Single Tenant Renewal Shows a Continued Commitment to Silicon Valley
Drawbridge was willing to offer a shorter-term lease to provide Austin-based NI with stability and continuity, and the renewal shows a commitment to Silicon Valley when some tenants are leaving.
SANTA CLARA, CA—San Francisco-based Drawbridge Realty recently renewed a single-tenant lease with NI, formerly National Instruments, at a building located at 4600 Patrick Henry Dr. According to market research, this is the third largest lease concluded in the Valley with Microchip (170,000 square feet) at 3850 N. First in San Jose and Olympus (80,000 square feet) at 2400 Ringwood in San Jose coming in at the number one and two spots of the later COVID era.
What does this short-term renewal say about the current market? Unlike some multi-tenant office markets, it’s still possible to get deals done in this market, especially for R&D product when landlords such as Drawbridge are willing to provide flexibility to tenants.
“Today, almost everybody in business is navigating uncharted waters as a result of COVID-19 so we feel it is as important as ever to be flexible where we can so that our tenants can focus on their core businesses and continue to be successful,” Bill Doyle, senior vice president of investments with Drawbridge Realty, tells GlobeSt.com. “Our company’s emphasis on partnering closely with all our tenants as well as investing in properties that are strategically important to them has resulted in a 90%-plus renewal rate over our 20-year history.”
Even strong public companies with solid revenue growth are facing uncertainties post-COVID and Drawbridge was willing to offer a shorter-term lease to provide NI with stability and continuity. Moreover, NI is Austin-based, and this renewal also shows its commitment to be in Silicon Valley at a time when other South Bay tenants might be looking to Austin.
According to an office report by CBRE, Silicon Valley was named the tech market that is most resilient and poised for future growth. With its office market dominated by large-cap tech firms, Silicon Valley had the fourth-greatest office rent growth and the sixth-greatest office net absorption. The Mountain View submarket posted the second-lowest vacancy rate among all top submarkets in second quarter, behind only South Lake Union in Seattle (also home to large-cap tech), says CBRE.