Historic Creative Office Building Located in Downtown San Jose 325 SOUTH 1ST STREET SAN JOSE, CA INVESTMENT SUMMARY 1
THE OFFERING CBRE Capital Markets, as exclusive advisor, is pleased to present the outstanding opportunity to acquire the fee simple interest in 325 SoFA ( the Property ), a boutique, multi-tenant historic creative office building located at 325 South 1st Street in downtown San Jose, California. Constructed in 1927, the 31,023 square foot building is 100% leased to five office tenants and two retail tenants at contract rents that are on average approximately 31% below today s market rents. The offering is being made un-priced and on an as-is, where-is basis. OFFERING SUMMARY Property 325 SoFA Address 325 South 1st Street San Jose, CA 95113 APN 264-29-058 In-Place Rentable Area 31,023 Square Feet Re-Measured Rentable Area 35,270 Square Feet Year Built 1927 Year Renovated 1999 Floors 4 Floors (Plus Lower Level) Land Area 0.19 Acres % Leased 100% # of Tenants 5 Office / 2 Retail Typical Floorplate Size 7,100 Square Feet INVESTMENT HIGHLIGHTS HIGHLY DESIRABLE SoFA LOCATION IN DOWNTOWN SAN JOSE WITH NEARBY ACCESS TO MASS TRANSIT 325 SoFA is located in the SoFA district (South of First Area) of downtown San Jose, a vibrant area centered on South 1st Street with an abundance of creative office buildings, residences, restaurants, retailers, art and cultural institutions, and hotels. The San Jose State University campus, which boasts an enrollment of over 32,000 students, is located just three blocks from the Property, adding to the vibrancy of the area. 2
The Property has excellent accessibility to the Valley Transportation Authority (VTA) Light Rail system via the Convention Center station located 1.5 blocks away (3-minute walk) on San Carlos Street. o o o The VTA Light Rail offers a connection today to Diridon Station, providing a connection to Caltrain. The VTA Light Rail will also offer a direct connection to both future downtown San Jose BART stations at Diridon and on Santa Clara Street, which are expected to begin service in 2025. Diridon Station is located less than a mile from the Property and is served by Caltrain, Amtrak and the Altamont Corridor Express (ACE). Diridon Station will be the future terminus of the first phase of the California High Speed Rail, connecting downtown San Jose to Fresno. 3
DOWNTOWN SAN JOSE S URBAN REVITALIZATION New residential multi-family development has amplified activity drawing new residents, restaurants, nightlife and amenities to downtown San Jose. Since 2000, nearly 3,800 new multifamily units have been delivered in downtown San Jose and nearly 60% of those have been completed in the last two years. 7. Museum Place 306 Units Tech Museum City National Civic W SAN CARLOS ST Plaza de Cesar Chavez 1. 360 Residences 213 Units Fairmont San Jose 8. 150 S 2nd Street 399 Units 9. Valley Title 1,000 Units 120 Room Hotel 36,000 SF Retail 5. The Graduate 260 Units E SAN CARLOS ST There are over 3,700 units currently under construction, and another 8,400 planned, further transforming downtown San Jose into a live/work/ play urban center. San Jose McEnery Convention Center S MARKET ST S 1ST ST W SAN SALVADOR ST S 2ND ST In addition to residential projects, there are several commercial developments in the under construction or planning phases including several new hotels and retail spaces. 3. The Flats at Balbach 101 Units 6. Gateway Tower 292 Units 4 There are also new proposed office developments, the most notable include Adobe s 600,000 square foot high-rise addition to their downtown campus and Google s 6 to 8 million square foot Diridon Station area development. Additional office developments are planned but are unlikely to be constructed on a speculative basis. Completed Under Construction 2. The Pierce 232 Units 4. Sparq Apartments 105 Units
1. 360 Residences 5. The Graduate 213 Units / 23 Stories Completed 2008 (330 S 2nd) 260 Units / 19 Stories Under Construction 2. The Pierce 6. Gateway Tower 232 Units / 7 Stories Completed 2016 3. The Flats at Balbach (501 S Market) 292 Units / 25 Stories 7. Museum Place 101 Units / 4 Stories Under Construction 306 Units / 24 Stories 4. Sparq Apartments 8. 150 S 2nd Street 105 Units / 7 Stories Under Construction 399 Units / 23 Stories 9. Valley Title 1,000 Units 120 Room Hotel 36,000 SF Retail 5
N. 2ND ST N. MARKET ST N. 1ST ST FUTURE DOWNTOWN SAN JOSE BART STATION DIRIDON STATION AREA PLAN SAP CENTER 87 E. SANTA CLARA ST E. SAN FERNANDO ST S. 1ST ST DIRIDON STATION AREA PLAN PARK AVE W. SAN CARLOS ST DIRIDON BART STATION GOOGLE S TRANSFORMATIONAL PLANNED EXPANSION INTO DOWNTOWN SAN JOSE Since the end of 2016, Google and its development partner, Trammell Crow, have acquired several parcels in the central zone of the Diridon Station Area. In June 2017, the city of San Jose City Council voted to enter into exclusive negotiations with Google to sell City owned sites near the Diridon Caltrain Station. At the beginning of 2018 the city of San Jose and Google reached an agreement on pricing for nine of the parcels that total 6.5 acres demonstrating the continuation of Google s expansion in downtown. Google s planned expansion will transform downtown San Jose, as they are reportedly considering between 6 and 8 million square feet of new mixed-use, transit-oriented development in the 240 acres surrounding the transit station. 6 This development could support more than 20,000 new employees downtown, and the positive impact of Google entering the market will permanently change the downtown San Jose office market.
