Super Micro Computer pays $80M for former Fry’s HQ in San Jose

Super Micro Computer has paid $80 million for the former headquarters of Fry’s Electronics in North San Jose, approved for redevelopment into a 1.9 million-square-foot office campus.

The locally based tech firm purchased the Mayan-themed building at 550 East Brokaw Road, the San Jose Mercury News reported. The seller was Caracol Property Owner, an affiliate of Campbell-based Bay West Development.

Super Micro Computer forked out cash for the 19.7-acre property near Interstate 880 and Brokaw Road, where the company now leases a warehouse.

The maker of computer servers, storage systems and software is aware of the property’s potential makeover, according to a regulatory filing.

“The seller previously obtained, and the company is acquiring under the purchase agreement, discretionary entitlements for a potential redevelopment of the property,” the company said.

Fry’s, a San Jose-based chain of electronics big-box stores known for their thematic architecture and interior decor, opened in 1996 and closed in early 2021, a victim of online commerce. The North San Jose site was home to its corporate headquarters and a superstore modeled on a Mayan temple. The quirky chain closed 31 stores in nine states.

The property opened in 1969 as a Levi Strauss & Co. distribution center, then was occupied by Tandem Computers and Televideo Systems before it was acquired by Fry’s. 

Bay West had planned to replace it with a 3.8 million-square-foot development, which would include seven eight-story buildings wrapped by curtains of glass, with white and copper accents.

The project would also include 1.65 million square feet of parking in two nine- and 10-story garages for nearly 5,400 cars and more than 400 bicycles.

Bay West won approval to build the spec project in February last year, including 1.9 million square feet of offices in four towers. In October, Super Micro Computer leased a 124,000-square-foot warehouse at the site. The Fry’s Mayan building is 293,900 square feet. 

But facing growing office vacancies during a shift to remote work, Bay West pivoted last fall with a plan to replace the proposed offices with between 519 and 1,233 homes. 

Office vacancy across Silicon Valley reached 18.9 percent in the third quarter, according to CBRE. Office availability, which includes space on the sublease market, hit a record 27.5 percent at the end of last year, according to Savills.

Super Micro Computer, based at 980 Rock Avenue, has expanded its local footprint for years. In 2013, it bought the former newsroom building of the San Jose Mercury News on Ridder Park Drive near Brokaw Road, then replaced it with an office and research campus.

During the 12 months that ended in December, the company earned $732.4 million on revenue of $9.25 billion. Over the one-year period that ended in June 2023, the company earned $640 million on revenue of $7.12 billion.

— Dana Bartholomew

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