Hines Picks Up Silicon Valley Office Building for $68M

5301 Patrick Henry Drive. Image via Google Street View

Hines has snapped up an office building in Santa Clara, Calif., marking another significant Silicon Valley office deal even as most workplaces sit empty. Said by multiple sources to have been leased to Apple since 2015, the 127,000-square-foot property at 5301 Patrick Henry Drive changed hands for $68 million, according to Santa Clara County records. 

The purchasing entity, HGIT Patrick Henry LLC, shares an address with Hines’ global headquarters in Houston. The seller, Crown Realty & Development, acquired the one-story property for $60.5 million in May 2016, according to CommercialEdge records.

The Mercury News reported in mid-2015 that Apple had agreed to lease the entire building along with a neighboring office property at 5440 Patrick Henry Drive. The space, totaling 318,000 square feet, would house up to 1,600 employees of the Cupertino, Calif.-based tech firm.

Built in 1982, the property was acquired by a consortium led by Insight Realty in December 2014 and underwent cosmetic renovations the following year. The building is located on a 6.9-acre site just south of State Route 237 and about 1 mile from Levi’s Stadium, the home venue of the NFL’s San Francisco 49ers.

Hines boosted its presence in Santa Clara last August, when Hines Global Income Trust, a REIT sponsored by the global property investor, acquired the sprawling Advanced Manufacturing Portfolio for $107.1 million. The four-building, 417,000-square-foot asset provides light manufacturing and R&D space near the intersection of Montague Expressway and Laurelwood Road.

Tech hub thaws

Santa Clara, a city of some 130,000 people within the San Jose metro area, is home to a cluster of major technology firms including Applied Materials, Intel and AMD. The region’s office properties continue to lure investors, despite a coronavirus-induced crisis which has led to historically low physical occupancy. Just 15.4 percent of the San Jose metro’s offices were occupied as of last week, according to access control data from Kastle Systems.

Last November, a South Korean investment group scooped up North First, a three-building, 317,612-square-foot office and R&D campus in San Jose for $160 million. The property forms part of Cisco’s global headquarters.

In the same month, Lane Partners purchased the six-building office and R&D campus serving as Fujitsu’s regional headquarters in nearby Sunnyvale. The property sold for $104 million as part of the Japanese firm’s phased relocation to a neighboring facility it owns.

In a recent report, CBRE ranked San Jose as the number one metro area in the U.S. for office development opportunity, bolstered by the city’s robust supply growth and absorption. The brokerage expects the city to have the fastest-growing economy following the current downturn, owing to its massive tech ecosystem, and noted that San Jose has strong preleasing of office buildings under construction at 62 percent.