Nvidia Buys Santa Clara Campus

Nvidia’s $123 million office buying binge led the Bay Area headlines this week. In another indication that artificial intelligence is pushing the local office recovery, the circuit-maker paid cash for a 10-building 13-acre office and research campus in Santa Clara across the street from its eight-building 550,000-square-foot headquarters, which it bought a year ago for $374.3 million.

In addition, just three months ago, Nvidia bought a separate 500,000-square-foot four-building campus, also in Santa Clara, for an undisclosed price. And it leased a 100,600-square-foot office and research building at 300 Holger Way, in north San Jose in December.

Nvidia makes graphics processing units, or GPUs, which are used by gaming and AI companies. Its stock price, even after a wildly uneven spring for the markets, is still up nearly 30 percent year over year.

Law firm signs big lease at SF’s One Market Plaza

In more expansion news, the New York-based law firm that advised on Elon Musk’s 2022 Twitter buy is taking 32,000 square feet at One Market Plaza. The complex is co-owned by Paramount and Blackstone, and has two high-rise towers with a six-story annex, and an 11-story historic building known as The Landmark.

News of the deal with law firm Simpson Thacher came via a Paramount Group earnings call, which did not disclose terms of the lease. It is just a fraction of the 342,000-square-foot chunk of offices in the 1.6-million-square-foot plaza recently vacated by Google, though the search giant continues to occupy space in The Landmark.

Paramount plans to add “amenity spaces” at One Market and another building it owns at One Front to draw in new tenants, Peter Brindley, head of real estate at Paramount, told investors on the earnings call. The proposed upgrades were not disclosed.

He described market conditions in San Francisco as challenging given the amount of available space in the city, but said the company had seen “a steady uptick” in leasing inquiries and office tours by would-be tenants.

Also downtown, Related California is moving ahead with plans to build a 41-story trophy office and hotel building in Jackson Square, after receiving no pushback on its environmental report from the city.

That means the $600 million project is on track for Planning Commission approval in July and could come to the Board of Supervisors for a vote in September. If it gets the green light, Related would break ground late next year or early 2027 and finish by 2030.

Plans for the 544-foot tower include 360,000 square feet of offices atop a five-star, 200-room hotel, plus a new firehouse to replace a station that will be demolished to make way for the project. It would be the first new tower in Jackson Square since 2018 and the first new five-star hotel in the city in 20 years.

$725M hotel debt in contract

In early March, The Real Deal reported that a buyer had been found for the $725 million debt on the 1,919-key Hilton San Francisco Union Square at 333 O’Farrell Street and 1,024-key Parc 55 at 55 Cyril Magnin Street.

Now the hotels are in contract, according to credit analytics firm Morningstar, almost two years after Park Hotels and Resorts stopped making payments on the commercial mortgage-backed securities loan tied to the properties. The sale is contingent upon the loan, which will be extended, being assumed by the buyer and the new owner must cover cash flow shortfalls and fund renovations, according to Morningstar, citing servicer comments.

It’s still unclear who the buyer is, what the sale price will be for the two hotels and when the deal will close. It is being brokered by Eastdil Secured, according to Morningstar.

Sean Dell’orto, former vice president of corporate finance at Hilton, signed off on the massive loan package from JPMorgan in 2016. Later that year, the global hospitality company spun off its real estate portfolio into a separate real estate investment trust, Park Hotels and Resorts, where Dell’orto now serves as CFO.

Park Hotels and Resorts was hoping to win an extension, according to its 2023 hardship letter, but talks with special servicer KeyBank fell apart and the properties were placed into a receivership. The pair of hotels ran at an operating loss of $34.1 million last year, per Morningstar. The debt went on the market last July.

A tale of two markets in Oakland

Across the bay in Oakland, the office market has been struggling, but Uptown’s amenities and outdoor appeal are drawing more interest than Downtown, experts told TRD.

Avison Young’s first-quarter office report reveals that both occupancy rates and foot traffic in the Uptown/Lake Merritt area are stronger than in the Downtown/City Center market, with Uptown showing a 13 percent higher visitation rate in March 2025 and a first-quarter vacancy rate that is nearly half of Downtown’s 38.2 percent figure.

Uptown also netted the biggest new direct lease in Oakland since the pandemic this spring, with the Veteran’s Administration signing on for nearly 80,000 square feet in the old Kaiser offices that sold to developer Behring Companies last year for just $20 per square foot.

Downtown hasn’t been able to offer the same discounted rents that new Uptown buyers with a much lower basis are able to offer since so many buildings in City Center were sold just before COVID, according to Mark McGranahan, a principal at Avison Young in the San Francisco office. Once Downtown loans start hitting their maturity dates, default and new owners take over, they’ll be able to compete again, he predicted.

“The buildings have to essentially go bankrupt. They need new capital. They need a new lender and then they can reboot and be competitive,” he said.

Lakeside Group founder Isaac Abid said his low basis and ability to put money into 180 Grand, as well as its position right on Lake Merritt, is part of what has netted him 12 leases since buying the building at a massive discount last fall.

He isn’t sure if a wave of distress is on the horizon Downtown, but said that whether borrowers and lenders arrange a workout or the buildings change hands, “you’ve got to have an ability to invest capital in office and that, I think, will happen in the next year or so.”

“The first mover advantage of 180 Grand to drop rents and meet the market, I don’t take that as a permanent state of being,” he said.

Behring Companies CEO Colin Behring said the newer vintage of the properties Uptown is part of its appeal. Downtown was already built out when the last big wave of investment came to Oakland a decade ago, he said, while Uptown had low-rise auto garages that were easily torn down and replaced with glossy, glass towers that only opened their doors in the last few years.