In an SEC filing this week the provider of datacenter networking solutions says it purchased three unimproved building parcels from MFP/Hunter@First Office Partners LLC for $50.9 million. It retained an affiliate of the seller to develop three office buildings totaling 562,000 sf for an additional $173 million that will be paid in installments over the next 27 months.
The new campus will consist of two seven-story buildings and one four-story building and will have a capacity of approximately 2,200 people, allowing the company to consolidate not only its headquarters at 1745 Technology Dr. but also a building it owns several blocks away at Skyport Plaza. Brocade's two existing local buildings total about 400,000 sf, a company source tells GlobeSt.com.
With regard to the decision to buy or lease, a company source tells GlobeSt.com that the company evaluated both kinds of transactions and "found that this was very fiscally responsible and met our needs."
Depending on the market or other circumstances, Brocade may evaluate entering into a sale-leaseback transaction with respect to the property and buildings at a future date, according to SEC documents. As part of the deal the company also obtained a four-year option to take down a fourth parcel totaling four acres for $26 million.
The seller, MFP/Hunter@First Office Partners, is Deke Hunter and Ed Storm, the principals of Cupertino, CA-based Hunter Properties. The duo in June 2007 paid Palm Inc. $70 million for 39 acres with visions of 880,000 sf of class A office space in four buildings, a 100,000-sf hotel, a 75,000 sf retail village and a 150,000-sf retail anchor.
"This site is the gateway to San Jose from Highway 237," Hunter told GlobeSt.com at the time. "Our idea is to embed a corporate campus environment in a top-tier, class A retail concept with outdoor dining, plenty of parking and other amenities."
Hunter tells GlobeSt.com this week that the plans now include the aforementioned office space, retail village and hotel (168 rooms by Lodgeworks, parent company of the Sierra Suites chain). And instead of 150,000-sf retail anchor, Hunter is seeking approval for another hotel (a 220-room Renaissance Club Sport), an additional 200,000 sf of office and 8,000 sf of retail.
Construction of the office campus and the first phase of the parking garage are under way, Hunter says, and site work for the retail village and Lodgeworks hotel will get under way in August. Lodgeworks will develop its own hotel while Hunter and Storm will develop the retail center, Hunter says.
A new application has just been submitted to convert the entitlements for the large format retail anchor into the second hotel and additional office space. Hunter expects to break ground for that piece of the project early next year.
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