ACCELERATING TECHNOLOGY TENANT MIGRATION TO DOWNTOWN SAN JOSE Tech Tenants TECH TENANT MIGRATION TO DOWNTOWN SAN JOSE 200 180 160 140 120 100 80 60 40 20 0 49% Growth Since 2014 177 119 2014 2017 Consistent with other downtown technology markets, San Jose has seen an increase in tech workers living downtown. Tech tenants are finding urban centers more appealing because of their work, live, play environment. As companies seek to locate near sources of potential labor, there has been an acceleration of technology companies leasing space downtown. In the last 3 years, downtown San Jose witnessed a 49% increase in the number of technology tenants, which now totals 177 different companies. This migration has contributed to the 500,000+ square feet of positive net absorption in downtown San Jose over the last four years, while asking rents have simultaneously increased 55%. AVERAGE ASKING RENTS IN DOWNTOWN SAN JOSE $4.00 55% Growth Since Q1 2014 $3.64 $3.87 Average Asking Rents $3.50 $3.00 $2.50 $2.00 $2.50 $2.70 $3.24 $1.50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2015 2016 2017 7
HISTORIC CREATIVE OFFICE BUILDING WITH MILLS ACT PROPERTY TAX RELIEF AND NEAR-TERM UPSIDE Built in 1927, the Building is one of only three buildings remaining in San Jose with a terra cotta-clad façade. Originally known as The Dohrmann Building, the Property is on the National Register of Historic Places and is a San Jose City Landmark. The reinforced concrete frame and wood joist construction offers excellent open floor plans with exemplary creative office build-outs, as well as high-image ground floor retail suites. 12 ceiling heights and massive floor-to-ceiling length windows on floors two through four provide abundant light to the interior space. The Property benefits from the property tax relief afforded by the Mills Act contract, which transfers to a new property owner. Currently 100% leased, the building s in-place contract rents are over 32% below today s market rents, offering upside in net income as leases roll to market. 8
A Listing From CBRE Capital Markets Office West, Led By: INVESTMENT CONTACTS SCOTT J. PROSSER Executive Vice President +1 408 453 7454 scott.prosser@cbre.com Lic. 01104754 JOE MORIARTY Executive Vice President +1 408 453 7480 joseph.moriarty@cbre.com Lic. 01224328 JACK DEPUY Vice President +1 408 453 7466 jack.depuy@cbre.com Lic. 01796176 TYLER MEYERDIRK Senior Vice President +1 415 772 0342 tyler.meyerdirk@cbre.com Lic. 01760166 RUSSELL INGRUM Vice Chairman +1 415 772 0103 russell.ingrum@cbre.com Lic. 01921454 SETH MCKINNON First Vice President +1 415 772 0165 seth.mckinnon@cbre.com Lic. 01842050 DEBT AND STRUCTURED FINANCE CONTACTS BRAD ZAMPA Executive Vice President +1 415 772 0225 brad.zampa@cbre.com Lic. 01174366 MICHAEL WALKER Senior Vice President +1 415 772 0278 michael.l.walker@cbre.com Lic. 01843658 LOCAL MARKET LEASING VINCENT MACHADO Senior Vice President +1 408 453 7411 vince.machado@cbre.com Lic. 01317553 CAPITAL MARKETS OFFICE WESTERN U.S. BAY AREA Scott J. Prosser Joe Moriarty Russell Ingrum Tyler Meyerdirk Jack DePuy Seth McKinnon DENVER Tim Richey Mike Winn Chad Flynn LA/OC COUNTIES Todd Tydlaska Sean Sullivan Mike Longo Anthony DeLorenzo PHOENIX Barry Gabel PORTLAND Trevor Kafoury Charles Safley SEATTLE Tom Pehl Lou Senini SAN DIEGO Louay Alsadek Hunter Rowe DEBT & STRUCTURED FINANCE Brad Zampa Michael Walker Brady O Donnell Val Achtemeier Bruce Francis Mark McGovern 2018 CBRE, Inc. All rights reserved. This information has been obtained from sources believed reliable, but has not been verified for accuracy or completeness. Any projections, opinions, or estimates are subject to uncertainty. The information may not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property and verify all information. Any reliance on this information is solely at your own risk. CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of 9their respective owners. Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited.