Amazon expanded its office presence in Santa Clara by 160,000 square feet, agreeing to rent an entire six-story building after taking a third of it last year.
Seattle-based Amazon leased the rest of a 246,000-square-foot office at 3075 Olcott Street, spokesperson Natalie Wolfrom told The Real Deal on Monday. Located a block from Highway 101, the building was under construction when Amazon pre-leased its top two floors prior to its completion in the fall of 2021, according to the Silicon Valley Business Journal and CoStar.
Wolfrom declined to comment on Amazon’s lease term or how many employees the company would have at the Olcott Street site. MDY Properties, the building’s owner and developer, and Cushman & Wakefield, its listing broker, declined or didn’t respond to requests for comment. The deal closed last quarter, according to reports by commercial brokerage firms Colliers and Newmark.
Amazon last year said that it planned to fill the building with employees of its consumer division and Amazon Web Services (AWS), its cloud computing arm. The company took an 85,000-square-foot chunk of the property a few months before AWS vacated 90,000 square feet of offices in East Palo Alto, although it wasn’t clear whether it would shift any of that unit’s workers to Santa Clara from the city about 15 miles north of it.
The expansion was the largest new office lease signed in Silicon Valley last quarter and Amazon’s single biggest such transaction by square footage in the region since 2018, when it took 385,000 square feet over two buildings in Sunnyvale, according to Newmark data. It and other tech companies carried the Valley’s office property market to a second straight quarter of positive net absorption. That data point comes with an asterisk: Google and LinkedIn finished a pair of projects in Mountain View totaling more than 2 million square feet combined, Newmark’s report said. Without those completions, net absorption would have been negative 390,435 square feet last quarter, the report said.
The deal also takes a large chunk of available office space off Santa Clara’s market, although the city’s vacancy rate for such properties still rose 2 percent from the previous three months, Newmark’s report said. The increase was mainly due to three subleases representing about 436,000 square feet coming on the market, Newmark data show. About 30 percent of offices in the city are empty, almost twice that of Silicon Valley’s overall vacancy rate.
Before taking 3075 Olcott Street, the last time Amazon substantially boosted its office presence in the Bay Area was in 2017 and 2018, when it agreed to rent more than 1 million square feet of offices spread across Sunnyvale, East Palo Alto and San Francisco. It had 7,000 white-collar workers in the region in 2019, making up a third of its North American workforce outside its home city of Seattle, the San Francisco Chronicle said at the time.
The company is seeking another 4,000 employees in the Bay Area, although it’s unclear how many of those would work in its offices. Amazon also is one of the region’s, and the nation’s, most active buyers and renters of industrial facilities and data centers, finishing 2021 with twice as much of its own U.S. space as it began the year.
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