be Legacy Partners or Boston Properties, entities who both control significant land and/or buildings Downtown and have the track record, equity, and money partners to see the acquisition through. It makes some sense for Legacy to acquire the asset as it is putting up the second 300,000 SF Class A tower at its RiverPark project, and would face stiff competition from 488 Almaden for any large block user, particularly given the fact that it might be trading for below replacement cost, potentially putting Legacy at a disadvantage when competing for tenants.

Whether the prospective buyer will continue to look for a single tenant remains to be seen, but whatever the case, significant monies will be required to ready the interiors for move-in.

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