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

Posted By squarefeet On May 7, 2010 @ 7:43 am In Commercial Development,Commercial Real Estate Investing | 2 Comments

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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 [2]]

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2 Comments To "Mark to Market: Sunnyvale R&D Trades For $40 PSF"

#1 Comment By Wayne Prescott, MAI On May 7, 2010 @ 4:39 pm

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

#2 Comment By Brad Kitchen On March 29, 2011 @ 5:22 pm

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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[1] Tweet: https://twitter.com/share

[2] Business Journal: http://sanjose.bizjournals.com/sanjose/stories/2010/05/10/story1.html?b=1273464000^3313611

[3] Weakness in Rents Beginning to Show: http://www.squarefeetblog.com/commercial-real-estate-blog/2008/03/17/weakness-in-rents-beginning-to-show/

[4] County Planning On Buying, Flipping Out Former San Jose Hospital Site: http://www.squarefeetblog.com/commercial-real-estate-blog/2009/11/11/county-planning-on-buying-flipping-out-former-san-jose-hospital-site/

[5] RREEF Portfolio Under Distress: http://www.squarefeetblog.com/commercial-real-estate-blog/2009/07/28/rreef-portfolio-under-distress/

[6] Bill Halford of Bixby Land Company: Wait: http://www.squarefeetblog.com/commercial-real-estate-blog/2009/01/08/bill-halford-of-bixby-land-company-wait/

[7] New Owners Squeeze Market: http://www.squarefeetblog.com/commercial-real-estate-blog/2009/08/27/new-owners-squeeze-market/