Silicon Valley Renaissance Man Mark CalvanoOct 01, 2018
A big Mountain View office building leased by Google has been bought for nearly $170 million in a transaction that highlights the allure of owning a building whose tenant is the search giant.
LH Shoreline has bought the building at 1001 N. Shoreline Blvd. in Mountain View for $169.9 million, according to Santa Clara County property records. Public documents also show the building was leased in late 2015 to Google.
The sale price in the March 16 transaction marks a huge increase from 2017, the last year the brand-new building and the land beneath it were assessed. At that time, the site’s assessed value was $60.4 million.
“It’s partly the Google effect,” said Erik Hallgrimson, an executive managing director with Cushman & Wakefield, a commercial real estate brokerage. “But it also reflects the difference between a building leased on a long-term basis to a credit tenant versus an empty building.”
It’s also possible that Google itself might wind up buying the building from the new owner, which, according to public documents, is an affiliate of San Francisco-based Stockbridge Real Estate, a realty investment management firm. Stockbridge also owns the Bay Meadows mixed-use village that includes offices, residences and retail in San Mateo.
Mountain View-based Google has negotiated a right of first offer to purchase the building, the county records show.
“This is in the path of Google’s expansion, so it’s entirely possible that they would exercise their right at some point to buy the building,” said Craig Leiker, an executive vice president and partner with the San Jose office of Kidder Mathews, a commercial realty brokerage.
Construction crews and machinery were visible on Monday working in numerous places both inside and outside the building.
Stockbridge executives declined to comment. Calvano Development, part of the group that sold the building, didn’t respond to multiple requests for a comment about the transaction.
To buy the 133,000-square-foot building, Stockbridge obtained $110.5 million in financing from Deutsche Bank, according to a mortgage recorded with the county.
“This building is in a good location,” Hallgrimson said. “It has great freeway access. It’s an extension of Google’s Shoreline footprint.”
Google has been buying and leasing an array of buildings and development sites in Silicon Valley in recent years, with Mountain View, Sunnyvale and downtown San Jose chief among its primary areas of interest.
In downtown San Jose, Google and its development partner, Trammell Crow, have spent at least $182.1 million purchasing properties near the Diridon train station and the SAP Center.
Google has proposed a mixed-use, transit-oriented community of 6 million to 8 million square feet of offices, retail and residential developments in this section of downtown San Jose. Eventually, the development could accommodate 15,000 to 20,000 of the search titan’s employees in offices that would be integrated with local neighborhoods.
In northern Sunnyvale, Google has spent more than $1 billion buying numerous older and new buildings, along with vacant lots, in recent years. The first of the company’s development plans emerged in December, when it revealed to this news organization a proposal for a striking two-building office complex totaling 1.04 million square feet.
Near the company’s Googleplex headquarters complex in northern Mountain View, Google also has undertaken a variety of property purchases and leases, along with development and redevelopment efforts to bolster a remarkable expansion.
“There are no guarantees, but if you are buying or leasing buildings in that centralized Google area of Mountain View, you have a good chance of realizing some upside,” Leiker said.