SAN JOSE — A $100 billion real estate titan has bought an industrial building in San Jose in a deal that shows some segments of commercial real estate remain in favor despite ongoing softness for the office market.
Prologis, a major real estate player with a market value that tops $100 billion, has bought a building at 6212 Hellyer Avenue, according to documents filed on July 20 with the Santa Clara County Recorder’s Office.
The company paid $37.7 million for the building, the county records show.
The building, which totals 111,000 square feet, is known as Silicon Valley Industrial Center. The building occupies a 5.5-acre site.
Varian Medical Systems, a producer of medical devices and software, is listed as the building’s tenant, according to Google Maps.
In the aftermath of the coronavirus outbreak, countless office buildings emptied out after government agencies imposed wide-ranging business shutdowns to help curb the spread of the deadly bug.
Even after the economic ailments unleashed by COVID have begun to heal, the return to the office has proceeded at an uneven pace.
Plus, tech companies have chopped jobs and trimmed their office footprints, putting big chunks of space up for sublease.
These outcomes diminished the need for office space, caused vacancies to swell and eroded the value of numerous office buildings, especially with a considerable number of tech employees still working from home.
As a result, industrial properties in the Bay Area have gained favor with investors.
Real estate experts reason that industrial, warehouse and logistics properties are valuable because they accommodate companies whose work must be done in person and not remotely.
In the case of the 6212 Hellyer building, the property’s assessed value was $27 million as of the end of June 2023.
This means the purchase price is 39.6% above the assessment, an indication that the property’s value is on an upward trajectory.
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