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Harmonic Leases 188K SF in North San Jose

December 28, 2009

It’s been a fairly busy December relative to the rest of the year. A couple big deals have been signed, including the Facebook and Rambus deals.

Harmonic (HLIT: 5.94 -1.16%) has also made a big move by signing a lease about a week ago for 188,332 SF at Carlyle Realty’s North First Street project (4300-4400 North First Street) in San Jose.

The terms of the lease were as follows:

  • 10-Year Term
  • September 1, 2010 commencement
  • 2-Years Free Rent
  • $1.90 NNN start (year 3), with $.10 annual bumps
  • $100 PSF Tenant Improvement dollars (over shell)
  • Right to cancel after 7 years
  • Right of first offer to purchase
  • Right of first offer to expand (subordinate to IBM)

The building Harmonic is taking was last transacted at the peak of the market, back in July 2007 when Cisco Systems (CSCO: 28.36 -0.21%) sold the project to Carlyle for $98M ($257 psf). This has proven to be a raw deal for Carlyle, who has been sitting on a two-thirds empty building since, and the tenant they have now landed to take them to 80% leased is costing them about 6 years of consideration to get (and they have a right to cancel in the 7th year).

When we posted about the Rambus deal, we felt that deal was rich while the Harmonic deal is more representative of the current market for big chunks of space.

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Goland December 28, 2009

$100 per square feet for tenant improvements? What in the world are they building? This is a tech company!

Square Feet December 28, 2009

Space is cold shell. In addition, Harmonic can use the TI dollars for furniture too in this deal.

Steve December 28, 2009

If I were Rambus, I'd be pretty upset. And if I were a broker, I would be calling each client of the person who represented Rambus and showing him these two deals.

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