Office demand has plunged except at Nvidia’s headquarters in Santa Clara — where growing demand by global investors has morphed into a bidding battle.
An unidentified foreign investor made an unsolicited nine-figure offer to buy the chip-maker’s seven-building campus at 2701 San Tomas Expressway, igniting a blockbuster bidding war, the San Francisco Standard reported, citing unidentified sources.
The seven-building, 550,000-square-foot campus is expected to fetch more than $400 million, or $727 per square foot, according to Bloomberg, which first reported the potential sale.
Newmark Group represents Los Angeles-based Preylock Holdings, owner of the property, but declined to disclose who launched the initial bid. Last month, the landlord secured $180.5 million in loans to refinance the campus headquarters.
Since then, the landlord has received multiple inquiries from would-be buyers, Steve Golubchik, executive vice chairman at Newmark, said.
“It’s easy to fixate on the global appeal of the tenant, but there isn’t a [real estate] product like this anywhere,” Golubchik told The Standard.
He said the property’s mix of data centers and advanced manufacturing and lab facilities make it more attractive than most traditional office listings.
It also has reliable juice. The City of Santa Clara owns and operates its own electric utility, Silicon Valley Power, which allows it to set its own pricing and better manage quality control.
A potential buyer would also gain possession of 2 million square feet of future development rights, Golubchik added.
Preylock bought the campus in 2017 for $109 million. Since purchasing the property, Preylock has worked with Nvidia to expand its labs. The entire seven-building campus was appraised last year at $350 million, or $636 per square foot.
Nvidia, a pioneer chipmaker for the artificial intelligence revolution whose stock price has more than quadrupled in the past year, is the sole tenant. It has a long-term lease, with six years remaining, according to Bloomberg.
The property is generating cash and will continue to do so, despite Nvidia’s flexible work-from-anywhere policy, which does not require employees work in-person, according to the Business Times.
In recent years, Nvidia has aggressively expanded its local office footprint.
Between 2018 and 2022, the company opened two new office buildings with more than 1.2 million square feet, nearby. The buildings, dubbed Voyager and Endeavor after Star Trek spaceships, are not a part of the impending sale, according to Bloomberg.
Despite a clamor for the Nvidia-leased campus, office demand has fallen during a general shift to remote work.
In December, office availability — the offices offered for direct lease or marketed for sublease — hit a record 27.5 percent in Silicon Valley, and was expected to grow this year.
— Dana Bartholomew