Applied Puts Up For Sale 30-Acre Santa Clara Site
September 14, 2009
Applied Materials (AMAT: 14.475 -0.86%) has quietly put up for sale a 30-acre site in Santa Clara. The property is being offered unpriced. It’s an odd time to put the property up for sale considering the fact that they’ve carried it for a long time, including the last boom cycle where the land would have likely fetched north of $50 per square foot. Nonetheless, it does signal the realization within the company that there is no material need to continue to hang onto it. It is also a broader, reinforcing signal that manufacturing in Silicon Valley doesn’t make sense anymore. Several years ago, across Bowers Ave, Equity Office put up a 16-acre site. Without any entitlements, EOP had offers north of $40 psf for that site. That deal fell apart after the developer couldn’t attract a big box home improvement store. Since then, EOP has been marketing a spec office development on the site – something which probably has 0% chance of coming to fruition in at least the next 3 years, and a 1% chance in the next 5.
The question now is who would want – and can bite off – the AMAT site. You could probably make sense out of the site for residential or multi-family development, and possibly for a data center [or football?], but that’s about it. It just doesn’t make any sense for office development- there are too few users that would need that much space and too many existing and emerging opportunities to acquire existing projects right now for 50% or less of replacement cost. And this doesn’t even include vacant land, such as Tishman’s North First Street site that is in trouble, which is sitting idle.
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Tags: Applied Materials, Equity Office, Land Sale, Santa Clara, Tishman Speyer
Would Santa Clara allow any residential development in that part of the city? It seems a likely spot for office towers if/when the market comes back. Related to this site, has there been any movement on the old office parks that Nvidia and Yahoo bought? Both are nearby.