Net-leased offering in Silicon Valley

Real Estate Alert, May 19, 2004

A development partnership is shopping a net-leased office complex near San Jose that has potential for expansion.

Techfarm Plaza, a 70,000-square-foot property in Mountain View, has an asking price of $25 million. The price includes $3.3 million for an adjoining parcel of land that could support a 30,000-sf building. At the asking price, the buyer's initial annual yield would be 7%.

The two-building complex was built in 2000 by area developer Bill Marocco and venture capitalist Gordon Campbell. Techfarm, a firm fun by Campbell, leases 12,000 sf of the complex. Impac Medical Systems leases the remaining space. Both leases expire in 2007. Although the leases have renewal options, the growing tenants probably won't exercise them.

Mountain View had an 88% occupancy level at the end of the first quarter--a figure that drops to 81.4% when factoring in space available for sublease. That's up about five percentage points from a year earlier. The broader Silicon Valley area, which has an occupancy level of 87.8% (82.4% excluding sublease space), didn't experience such a recovery--with occupancy levels down slightly from a year earlier.

Cornish & Carey has the listing. For more information, call Steve Henry at 650-473-4763.