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Moffett Towers Lands Rambus For 125K SF

December 18, 2009

It took a few years, but Moffett Towers has landed a tenant (ht Phil). Rambus (RMBS: 13.09 -0.30%) has become the guinea pig.  It signed a lease for 125,000 square feet on December 15th. The 10-year term begins around July 2010 once its tenant improvements are completed.

The space will be delivered turnkey. They are occupying a portion of the first floor and floors 6,7,8 of 1040 Enterprise building.

The terms of the lease are:

  • 10-Years
  • $2.45 NNN start rate with 3% annual increases
  • 6-Months Free Rent
  • Right to cancel after 7 years

This is a great deal for Jay Paul in our opinion, but not so much for Rambus. 6 months free rent? That is hardly anything in today’s market for a tenant this size. $2.45 NNN start rate — that is a fairly rich number, even for a turnkey job. There are deals floating out there right now offering much more favorable terms. Rambus’ existing lease expires at the end of 2010. The fact that they are getting six months of free rent probably means that they didn’t even get Jay Paul to pick up their rent obligation for the second half of 2010 at their existing location and in effect are getting little to no free rent.

Cornish & Carey brokered both sides of the deal (different brokers).

Good job Jay Paul. Rambus, better luck next time.

As for Rambus’ existing digs at 4440 El Camino Real (pictured below). Tough break for Behringer Harvard who paid Sand Hill Property Company about $40M for the existing building 3 years ago. That asset was built in 2000, is about 95,000 square feet on a 1.5 acre parcel on El Camino in Los Altos. Either way though, they would have gotten nailed, be it on rent, or vacancy though at this point a 100K SF vacancy on El Camino in Los Altos probably isn’t something I’d want to have with such a high basis.

4440 El Camino Real

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Categories: Commercial Finance and Lending | Commercial Real Estate Investing | Market Data | Notable Deals
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No Conflict Broker December 18, 2009

WOOOOOW!!! First tenant in the project…risky move.

But let's point out the terms of the deal…ummm, does Rambus know they are getting ripped off? There were other deals on the table earlier this year with MANY more concessions and a LOWER rate. I wonder why this is??? Hmmm…perhaps Cornish was on both sides of the deal??? Shady.

Joshua December 18, 2009

$2.45 NNN is a rich deal. it would be fun to see what the amortized TIs come out to as a percentage of that rate.

Square Feet December 18, 2009

Cold shell right now, guessing about $80 to turnkey. At 350bps above prime, puts it at about $.92, which puts it at about $1.53 NNN on an as-is deal. At $1.53 NNN they should have gotten about $30-35 at least.

I got some hate mail about this post, so I'll post a similar deal that just went down recently pretty nearby which will provide some contrast.

Joshua December 18, 2009

that guesstimate sounds much more reasonable.

dave house December 20, 2009

Good deal for Rambus….no one has cash like that in the valley!!!! Furthermore the big sign on the freeway will be cool

Square Feet December 20, 2009

I would argue otherwise. There are at least 3 other deals of this size or greater floating around right now with turnkey dollars from the LL. And there are several other buildings out there right now with similar signage opportunities.

No Conflict Broker December 20, 2009

Look…I know of a very high-credit tenant who had a deal on the table with Jay Paul at Moffett Towers for $2.00 NNN Effective, $50 in TI's for a 10 year term…and the start rate was going to be $1.50, so plenty of free rent (more than 6 months) in that deal. And this was back in Q1 of '09.

So don't worry about the hate mail, blogger…it's only natural to have this reaction. Rambus got screwed.

Keep telling the truth!!!

ZhiHen December 21, 2009

The big sign on the freeway comes at a big cost, so that's not cool.

SandyR December 23, 2009

And don't forget Jay Paul uses drip line measurement instead of BOMA as well, so that adds a bit to the deal as well!

mr foo January 29, 2012

After losing all their important patents rambus may be doing a BK soon so Moffett Towers will be screwed

squarefeet January 31, 2012

There’s probably a few takers for the space if Rambus vacates, and rents have risen since then so I highly doubt Jay Paul is contemplating the sale of his yacht over Rambus’ demise…

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