Amazing Sunnyvale - TMG and Principal Moving Forward to Bring Another 100K SF of Office Online

The Martin Group and its JV partner Principal Global Investors have plans to break ground shortly on 384 Santa Trinita Ave, a four-story Class A office project in Sunnyvale. The building will feature 25,000 square foot floor plates, and 3.35/1000 parking. This development would dump another 100,000 square feet of space on top of a market which has 3,000,000 square feet of Class A office space in various stages of construction and delivery, and an overall vacancy rate for office space north of 25%!

The development is scheduled for delivery late 2009, early 2010. This project might prove a little more flexible than some of the other projects going up in Sunnyvale as the 25,000 square foot floor plates with centralized lobby and elevator shafts provide additional flexibility in getting tenant suites down to 12,500 square feet or possibly even less.

The project sits on a 4.6 acre site which TMG and Principal acquired in the first quarter of this year around the same time they picked up the 6.9 acre parcel at 399 W. Java Drive in Sunnyvale. The plans for that site include a 7-story, 200K SF Class A office building.

It’s unclear what the final sales prices for the parcels were, but at the time of sale, the sellers were looking for about $66 psf on Java Drive. On Santa Trinita, the partnership leveraged the parcel with a $13.1M loan from Wachovia, which would imply similar pricing.

Between all the projects in Sunnyvale, there is some 3,000,000 square feet of new construction either ready to go or somewhere in the pipes. At 200-300 SF per employee, that represents some 10,000-15,000 new employees that developers are expecting to materialize in the city. When you consider that the total employment base of Sunnyvale is only 71,000, that is a staggering number. In fact, over the past 8 years, the employment numbers in Sunnyvale have generally been decreasing from the highs they reached in 2000. The historic employment numbers for the city are as follows:

2007 - 71,000
2006 - 70,000
2005 - 68,300
2004 - 67,700
2003 - 67,300
2002 - 69,900
2001 - 74,800
2000 - 80,400

Not sure what the developers of all these projects are thinking, and I would be very interested to hear a well-reasoned explanation, but for the time being, what is clear is that, a) it is a good time to be a sizeable Class A tenant in Sunnyvale, and b) i’m glad it’s not my money financing these projects.

Similar Posts:

• Signs of Life at Moffett Towers in Sunnyvale
• Q4 2007 Leasing Figures Not as Rosy
• Shorenstein Picks Up Piece of Moffett Towers Debt
• Moffett Towers Might Finally Be Getting a Tenant
• Weakness in Rents Beginning to Show

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