SAN JOSE — A $100 billion real estate titan has purchased an industrial building in San Jose, demonstrating that certain sectors of commercial real estate are still in demand despite the ongoing softness of the office market.
Prologis, a major player in real estate valued at over $100 billion, acquired a building located at 6212 Hellyer Avenue, as indicated by documents filed on July 20 with the Santa Clara County Recorder’s Office.
The purchase price for the building, which encompasses 111,000 square feet and occupies a 5.5-acre site, amounted to $37.7 million, according to county records.
The building, known as Silicon Valley Industrial Center, is currently leased to Varian Medical Systems, a manufacturer of medical devices and software, according to Google Maps.
In the wake of the coronavirus outbreak, numerous office buildings were vacated after government agencies implemented widespread business shutdowns to combat the spread of the deadly virus.
Even as the economic impact caused by COVID begins to recover, the return to office spaces has been uneven.
In addition, technology companies have reduced their workforce and downsized their office spaces, leading to a surge in subleased spaces.
These circumstances have reduced the demand for office spaces, resulting in increased vacancies and decreased value for many office buildings, particularly as a significant number of tech employees continue to work from home.
As a result, industrial properties in the Bay Area have become more attractive to investors.
Real estate experts believe that industrial, warehouse, and logistics properties are valuable because they accommodate businesses that require in-person work and cannot be done remotely.
As of June 2023, the assessed value of the 6212 Hellyer building was $27 million, indicating that the purchase price represents a 39.6% increase from the assessment and suggests a positive trend in the property’s value.