The two buildings, 2220 and 2330 Central Expressway, are part of a three-building campus that used to be the corporate headquarters for Covad Communications. After Covad left, JDS Uniphase backfilled one of the buildings, and has since subleased it to Juniper Networks and Turnstone Systems Inc. leased the other.
Tellabs' broker, Scott Kinder of Cresa Partners in San Jose, tells GlobeSt.com that Tellabs leased the empty building and the one most recently occupied by Turnstone. One of the buildings comes already built out and comes with furniture, he says, while the other will need to be built out.
"We were able to secure very favorable terms in one of the area's few remaining class A, 'plug-and-play' facilities in a high visibility, corner location," at the intersection of San Tomas and Central Expressway, says Kinder.
A source at Tellabs says the company will move into the space mid-year. The lease is an expansion of its broadband operation, which is currently located at 90 Rio Robles in San Jose. Tellabs will vacate that space when it moves into the new location. Whether it also will vacate its Petaluma, CA location could not be confirmed.
The value of the lease was not released by the parties involved and not otherwise immediately available. Mission West says in its 2004 annual report that the average asking market rent is $0.88 per sf per month. Kinder says the top end of the range is $1.05 per sf per month.
Mission West's eight-million-sf portfolio is primarily located in the Silicon Valley. The company's portfolio occupancy at the end of September 2005 was 67.5%, which is well below the market wide R&D average of around 20%. In addition, the company says leases for 558,000 sf will expire prior to the end of 2006. A company executive could not be reached Wednesday for comment.
"The properties subject to these leases may take anywhere from 24 to 36 months or longer to re-lease," the company said in a November SEC filing. "We believe that the average 2006 renewal rental rates for our properties will be approximately equal to, or perhaps below, current market rents, but we cannot give any assurance that leases will be renewed or that available space will be re-leased at rental rates equal to or above the current quoted market rates."
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