Tishman Speyer Strikes One of Mountain View's Largest Office Sales in Recent Years
An unnamed buyer has swooped in to buy Tishman Speyer's 400 Castro office tower in downtown Mountain View, California, for $121.5 million.
The price comes in at $876 per square foot and is "one of the strongest pricing outcomes for a Mountain View office sale in recent years," the developer said in a statement. Eastdil Secured represented Tishman Speyer on the sale.
Since recapitalizing the 138,000-square-foot property, the internal rate of return has come out to 17.4 percent with a 1.9x equity multiple. After fees and expenses, these categories translate from 15.80 to 17 percent and 1.8x, respectively.
The asset was first developed in 2002, with Fenwick & West leasing the full space immediately. The law firm has operated at the property since.
The Class A building offers expansive roof decks, underground parking and views of the coastal mountains and San Francisco Bay. Plus, on-site retail is included, such as Peet's Coffee, Sweetgreen and a Cascal restaurant.
Importantly, Tishman noted that the area continues to benefit from the strong leasing seen in Silicon Valley thanks to the emergence of AI and tech. This trend is favoring high-quality properties.
In fact, in Savills' recent first-half report, Silicon Valley saw a robust 3 million square feet of activity in the second quarter, well above the 2 million square feet leased in the same period a year ago and the five-year quarterly average of 1.5 million square feet. Both overall rents and Class A properties enjoyed increases of 6.7 percent year-over-year in the second quarter, with pricing coming in at $5.72 and $5.92 per square foot, respectively.
"Our successful development and stewardship of 400 Castro reflects our capabilities and thoughtful, long-term approach to managing high-quality real estate that serves the evolving needs of our customers," Tishman Speyer Managing Director Maggie Kadin said in a statement.
"The transaction demonstrates continued demand for well-located, institutional-quality office assets."
Source: GlobeSt/ALM