TMG Buys Silicon Valley Office Campus to Serve the Evolving Workforce
NortonLifeLock sold the 445,967-square-foot fully amenitized office campus as part of a sale-leaseback transaction.
TMG Partners has acquired a five-building 445,967-square-foot fully amenitized office campus in Mountain View in Silicon Valley. NortonLifeLock sold the property as part of a sale leaseback, and will occupy one of the buildings on the campus.
Ben Kochalski, Regional Partner with TMG Partners, said that the asset aligns with the company’s Silicon Valley strategy to acquire properties that accommodate an “evolving workforce.” The property is built in a unique U shape that connects four of the buildings, creating walkability between the four buildings on nearly every floor. Kochalski specifically noted the interconnectivity of the campus as well as the indoor and outdoor amenities and health and wellness as characteristics that attracted the firm to the office asset, despite the market disruption in 2020.
Like nearby San Francisco, the Silicon Valley office market was shaken by the pandemic. A first quarter report from Colliers found that the sublease supply in the Silicon Valley has increased 64% through April 2021, up 1.5 million square feet. Since March 2020, there have been 180 new subleases added to the market, creating a total of 248 subleases available. The supply has pushed sublease rates to $4.36, down year-over-year.
In addition to increasing sublease supply, new product deliveries have also contributed to an increased supply and created a tenant market. In the first quarter, office inventory in the market increased by 17 million square feet, according to research from Savills, but leasing activity continues to struggle following the pandemic. The combination is good news for tenants looking to find a deal on class-A product. In the same period, leasing activity fell from 1.6 million square feet before the pandemic to only 400,000 square feet. As a result, the vacancy rate has climbed from 14.4% to 18.4% and asking rates have decreased to $4.82 per square foot, down $0.08 from the first quarter last year.
TMG is working with Newmark’s executive managing director Jon Mackey, vice chairman Mike Saign and executive vice chairman Phil Mahoney to handle leasing for the property.