All three buildings saw extensive exterior and interior retro-fits and seismic upgrades. As a result, AMB executives says the buildings "have many advantages of new buildings at a much lower occupancy cost than other competing class A products."
Mark Hansen, AMB's SVP of value-add conversions, tells GlobeSt.com that new R&D office buildings command rates closer to $3.25 per sf (NNN), so its highly renovated product for 75% less has been attractive to tenants.
In the largest of the three deals, Omneon Inc, a maker of media servers and content storage and distribution products, leased a 69,000-sf building at 1237 East Arques Ave., which is within the two-building, 132,000-sf AMB Lakeside Business Center. The second, 63,000-sf building within the development, 432 Lakeside, is set to be renovated next; the triple-net asking lease rate is $1.75 per sf per month. Craig Fordyce and Mike Rosendin with Colliers International have the leasing assignment for the development. Steve Levere of Jones, Lang, LaSalle and Brian McCorduck with Cushman & Wakefield represented Omneon in its lease negotiation.
In the second largest deal, Innovalight Inc., a maker of thin-film solar panel modules leased 35,537 sf of an 49,000-sf, two-story building at 955 East Arques Ave., within AMB Arques Business Park, a two-building, 85,454-sf development. Brokers Kalil Jenab, Randy Arrillaga and Jim Kovaleski with BT Commercial have the listing assignment. Lori and Tom Sweeney with Wayne Mascia & Assoc. represented Innovalight. The asking rate for the remaining space is $1.85 per sf (NNN).
In the third deal, Mirapoint Software, which plays in the email server space, leased a 27,000-sf building at 1215 Bordeaux Dr., aka AMB Manzanita R&D. Kalil Jenab and Randy Arrillaga with BT Commercial had the leasing assignment. Hugh Scott with the Staubach Co. represented Mirapoint. The building has been built out with 65% open office space and 35% light manufacturing/lab space with a clean room and anti-static flooring, according to a flyer on the property.
AMB acquired all three developments between August 2007 and February 2008. The acquisitions were off-market transactions from different sellers. Hansen says AMB has one other conversion project under way in North San Jose and is evaluating several other of its assets in the market for value-add conversions or full redevelopment.
AMB's San Francisco Bay Area portfolio totals approximately 11 million sf of operating and development properties.
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