The new buildings will be delivered as a "warm shell," which the developer is valuing at $35 per sf. The asking triple-net lease rate, $3.25 per sf, assumes an additional tenant improvement allowance of $25 per sf. Mike Benevento of CB Richard Ellis, who with partner Jeff Houston has the leasing assignment for the new campus, says he's just started marketing the property, which is already generating a lot of activity.
Yahoo, whose headquarters are located next door, leased the old campus right up until it was torn down 60 days ago, he says. Based on interest received to date and the rapid expansion of nearby companies such as Yahoo and Juniper Networks and Network Appliance, Benevento tells GlobeSt.com his expectation is that whole-campus or whole-building users will lease the property prior to completion.
"We're one of the first ones out there with new product," he says.
The project is in response to the City of Sunnyvale's plan for increased density around the VTA light rail line as well as increased demand for mid-rise class A office in a region currently dominated by low-rise industrial-style R&D buildings.
Nearby the Bordeaux Centre site, along Java Drive, a partnership of SCM Properties and Exterra Realty Partners is methodically tearing down a 20-year-old, single-story R&D campus and replacing with four- and five-story class A office buildings. The first phase of, Java Metro Center is a five-story, 150,000-sf building and a four-level parking garage. Completion is slated for this time next year.
Exterra principal Mike Parker, formerly a partner with Koll Development, told GlobeSt.com last month that there are some six million sf of requirements in play in the heart of the Silicon Valley. The listing agents for the development, CPS Corfac International principals Steve Pace and Dan Hollingsworth, have responded to RFPs that would fill the first two buildings, he says.
There's plenty of competition out there, including the 1.8-million-sf Moffett Towers project, but Exterra and California Bavarian Corp. are betting the lower-rise and less dense nature of their projects will attract its own set of tenants.
"With severely constrained supply for class A offices in Silicon Valley and few large contiguous blocks of space available for lease in Sunnyvale, tenants in the marketplace are expressing strong interest for a portion of the campus or potentially all of it," said Pace. He added that asking rental rates for Java Metro Center have not been established but current rates in the area are "about $3 per sf and escalating monthly as supply dwindles in step with the region's expansion of high technology companies."
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