KBS, one of the country’s largest investors in premier commercial real estate, recently announced the sale of a third building in its District 237 campus in North San Jose. The buyer — independent wealth and investment management firm Bailard — paid a little more than $38 million for the property at 250 Holger Way.
This transaction marks KBS’ third sale in the last four months at the campus — a significant indicator of strong demand for office space in San Jose despite the ongoing COVID-19 pandemic. Formerly known as Corporate Technology Centre, District 237 is a recently renovated Class A office park located within a 15-minute drive of the San Jose central business district. It’s also within close proximity to the San Jose Mineta International Airport.
Furthermore, the property’s location in the Highway 237 corridor presents investors with unique advantages for the region, according to Brent Carroll, asset manager for District 237 and senior vice president for KBS.
“San Jose enjoys tech spillover from the rest of Silicon Valley, including cities such as Palo Alto and Mountain View,” he said. “Tech tenants who are drawn to Silicon Valley are finding more competitive rates in this submarket, and office investors are realizing that institutional-grade assets like the buildings at District 237 can add tremendous value to their portfolio. KBS recognized how well-located District 237 is in this submarket and the potential for powerful value creation at this property. The fact that the firm has achieved this goal is evidenced in this latest sales transaction.”
Originally built in 1999 and 2001, District 237 was constructed as a total of eight single-, two- and three-story buildings, three of which were sold by KBS in 2018. Then, in June of this year, the company sold two more — 100 Headquarters Drive and 200 Holger Way — which incorporate roughly 143,000 square feet of Class A North San Jose office space. Shortly before the sale — which commanded an investment of $95 million — both office and R&D properties had been leased to U.S. defense contractor Raytheon.
“250 Holger Way is a natural fit for the portfolio, with a strong tenant base and located within a highly desirable and liquid submarket in the U.S.,” said James Pinkerton, senior vice president of acquisitions and portfolio management at Bailard. “The Bailard team is continually looking to refresh and expand its portfolio with high-quality assets and is pleased to complete the acquisition of 250 Holger Way within District 237.”