Trending
Menlo Equities buys Sunnyvale campus with redevelopment potential for $89M
City OK’d previous owner’s plan to redevelop campus into office and research complex more than twice its size, which new owner has option to build
Menlo Equities spent $88.5 million for a vacant, three-building campus in a formerly industrial part of Sunnyvale that’s become one of Silicon Valley’s most in-demand office submarkets in recent years.
The Menlo Park-based commercial real estate investment firm paid about $634 a square foot for the approximately 140,000-square-foot office complex at 888-894 Ross Drive. The property is near the interchange of highways 101 and 237 and campuses owned or leased by Google, according to the Mercury News, which reported details of the deal earlier.
The transaction was recorded with the Santa Clara County Clerk-Recorder’s Office on Jan. 5, and the seller was a partnership of Miramar Capital and Garrison Investment Group, which acquired the property in 2018 for about $66 million, according to Old Republic Title records. At the time, the property was fully leased to Proofpoint Inc., a cybersecurity company, which has since moved its headquarters there to newer, larger offices nearby.
The Sunnyvale City Council approved a proposal in November 2020 by Miramar to demolish the existing campus and build a pair of five-story office and research buildings totaling about 391,000 square feet as well as a parking garage in its place. The firm did not break ground on the project before it and Garrison sold the site to Menlo Equities, which typically invests in commercial properties as opposed to building them.
Yet since the Ross Drive complex changed hands in 2018, the area in which it’s located — a business district called Peery Park — has continued to garner strong interest from various tech companies. Apple signed an almost 700,000-square-foot lease in the district last May, while Meta, the company formerly known as Facebook, signed a 720,000-square-foot lease there in November.
The city approved a framework for development in Peery Park in 2016 that paved the way for up to more than 2 million square feet of new office and commercial development there, but it took about two years for all that square footage to be accounted for, the Silicon Valley Business Journal reported in 2019. That makes Menlo Equities’ latest real estate acquisition especially valuable, as the firm can either try to lease up the existing campus, which sits on about nine acres of land, or transform it into a complex more than twice the size of the existing one in an area where such redevelopment opportunities are scarce.
[The Mercury News] — Matthew Niksa