By George Avalos
A north San Jose tech campus has just been bought by an insurance company that paid triple what the office complex traded for less than three years ago, a deal that is a reminder of how hot the technology and job markets are in Santa Clara County.
Bixby Land sold The Campus, a four-building complex at Trimble Road and Orchard Parkway, for $96 million to MCP Trimble Campus, a unit of insurance titan MetLife.
In October 2012, Bixby paid $29.5 million for what then was a dilapidated and obsolete campus that was nearly empty at the time.
"We saw that we could meet the needs of big companies that needed to expand and grow in Silicon Valley but didn't have a lot of good alternatives for space," said Bill Halford, president of Bixby Land.
Bixby Land put $20 million into a renovation and upgrade of the property, an investment that transformed the site into a sleek and modern campus. Bixby renovated the four buildings on the site.
"The project had sat virtually empty for an extended period of time and needed a complete overhaul," Halford said. "We added building exteriors, roofs, mechanical equipment, common areas, landscaping -- the works."
Three of the four buildings were vacant when Bixby took ownership, and the three buildings are now fully leased to big tenants. The fourth building was occupied by a tenant throughout the upgrade process, so the campus is now 100 percent occupied.
The tripling of the sales price is a reflection of the superheated Santa Clara County job market, which is booming. And even counting the $20 million investment that Bixby put into the project, the developer harvested twice its total investment in the complex.
Total jobs in Santa Clara County are now growing at an annual pace of 6.1 percent, best in the nation by far. And in a further reflection of the strength of the tech sector, the No. 2 region, the San Francisco-San Mateo area, is growing by 4.9 percent, according to the U.S. Bureau of Labor Statistics.
The outmoded buildings had scant prospects of attracting the flock of technology companies that had begun to scout for big blocks of space to accommodate the explosive growth of their work forces.
Plus, older buildings with few modern amenities generally would be unattractive to tech companies whose employees include numerous young and hip engineers and software experts who want state-of-the-art places to work.
It didn't take long for companies to chase after the campus, whose amenities include considerable open spaces as well as fire pits and bocce courts.
Just three months after Bixby finished its renovation, Verizon leased 136,000 square feet, taking two full buildings. Earlier this year, ASML US leased another 92,000 square feet.
"Both of these tenants wanted collaborative, open areas where their employees could meet or relax," said Rob Shannon, a senior vice president at CB Richard Ellis, a commercial realty firm that handled the leasing of the complex, which is officially named The Campus.
Bixby also is in the process of renovating a much larger complex, The Quad at Tasman, a Santa Clara development that's a short distance from Levi's Stadium. The developers believe the current expansion of the tech sector, jobs market, and commercial realty sector won't soon wane. All of that could intensify the demand for large blocks of office space.
"The office market is tightening now in Silicon Valley," Halford said. "It started in Palo Alto and Mountain View, and now has spread to Sunnyvale and Santa Clara, and we see it getting tighter in north San Jose."