Sun Micro complex up for grabs

Real Estate Alert, June 9, 2004

An investment partnership is shopping a Northern California office complex that is fully leased by Sun Microsystems.

The 99,000-square-foot Gateway Center consists of twin buildings at 8000-8100 Jarvis Avenue in the East Bay community of Newark. The asking price is $35 million, which would provide the buyer with an 11% initial annual yield. Sun leases both buildings until 2011, but occupies only the building at 8000 Jarvis. The lease calls for regular rent increases.

The owner, a local partnership of high net-worth investors dubbed Orchard Portfolio Partners, has negotiated a "handshake deal" with Sun allowing it to buy out its lease on 8100 Jarvis. The buyer, which would receive the payoff, would have to approve the deal. It's likely that the buyer would first try to line up a replacement tenant before severing ties with Sun.

Newark lies in the South 880 Corridor, which has had one of the stronger office markets in the Bay Area. The 3.3 million-sf submarket had a 93.8% occupancy level at the end of the first quarter (91.2% excluding sublease space), according to BT Commercial.

The low-rise offices, built in 2001, are located off Highway 84, about two miles southwest of Interstate 880.

Cornish & Carey/Oncor International has the listing. For more information call Sam Wright at 408-987-4139.