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. If 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]
- Weakness in Rents Beginning to Show
- County Planning On Buying, Flipping Out Former San Jose Hospital Site
- RREEF Portfolio Under Distress
- Bill Halford of Bixby Land Company: Wait
- New Owners Squeeze Market