SANTA CLARA, CA—Record-breaking stats continue to mount in the Valley. In a recent high price per unit sale, Velocity at Lawrence Station sold for $456,250 per unit, or a total of $25.55 million. The seller was Old Adobe Management Company and the buyer was a private owner.
“This is the ultimate example of a successful full-cycle investment,” says Robert Johnston, senior vice president of Levin Johnston. “The Levin Johnston team assisted Old Adobe Management Company in acquiring this 56-unit property in February of 2015 for $14.25 million. After extensive strategic renovations, the property's value increased exponentially, enabling us to achieve a per-unit sale price that is the highest in the history of Santa Clara for a community with more than 10 units, according to CoStar.”
Velocity at Lawrence Station is located at 3488 and 3508-3518 Agate Dr. Large-scale renovations were performed on both the interior and exterior of the property, including new roofing, upgraded plumbing including copper risers and sewer lines, and new electrical wiring in every unit. The property also features all-new drought-resistant landscaping, as well as new carports and newly upgraded common areas with barbecues. In-unit amenities were substantially upgraded, including finishes such as quartz countertops as well as new dishwashers, and the addition of washers and dryers in every unit.
“This level of upgrades is nearly unheard of in today's market, and speaks to the commitment and expertise of the seller,” says Adam Levin, senior managing director of Levin Johnston. “By investing in the amenities that matter most to tenants, Old Adobe Management Company was able to enhance the value and lifespan of the property for future owners, while substantially increasing their return on investment.”
The property is located in walking distance to Lawrence Station Caltrain, which offers a short 10- to 20-minute commute to Mountain View, Palo Alto, Menlo Park and other nearby hubs for major employers such as LinkedIn, Intel, Facebook, Apple, Yahoo! and Google.
“The Bay Area market is characterized by its outstanding employment rates and Santa Clara's fundamentals are on trend,” notes Levin. “Unemployment in Santa Clara recently dropped to 2.6%, fueling continued strong demand in the local multifamily sector. This tenant demand continues to drive increased investor interest, enabling us to achieve strong returns for our client through this sale.”
Other stats bear out the strength of the Silicon Valley market. For example, corporate consolidations have added vacancy to the office market and will continue in 2018. These consolidations have occurred primarily within the local computer hardware sector where there have been a significant number of closed M&A deals, according to a fourth quarter report by JLL.
Despite the rise in vacancy, demand for office is steady. Tenant requirements in the 50,000- to 100,000- square-foot range have increased and the lack of traditional multi-tenant space is driving the demand for smaller space requirements. Average asking rents throughout the Valley are $50.52 per square foot.
The outlook is for vacancy to rise slightly as more space is expected to hit the market, but will be driven down once tenants who signed large deals occupy in late 2018. Smaller requirements will rise in response to several major redevelopment projects that will uproot existing tenants into the market, GlobeSt.com learns.
Levin Johnston is part of Marcus & Millichap's Palo Alto office.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
