LBA Bags Bargain on San Jose Office

A Southern California investor appears to have found a bargain in San Jose’s office market.

An affiliate of Irvine-based LBA Realty has agreed to pay $18.5 million for Analog Devices’ 77,000-square-foot property at 3350 N. 1st Street, the San Jose Mercury News reported.

The deal comes to $240 per square foot — around 40 percent below its assessed value last year, according to the Santa Clara County Recorder.

LBA is a veteran commercial real estate investor with a national portfolio and a reputation for savvy buys. It paid cash for the San Jose office, according to property records.

The deal comes as office vacancy rates remain above 20 percent overall in San Jose and 15 percent or so in North San Jose — part of a larger trend dipping values throughout the larger Silicon Valley region that the city anchors. A number of large office buildings have slipped into distress in recent months, signaling ongoing difficulties.

The price of well under $300 per square foot, meanwhile, points to an ongoing reset of values in the region.

Activity does appear to be picking up, however, as indicated by chipmaker Nvidia’s recent deal with stalwart local developer and investor Sobrato for a 500,000-square-foot property in Santa Clara, just west of San Jose.

The property at 3350 N. 1st Street is part of a nearly 6-acre office center at N. 1st Street and Baypointe Drive in North San Jose, center of the city’s renowned hub for the semiconductor industry. LBA’s newly acquired building is near Intel’s San Jose Innovation Center as well as a facility that houses operations of Broadcom, another globally prominent maker of semiconductor chips.

LBA’s portfolio includes office and logistics units, and ranges from urban centers such as Downtown Los Angeles and Downtown San Francisco to suburban properties in its hometown of Irvine.

Cushman & Wakefield brokers Scott Prosser and Jack DePuy had the listing on the building for sale or lease at the time of the deal, according to a brochure from the brokerage.