By Jon Peterson

New York City-based Clarion Partners has paid just over $26 million or $316 per square foot to buy the 82,278 square foot 2901 Patrick Henry office/R&D building in Santa Clara, according to sources familiar with the transaction.

“We are very pleased with this investment to our Silicon Valley portfolio. We believe that the quality of this property and its excellent location and strong tenancy coupled with strong demand this submarket is experiencing make it an ideal addition,” says Richard Pink, a managing director with Clarion. He works out of the company’s regional office in Los Angeles.

He thinks that there is a lot of action happening in Santa Clara. “The tightest of some of the other markets in Silicon Valley like Sunnyvale and Cupertino is creating tenant demand for Santa Clara. This coupled with the new 49ers football stadium and new retail and office developments happening in the region is making Santa Clara an attractive market,” said Pink.

Another factor is the dwindling supply of single-story office product in the area. “Some of this space is being renovated and converted to other uses including apartments. This makes the product that is left more attractive to own,” said Pink.

The acquisition by Clarion has yielded a cap rate in the high six percent range, according to sources aware of this sale. This return is based on the property’s existing net operating income.

The property was sold by San Francisco-based Four Corners Properties. The real estate firms traded the asset through its listing agent, Steve Hermann, executive managing director and principal with Cassidy Turley Commercial Real Estate Services in its San Francisco office. The seller had owned the property since 2011 when it was acquired from Campbell-based South Bay Development Company. The purchase price at that time was $13.6 million or $165 per square foot.

Four Corners did not respond to phone calls for this story. According to its Web site, the company acquired the property with its equity partner, New York City-based Westbrook Partners.

There are two tenants in the single-story office/R&D asset making it a fully leased property. One of them is for 50,500 square feet is the DataDirect Networks. The privately-held data storage infrastructure provider signed a lease for the space in April of 2013, according to data supplied by Cassidy Turley. This tenant had moved from Sunnyvale’s Moffett Park to the new location.

2901 Patrick Henry Drive was built in 1977. It was substantially renovated in 2013 with $2.8 million invested in property improvements including a new lobby, new HVAC units and updated interior and exterior renovations. The property features floor-to-ceiling windows, an outdoor dining patio and almost 14.5-foot ceilings.

Clarion has now acquired two properties in Silicon Valley this year. In January it paid $27 million to acquire the 93, 385 square foot Arques Business Park in Sunnyvale.

The real estate investment firm continues to look for new investment opportunities in San Francisco and Silicon Valley. This could include all four of the main property types.