A real estate investment company has agreed to pay $3.5 billion to gobble up a portfolio of more than 25 office buildings in Silicon Valley in one of the biggest property sales of 2014, the buyer announced Monday.
All told, Hudson Pacific Properties will buy 26 buildings in Santa Clara and San Mateo counties from Equity Office Properties in the portfolio sale, which totals 8.2 million square feet and equates to the combined size of eight regional shopping centers.
"West Coast markets are poised for continued growth" and regions such as Silicon Valley and other parts of the Bay Area are primary targets for Hudson, CEO Victor Coleman said.
Among the high-profile office complexes that Hudson is buying are the seven-building, 944,000-square-foot office complex in San Jose known as The Concourse, the five-building Gateway complex in San Jose that totals 612,000 square feet, and the Techmart Commerce Center in Santa Clara. Hudson also grabbed buildings in San Mateo, Redwood City, Redwood Shores, Menlo Park's Sand Hill Road district and Palo Alto.
"We like the region's strong employment and demographic trends, as well as its concentration of established and growing companies," Coleman said of Santa Clara County and the Peninsula.
The deal shows the strength of the Bay Area economy and the appetite of realty investors for buildings that are likely to attract fast-growing companies such as Google and Apple.
"Silicon Valley is one of the hottest office markets in the whole country," said Chad Leiker, a broker with Kidder Matthews, a commercial realty firm. "That is continuing. People are placing bets on this area."
That surge of interest and leasing activity won't ebb soon, experts say.
"The momentum will carry us into 2015," Leiker said. "There is still strong growth and strong demand for office space in Silicon Valley from tech companies."