Trouble in North San Jose For Tishman Speyer
June 29, 2009
Tishman Speyer has defaulted on the loan it used to finance the purchase a 40 acre site from BEA Systems in 2007. Tishman paid about $60 psf ($108M) for the site in March of 2007, which BEA Systems then parlayed into the purchase of the office tower at 488 Almaden from Sobrato.
Tishman had intended on ultimately constructing about 3M square feet of office and retail on the site, but those plans fell apart shortly after it acquired the site. The lender on the dirt is LaSalle Bank, which is now part of Bank of America. The note amount is about $85M.
The site is located adjacent to the former BEA headquarters owned by Sobrato, at 2315 North First Street in San Jose. Just south of the site, Atmel has it’s approximately 290,0000 square foot headquarters up for sale, along with adjacent land which is able to support some 400,000 – 500,000 sf of additional office space.
Also nearby is the Philips Lumileds site, a 16.5 acre parcel picked up by Legacy Partners for approximately $40M in the 2nd quarter of 2007. Legacy was intending on ultimately building 1.25M square feet across three (3) buildings there. That site is located at 2503-2509 Orchard Parkway and is in a world of hurt as well. Legacy’s proforma for that project had an exit cap rate of under 6%. The kicker is that even if it had been built and leased to a credit tenant, the cap rate in today’s market would have been closer to 9% anyways.
Nearby all these sites is the former 224,000 SF BEA Campus, which is available for lease. To the North on First Street is a 2-story campus which is also available on a sublease.
My guess is that the Legacy and Tishman sites have lost around 70% of their value at this point, if not more.
Below is a map showing all the sites – you may click on it for a slightly larger version.
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The land is worth nothing. There is over seven million squre feet of Class A space available in the Valley today. No one is going to build anything for a long time!!
oh stop it with this worthless land argument. The land price has plummeted, we get it, but it is not worthless. I guarantee you will find people to land bank at $10 per square foot, not to mention some users that will come out of the wood work at around $15-20 per. would ebay not spend $26m of its $3b+ cash pile to lock up 40 acres adjacent to its HQ? I think it would.
anyways, a land bank at $15 per still gives you a decent IRR over 7 years if you assume that the price will get back to $40 by then with minimal management requirements
what would be interesting to see if the city would consider these sites for a stadium – baseball or soccer….
Why would a user buy land today when they will be able to buy completed brand new vacant buildings at well-below replacement cost prices ($100 psf). The “reset” will happen and frankly needs to happen so that this market starts moving again.
$10 / psf dreaming! Let’s see what Mtn View closes at.
The ball park and soccer stadium need to be in downtown, not N1st!
I have to agree with Yo Yo Yo (with that name, he must definitely be a broker) that this isn’t a very good ballpark site.
As for the land being worthless, it’s worth something, but certainly not much.
…I think the real question is who has a specialized use that needs a custom building. Answer that question, and you might find a buyer.
if it’s worthless then i’d like to put in an offer. heck, i’ll even take the land on the other side of Guadalupe Parkway. I think it’s owned by equity office, which if i’m not mistaken is putting out their own fires considering airport rents are in the dumps too
Actually, the soccer stadium will be quite close to this site…not really downtown. The old FMC site I believe it is called. Adjacent to the airport, across from the Santa Clara Caltrain station.
who cares how much the land is worth, just keep any stadiums away from that part of 101 please
goldman sachs sucks