The purchase price translates to an initial cap rate in the low 4% range, according to local industry sources. One of the brokers in the deal, David Silver of Arroyo and Coates, declined to confirm the name of the seller or the cap rate but did tell GlobeSt.com that rent at the property is below market as is, meaning that the new owners could begin to increase the pace of the return on investment even before their planned rehab begins, and then again after it is completed.

"There were 34 offers on the property," says Silver, who had the disposition assignment with fellow A-C broker Nathan Blair. "It was highly competitive because it is an A location and a high-quality product right in the sweet spot for developers looking for a renovation/rehab play."

Located at 745 S. Bernardo Ave., the development consists of four three-story buildings. Next door is a Safeway grocery store. In addition, El Camino Real is two blocks away and many major technology employers have facilities in the area. There have been no substantial renovations to the property since it was developed, Silver says.