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REA
March 04, 2020  

San Jose Office Listing in Record Territory

A USAA Real Estate partnership is marketing a San Jose office complex that could fetch $625 million, which would be the highest amount ever paid for an office property in the city.

The property, called America Center, encompasses four Class-A office buildings and an amenities center totaling 893,000 sf. The offering also includes a land parcel with approvals for development of another 200,000 square feet of office space. The anticipated sale price would work out to roughly $700/sf.

USAA, of San Antonio, and its partner, SteelWave of Foster City, Calif., have given the listing to JLL.

The complex was developed in phases, with two office buildings completed in 2009 and two in 2018. All carry LEED gold designations.

The campus is 99% leased to 10 tenants with a weighted average remaining lease term of just over seven years. In-place rents average about 20% below market rates, according to marketing materials. Tenants include Bill.com, Hewlett Packard Enterprise and McAfee. Polycom has a lease that expires in April 2022, offering a near-term opportunity to raise rents upon rollover.

The property, at 6001-6280 America Center Drive, is in the North San Jose submarket, which has benefited from a wave of investment by technology companies. For example, Alphabet has acquired over 1.8 million sf of office properties in the area for a Google campus, which in turn is spurring development of multiple property types.

The largest single-property office deal in San Jose took place last year, when Tokyo-based Mori Trust paid $429 million, or $711/sf, for HQ at First, a 604,000-sf building at 130 Holger Way. Newmark advised the sellers, Lane Partners of Menlo Park, Calif., and Pimco of Newport Beach, Calif.