It’s a good time to own property leased to tech giant Google.
The Business Journal reported last month that Irvine-based healthcare real estate investment trust HCP Inc. (NYSE: HCP) entered into a profitable agreement to sell its Shoreline Technology Center, a 12-building office campus in Mountain View.
The 51.8-acre campus holds about 800,000 square feet, and is 92% occupied by Google, whose headquarters is elsewhere in the city.
HCP said in a November call with analysts that it reached a deal with an undisclosed buyer to sell the campus for $1 billion.
That’s roughly $19 million per acre, or an eye-opening $1,250 per square foot for the nonhealthcare-focused property, which HCP was trying to sell since it wasn’t part of its core base of medical offices.
In comparison, office deals exceeding $400 per square foot are a rarity in Orange County.
HCP said it would generate a profit of $700 million from the sale, making it one of the most profitable office transaction in the state this year.
The REIT said it would use the proceeds to pay down debt, and buy and develop new projects.
Shoreline “became more of a non-core suburban office asset for us that was a great piece of real estate to own, but to get the pricing that we got, and to be able to recycle that capital into more of the core markets that we’re in, made sense to us—and we’re not disclosing the buyer,” HCP Chief Financial Officer Peter Scott told analysts last month.
Silicon Valley area newspapers have since tracked down the information: it’s Google, which owns and occupies millions of square feet in the vicinity of the Mountain View campus.
The business park is entitled for more dense office development, but local news reports cited Google officials who said no plans were in the works to redevelop the Shoreline campus.
Closer to home, data from real estate tracking firm CoStar Group Inc. suggest that Google is adding more space to its main hub of local operations at the Google Center office campus on Jamboree Road in Irvine.
The five-building Google Center campus is near the intersection of Jamboree Road and MacArthur Boulevard.
The Google Center, which was previously known as the Impac Center, totals about 573,000 square feet. As of a few months ago, Google was estimated to lease about 150,000 square feet of that.
In September, I reported that the company leased another floor at the center’s 10-year-old 19520 Jamboree Road building. That lease commenced last month.
Google has since added two floors in the same building—which was initially built for the headquarters of now-defunct John Laing Homes—totaling an additional 44,000 square feet of space.
Those leases begin early next year, and will push Google’s space at the campus to nearly 200,000 square feet, according to CoStar records.
An entity controlled by billionaire Jack Dangermond—founder of digital mapping company Esri in Redlands—bought the Irvine site about two years ago for nearly $255 million, or $445 per square foot.
There’s been no indication that Dangermond wants to sell or that Google is looking to buy it.
Google’s Irvine operations are focused on “massive data storage, forecasting, inventory management, novel presentation layers, optimization, and search,” according to the company’s website, which lists about 20 job openings in the city.
Bridge Buy
Chicago-based Bridge Development Partners paid $11.2 million for a recently vacated industrial property at 3400 W. Segerstrom Ave. in Santa Ana.
Bridge paid about $200 per square foot for the building, which was last used by Behr Process Corp., a Santa Ana-based manufacturer and supplier of architectural paint and exterior wood care products that’s consolidating operations into a larger building at 1801 E. St. Andrew Place in the same city.
Behr, formed in 1947, was sold in 1999 to Taylor, Mich.-based Masco Corp., which owns a variety of home-improvement brands. Masco sold the building to Bridge Development, according to property records.
