Seagate Seeks $300M Sale-Leaseback of Silicon Valley Campus

A struggling hard-drive maker based in Ireland has listed its 31-acre, 575K SF Silicon Valley research campus for sale, asking for $300M and a seven-year leaseback deal.

Cushman & Wakefield is representing Seagate Technology Holdings in the sale-leaseback of the complex located at 47,488 Kato Road in Fremont, a San Jose suburb, according to a report in the San Francisco Business Times.

Seagate, which is laying off 8% of its global workforce, also is listing a 400K SF research campus in Longmont, CO.

The two-story Fremont campus was built in 2010 for $300M and was originally occupied by Solyndra, a solar-panel maker that become a national controversy when it went belly up in 2011 after receiving millions in stimulus subsidies from the federal government.

The Obama Administration steered the bulk of government stimulus funds during the Great Recession that followed the 2008 fiscal collapse toward jump-starting a renewable energy industry in the US.

When China undercut the infant industry by dumping subsidized low-cost photovoltaic panels in the US, several major solar-power manufacturing projects funded with federal stimulus money failed to get off the ground.

Seagate bought the Fremont property—11 of the 31 acres have not been developed—in 2013 for $90.3M. The site is adjacent to Interstate 880.

In 2016, Seagate undertook at $200M renovation of the Fremont campus, upgrading clean rooms, labs, heavy power and MEP infrastructure.

According to the Business Times, Seagate began consolidating its Bay Area holdings before the pandemic started, selling assets in Scotts Valley in 2017 and selling a 140K SF office building in Cupertino.

Shrinking company office footprints led to negative net absorption of minus 957,311 SF in the Silicon Valley office market in Q3, the lowest since the pandemic began, according to JLL’s market report.

“Economic uncertainty and shifting work dynamics have led to a wave of negative absorption this quarter,” JLL’s report said.

Total availability has reached record highs while overall asking office rent, which had surged 8.3% since Q1 2020, is leveling off in Silicon Valley, JLL said.

On the brighter side, JLL reported that pre-lease commitments in the Silicon Valley office market total 1.2M SF. The brokerage said the pre-leasing activity would bolster office occupancy levels in the market in coming quarters.