Software company Synopsys leased a 152,000-square-foot building in Sunnyvale, giving it four offices within walking distance.
Synopsys signed a long-term lease on the Class A building at 675 Almanor Avenue, Scott Athearn of Dollinger Properties, its owner and developer, told The Real Deal. While Athearn didn’t disclose details of Synopsys’ lease, two brokers who requested anonymity said the company’s term is for 15 years and that the deal closed earlier this month.
The Almanor Avenue site is across from a campus containing about 350,000 square feet of offices over three buildings that Synopsys leased at the end of 2017 and occupied in the first quarter of 2020. The company’s rental agreement on that campus runs through October 2031, according to its most recent annual report.
Elsewhere in Sunnyvale, Synopsys owns a 120,000-square-foot building that it vacated around the same time it was moving into the campus. An unidentified tenant is leasing that property through February 2031, the report said.
A Synopsys spokesperson didn’t respond to requests for comment. The company’s software is used by engineers to design and test so-called integrated circuits, colloquially known as “chips.” Despite its affinity for leasing and owning property in Sunnyvale, it keeps its headquarters in two buildings containing about 341,000 square feet at 680 and 690 East Middlefield Road in Mountain View. It’s leasing both properties through August 2030, although self-driving car company and Google spinoff Waymo agreed to sublease one of them through July 2024, according to the San Francisco Chronicle and Synopsys’ latest annual report.
The deal deepens Synopsys’ ties to Sunnyvale, where it had almost 1,600 employees in January 2021, according to the city’s latest business tax data. And it’s another notch in the belt for the city’s office property market, where some of the Bay Area’s largest tech companies have recently expanded their footprint. Meta leased a four-building, 719,000-square-foot campus near the end of last year, which property owner Tishman Speyer touted as the largest such deal by square footage in the U.S.’s private sector in 2021. Around the same time, LinkedIn agreed to rent a 175,000-square-foot Class A building for more than 15 years and spend $123 million on nearby properties that can support a new office and research complex.
Such demand has pushed average Class A asking rents in Sunnyvale to $7.15 a square foot a month, trailing only Palo Alto, Menlo Park and Mountain View, which are widely considered to be Silicon Valley’s most expensive office submarkets, according to Cushman & Wakefield data. The city’s office vacancy rate was 10.1 percent at the end of last quarter, prior to Synopsys’ lease on 675 Almanor Avenue. The deal takes a relatively large block of space off the market that had been vacant since June 2020, when construction of the building there wrapped up.
Some office developers, meantime, clearly don’t see demand for new workplaces in Sunnyvale dissipating anytime soon. Hunter Storm, the development arm of Hunter Properties, broke ground in January on a pair of Class A buildings downtown that will offer almost 600,000 square feet. The firm started construction without any signed pre-leases and expects to complete the project by late 2024, it said in a news release at the time. Harvest Properties and W.P. Carey also broke ground on a new spec office project in the city last quarter, albeit at a smaller scale, according to Cushman data. Its 141,000-square-foot Class A building is slated for completion sometime next year.
Cushman’s Steve Pace, Dan Hollingsworth and Liam Martin represented Dollinger in Synopsys’ lease of its Almanor Avenue building. Pace declined a request for comment, citing strict confidentiality. CBRE’s Brian Beswick, a portfolio advisor for Synopsys, also declined to comment.
While it’s unclear how much Synopsys is paying at the start of its lease term, the building’s asking rate was $5.50 a square foot a month, below the citywide Class A average asking rate of $7.15 a square foot.