A tech office campus in Santa Clara has been sold for $55.5 million, reflecting a significant shift in the local real estate market. The property, located at the intersection of Central Expressway and De La Cruz Boulevard, has struggled with rising vacancies, a trend that buyers are responding to with lower price expectations. The sale, finalized last week and reported by The Mercury News, highlights the evolving dynamics of Silicon Valley’s office space market.
According to documents filed with the Santa Clara County Recorder, the buyer, LBA Realty, acquired the multi-building campus, which spans approximately 298,300 square feet. The previous owner purchased the site for $97.6 million in 2018, making the recent sale price about 43.1% lower than the original investment. This steep markdown underscores the ongoing decline in office valuations, even for properties that have undergone renovations.
Vacancy and Renovation Insights
The campus, marketed as “@Central,” has approximately 92,700 square feet available for lease. This substantial vacancy level has contributed to a cautious approach among potential buyers, who are now more reluctant to overpay for office spaces.
Prior to the sale, Swift Real Estate Partners completed a significant renovation of the campus, enhancing its exterior and adding outdoor amenities. This modernization indicates that the property is not merely a relic of past economic cycles, further emphasizing the impact of current market conditions on pricing.
Future Prospects and Market Trends
The implications of this sale extend beyond the immediate transaction. For investors, the calculus has shifted from anticipating a rapid market recovery to seeking opportunities at discounted prices. Many buyers now focus on re-leasing vacant spaces or enhancing properties to maximize returns over time.
LBA Realty, which specializes in managing office and industrial properties across the western United States, appears to view this Santa Clara acquisition as a long-term investment rather than a quick turnaround. The firm’s reputation for repositioning suburban office portfolios suggests a strategic approach to address the existing vacancies.
Santa Clara’s recent planning decisions have maintained the area’s focus on industrial and office uses, reducing the likelihood of the campus being converted into residential projects. Adjustments to the city’s general plan, as noted by local sources, indicate a commitment to sustaining office-related developments in response to market demand.
As LBA Realty moves forward, the company will face the challenge of leasing the vacant space and attracting quality tenants. The success of this endeavor will be crucial for determining the future of the campus. For the broader Silicon Valley market, this sale represents a potential shift towards a wave of discounted office transactions in the near future, reflecting the changing landscape of commercial real estate in the region.
