Commercial Real Estate Blog

Since Legacy Partners dropped its plans to acquire the 388,000 square foot Oracle Tower in San Jose, Oracle has had a bit of difficulty in rounding up another buyer. In fact, last week at the CoreNet/ULI event in Foster City, Randy Smith, the VP of facilities and global real estate for Oracle confessed that the building is proving more difficult than expected to sell.

Nevertheless, word is that a new buyer has been identified, and it is Sobrato. After developing the building early in the decade and watching it sit vacant for seven years, Sobrato offloaded the building to BEA for $130M in 2007. BEA was subseqently acquired by Oracle Corporation and Oracle put the building on the sale block in May of this year, and Legacy was reported in July to be in contract to acquire the asset for roughly $100M or about $275 psf.

Faced with a difficult (to say the least) lending environment, Legacy dropped its plans in August to acquire the building, and Oracle was back out in the market looking for a buyer, and it now seems that buyer could be Sobrato.

Based on the current state of the capital markets, an acquirer will either need significant pre-leasing to take place or have very deep pockets, and Sobrato certainly has the latter, and if the stars align they might even have both. The significance of the tower is that it represents one of only two large chunks of Class A office space in Downtown San Jose, with the other being Legacy Partners’ RiverPark Tower II project which is under construction. In addition, it represents an opportunity for a suitor to acquire the building well below replacement cost.

We previously posted on PriceWaterhouseCoopers requirement in downtown San Jose for some 150K square feet, and just the other day made mention of Sony’s 300-400K square foot requirement. We’ve also heard of at least two other 100K+ square feet requirements coming through the pipes. It will be interesting to see what Sobrato can pull off.

I attended a CoreNet Global dinner event at the Four Seasons in San Francisco on thursday honoring the Corporate Real Estate Service Provider of the Year as well as the Corporate Real Estate Professional of the Year for the Northern California Chapter.

This year’s winners were Joan Price of Gensler for the CRE Service Provider of the Year award, and Frank Jesse of BEA Systems for the CRE Professional of the Year.

This year’s dinner honoring the winners brought out about 450 corporate and industry professionals. It was a great event and a good opportunity to connect face-to-face with individuals I have interfaced with over email and phone. Another pleasant surprise was running into a few clients!