A significant transaction in the Bay Area real estate market has occurred, with the sale of a tech campus in Santa Clara for over $55 million. LBA Realty, a well-established real estate firm, completed the acquisition of the property located at the intersection of Central Expressway and De La Cruz Boulevard. The deal, finalized on November 26, 2023, underscores the challenges currently faced by the office market in the region, which has yet to recover to its pre-pandemic value levels.
The @Central campus was previously owned by an affiliate of Swift Real Estate Partners, which purchased the property for $97.6 million in 2018. This latest sale represents a significant decline in value, coming in at 43.1% below the initial purchase price. Despite extensive renovation efforts by Swift, the property struggled to attract tenants from the technology sector, leaving a substantial portion of the space available for leasing.
According to documentation filed with the Santa Clara County Recorder’s Office, the campus encompasses 298,300 square feet. The renovation included enhancements such as updated front facades and outdoor amenities designed to appeal to large single-tenant tech users. Swift Real Estate noted on its website that it initiated a large-scale renovation immediately after acquiring the property.
Despite these improvements, the demand for office space in Silicon Valley remains tepid. The marketing materials from Newmark, a commercial real estate firm, indicated that up to 92,700 square feet of the campus was still available for lease. This indicates that even with renovations, significant challenges persist in attracting substantial tech companies to the site.
The broader context reveals a struggling office market in the Bay Area and South Bay, where property values continue to decline. While there are signs of recovery in the commercial real estate sector, the office market remains particularly vulnerable. This situation places landlords in a position where they may need to offer lower rents to attract tenants seeking office and research spaces at competitive rates.
LBA Realty, the new owner of the @Central campus, is recognized for its diverse expertise across various asset classes in the commercial real estate market. The firm has shown a proactive presence in the Bay Area, suggesting they may have strategies in place to navigate the current market challenges effectively.
As the landscape continues to evolve, the recent sale reflects both the ongoing difficulties faced within the sector and the potential for future opportunities as the market stabilizes.
