Friday, May 6, 2011
Premium content from Silicon Valley / San Jose Business Journal – by David Goll

The sale of a 32-year-old Santa Clara office building indicates speculative redevelopment has returned to the South Bay, according to real estate industry insiders.

The three-story, 103,000-square-foot office and research and development building at 3175 Bowers Ave. was picked up by Four Corners Properties LLC, a San Francisco-based real estate investment company. The seller was Bowers Street LLC. Although the final sale price was not disclosed, the asking price for the structure was more than $8.2 million.

“I see this as the first wave of speculative redevelopment of office space,” said Kevin Cunningham, vice president in the Palo Alto office of Cornish & Carey Commercial Newmark Knight Frank. Cunningham and his colleague, Jeff Arrillaga, senior vice president in the Santa Clara office of Cornish & Carey, represented Bowers Street LLC in the transaction. Representing the buyer in the deal was Brandon Bain, partner in the Santa Clara office of Cassidy Turley CPS.

As economic conditions have improved, Cunningham said a growing number of investors have purchased older office/R&D space to renovate and modernize it for new tenants. The trend that began last year in the red-hot Palo Alto and Mountain View markets has now moved southward toward Sunnyvale, Santa Clara and San Jose, he said.

He said the Santa Clara building is a “prime site for redevelopment” as the new owner readies the property for tenants. He said the property, formerly occupied by Agilent Technologies. Agilent Technologies for at least 15 years, has been vacant for about two years.

Four Corners Properties, established in 2005, has now acquired more than 20 office and R&D buildings with a total of 1.2 million square feet. The company’s investment in the properties totals more than $200 million.