Shorenstein Properties Buys Phase I of San Jose’s America Center
The property has two six-story buildings totaling 427,600 square feet and a development parcel.
Shorenstein Properties has acquired the first phase of the America Center in North San Jose from USAA Real Estate. The property has two six-story buildings totaling 427,600 square feet and a development parcel. The sales price was not disclosed.
The property is part of the five-building America Center, an office campus that serves Silicon Valley, East Bay and Oakland. The first phase was built in 2009. It features a LEED Gold certification, and high-end onsite amenities, like jogging and biking trails, cafeterias, a fitness center, a sports park and outdoor gathering space.
JLL represented the seller in the deal and secured debt on behalf of the borrower. The Capital Markets team included senior managing directors Will Connors, Michael Leggett and Rob Hielscher, senior director Daniel Renz and director Michael Manas. Senior managing director Bruce Ganong, managing director Geoff Goldstein and analysts Spencer Bergthold and Auden Menke secured acquisition financing.
According to data from JLL, the San Jose office market is strong. Rents have increased 47% since 2013, and are up 17% in just the last 24 months. Plus, six out of the last eight quarters have had positive net absorption with 4.8 million square feet of current tenant demand.
However, the region did falter during the pandemic. A recent report from Marcus & Millichap forecasted that San Jose will likely close the year down 60,000 jobs compared to the peak in 2019. Pressure from unemployment will likely increase office vacancy 250 basis points, driving rents down 2.3%. This follows an already downward trend from 2020, when the vacancy rate increased 340 basis points year-over-year and rents decreased 1.9%.
Despite the challenges, investors continue to buy in the market. In addition to this deal, KKR’s fund KKR Real Estate Select Trust acquired HQ @ First, a 603,000-square-foot office campus in Silicon Valley, from Japanese developer MORI TRUST CO. earlier this month. The property is currently fully leased to an investment-grade tenant.