A newly leased R&D office building in North San Jose has sold for $21.5 million just seven months after trading hands in lieu of foreclosure. The 85,270-square-foot property at 1704 Automation Parkway was purchased by Nautilus Global Commercial RE Investment I LLC, a Fremont-based group associated with an investor known as Nautilus Global Investment. New York-based Atlas Real Estate Partners sold the two-story building in a transaction that was made public this week, just as Quantenna CommunicationsInc., a wireless Internet service provider, is set to move in with a seven-year lease.
The sale works out to $252 per square foot, or nearly $3.84 million per acre on the 5.6-acre site in the city’s International Business Park. “With a scarcity of building offerings in the North San Jose submarket and throughout the Silicon Valley, especially one that is 100% leased for the next seven years that offers a stable income stream from a quality tenant, both the buyer and seller were thoroughly pleased to have received such a terrific outcome,” Scott Prosser, executive vice president at CBRE said in a statement Wednesday evening. Prosser, along with CBRE brokers Joe Moriarty and Jack DePuy represented Atlas and its capital partner, San Francisco-based Soma Capital Partners, in the transaction. CBRE brokers Chip Sutherland and Sherman Chanarranged the lease with Quantenna ahead of the sale.
The building, erected in the late '90s, has received a facelift recently, with a slew of exterior upgrades and updates to its two-story interior lobby, according to CBRE. Those improvements were prudent, the real estate firm noted, because North San Jose and nearby Milpitas are both growing, boasting a development pipeline of nearly 14,000 new residential units. “Increased demand for higher-end amenities has emerged in response to the influx of high-paying jobs and modern housing options,” the CBRE statement said. Development interest has piqued in large part because of “progressive planning and transportation policies,” CBRE noted in a statement.
The site is about two miles from the Milpitas and the San Jose Berryessa BART stations, both of which are under construction now. Avoiding foreclosure Atlas picked up the property, along with a neighboring building at 1710 Automation Parkway, in February from an LLC associated with Steelwave. The Foster City-based developer handed over the deed to Atlas in order to avoid foreclosure proceedings, county documents show. The unpaid debt on the two adjacent properties was more than $36 million at that time. But Atlas isn’t currently selling the second building, a CBRE spokesperson said Wednesday. That property, at 1710 Automation Parkway, is fully occupied by Western Digital Corp., which has had a tumultuous year, riddled with layoffs and topped off an extremely public, months-long bid to buy Toshiba’s flash memory chip business, only to be passed over in the 11th hour. But the company seems to be putting a new focus on its San Jose presence.
Earlier this year, the Business Journal reported that Western Digital had moved its headquarters from Irvine, in Southern California, to 5601 Great Oaks Parkway in San Jose – an office on the opposite end of San Jose to its Automation Parkway location. Investors clamor to North San Jose North San Jose has seen a flurry of buying activity this year. Earlier this month, a Chinese company bought a Class A, two-building office campus in North San Jose for $58.5 million. Before that, a Florida investor bought a 22-acre office campus in the area for $105 million. One developer has submitted plans for a 70-acre North San Jose industrial parcel to be transformed into a mixed-use site with a hotel, retail and potentially a winery or brewery— tapping into the city's long-term vision to eventually make the area more urban and walkable.
