SAN JOSE — A big north San Jose building that is fully occupied by a tech company has been bought in a deal that points to a robust Silicon Valley office market.
Investors have bought a building at 250 Holger Way in San Jose, a short distance from the interchange of State Route 237 and North First Street, according to Santa Clara County property documents.
The seller was an affiliate of KBS Real Estate Investment Trust, the county documents show. The buyer is linked to Bailard, a San Francisco-based wealth and investment management firm.
The Bailard-led group paid $38.3 million for the building, county property records that were filed on Sept. 28 show.
“That’s a pretty good price,” said Eric Fox, an executive managing director with Cushman & Wakefield, a commercial real estate firm. “Leased assets remain in high demand in this area.”
The building totals 76,000 square feet and is fully leased to CDK Global, a tech company that provides software for the automotive sector.
“This is a well-located building and is a well-designed asset,” said Dave Sandlin, an executive vice president with Colliers International, a commercial real estate firm.
KBS undertook a wide-ranging upgrade of the building and others nearby in recent years.
“This is definitely a high-quality building,” Fox said. “KBS spent a lot of money to upgrade it.”
KBS believes a growing number of tech companies are being enticed by north San Jose.
“San Jose enjoys tech spillover from the rest of Silicon Valley, including cities such as Palo Alto and Mountain View,” said Brent Carroll, a KBS senior vice president. “Tech tenants who are drawn to Silicon Valley are finding more competitive rates” in north San Jose.
With the rising interest on the part of tech companies, investors also are intrigued by the area, KBS believes.
“Office investors are realizing that institutional-grade assets like the buildings at District 237 can add tremendous value to their portfolio,” Carroll said.
KBS has sold other buildings recently in the same business park as the 250 Holger offices.
In late June, KBS sold to an investment group two buildings totaling 143,000 square feet at 100 Headquarters Drive and 200 Holger Way in a $95.2 million deal.
CBRE brokers Joe Moriarty, Scott Prosser, Jack DePuy, Russell Ingrum, Brad Zampa, and Mike Walker with the commercial real estate firm’s Northern California Capital Markets Team arranged the sale of the 250 Holger Way office building. The CBRE agents also assisted KBS with its sale of the two buildings in June.
All of the recently sold buildings, as well as other office sites on the same block, are part of a tech campus with several buildings that KBS has branded District 237.
At the time of the purchase of 250 Holger Way, the assessed value of the office building was $25.9 million, Santa Clara County assessment records show.
“Despite our uncertainties with COVID, real estate in Silicon Valley is still appreciating in value,” Sandlin said.
