Cannae Partners, Blue Vista Ink 146 KSF Bay Area Lease Extension

March 26, 2024

The tenant has occupied the building for more than a decade.

The joint venture of Cannae Partners and Blue Vista Capital Management has secured a long-term lease extension at a 146,159-square-foot R&D building in San Jose, Calif.

The tenant is Intermolecular, a firm that focuses on advanced materials innovation, affiliated with Germany-based science and tech company Merck KGaA. Intermolecular has fully occupied the property for well over a decade and will continue to be its sole tenant. Cushman & Wakefield negotiated on behalf of the landlord, while JLL worked on behalf of the tenant.

The one-story building at 3011 N. First St. includes 28,300 square feet of laboratory space. The asset came online in 1980 and was most recently renovated in 2013, according to CommercialEdge.

The joint venture picked up the Class B property in June 2021 for $28.9 million, the same source reveals. The buyer also assumed the outstanding balance of a CMBS loan from 2015 in the original amount of $21 million, with a maturity date in 2025. The previous owner, Sand Hill Property Co., had planned to replace the asset with a $50 million mixed-use redevelopment, according to the Silicon Valley Business Journal.

The 9-acre property is close to multiple bus and light rail stations, close to Interstate 880 and 3 miles from San Jose Mineta International Airport. The location is 6 miles from downtown San Jose, 32 miles from San Francisco International Airport and within 45 miles of downtown San Francisco.

Cushman & Wakefield Vice Chairman Todd Beatty, Executive Vice Chairman Steve Horton and Director Kelly Yoder assisted the landlord during negotiations. Intermolecular was represented by JLL Executive Vice President Bret Yerkovich and Senior Managing Director Grant Dettmer.

Increased office vacancy rates in western U.S.

U.S. office vacancy rates saw a major increase in western markets, a recent CommercialEdge report shows. The Bay Area’s office vacancy clocked in at 20.8 percent, representing a 320-basis-point rise. The region lagged San Francisco (24 percent), Seattle (22.5 percent) and Denver (22.1 percent).

One of the area’s significant office deals signed in late 2023 was Alexandria Real Estate Equities’ 99,557-square-foot long-term lease at The Alexandria Center for Life Science in San Carlos, Calif. The tenant, CARGO Therapeutics, will move into its new lab space at the campus’ 276,945-square-foot Building 2.