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Mark to Market: Sunnyvale R&D Trades For $40 PSF

May 7, 2010

Well there you go, $40 psf on a building, and less than $1M/acre for a Sunnyvale R&D project.

We’re back to the lows of 2003 as far as land costs go when Gilbane acquired the 12-acre site of Kifer Commerce Park for about $19 psf. The purchase of 645 Almanor by Trumark sets a new bar though for Sunnyvale as far as building costs go. The property was purchased from Prudential Insurance.

The asset requires a lot of work, but this is the type of deal that will turn into a slam-dunk in the next 10 years. You acquire a dog asset with lots of land for next to nothing, spruce it up a bit, lease it for next to nothing and still throw off a fair yield, get it entitled in a few years, and sell the site to some out-of-area developer with an ego – and OPM to burn – who decides they have to do spec development in Silicon Valley in 7-8 years as the next “development cycle” picks up.

I have to look at the fiber maps, but I’m pretty sure several major carriers have a bunch of fiber running on the south side of 101 in Sunnyvale.┬áIf the connectivity is there and this asset could be converted to a data center, then it could prove to be a very sweet deal.

[via Business Journal]

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Categories: Commercial Development | Commercial Real Estate Investing
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As an appraiser, I have to wonder how much the buyer allocated to those portions of the building that are useable. Did he allocate contributory value to the buildings, or treat them as a teardown? I'm sure I'll find out when I need to use it as a comp. Regarding the size of the lot, the public record shows 4 parcels totaling close to 7 contiguous acres owned by Prudential at this site, about $17/SF of land if the deal included all 4 Wayne Prescott, MAI, CCIM

Brad Kitchen March 29, 2011

A prominent downtown high-rise in Columbus, Ohio just sold for $11 PSF for 350,000 SF, an amazingly low price. We need some positive absorption to increase rents and values.

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