SFF Realty Partners Buys The Almaden Office Campus in Downtown San Jose From KBS for $82 Million

SAN JOSE, Calif. — SFF Realty Partners has acquired The Almaden, a three-building, 416,126-square-foot Class A office campus in downtown San Jose, from KBS Real Estate Investment Trust III, Inc., KBS announced Oct. 8. The sale price was $82 million, or approximately $197 per square foot, paid in cash.

KBS characterized the transaction as the largest multi-tenant office trade in San Jose since the onset of the pandemic. Newmark represented KBS in the sale. The Almaden was owned by KBS Real Estate Investment Trust III, Inc., an affiliated KBS real estate investment trust, and was acquired by an affiliate of SFF Realty Partners.

The Almaden Office Campus: Property Details

The Almaden comprises three office buildings and a 1,264-space parking structure in downtown San Jose's SoFA District. The campus is located at 1 Almaden Blvd., 55 Almaden Blvd. and 99 Almaden Blvd.; KBS identifies the property at 55 Almaden Blvd. The buildings were constructed in 1981.

The property is anchored by Zoom Communications' global headquarters, which occupies approximately 25% of the campus.

Pricing and Ownership History

At $82 million, the sale price works out to roughly $197 per square foot. KBS acquired the campus in 2015 for approximately $150 million, or about $360 per square foot. The sale price is roughly 45% below that 2015 purchase price in total dollars, before accounting for later capital spending.

KBS said the campus benefited from more than $49 million in capital improvements during its ownership. The price also represents a discount of about 54.7% to the property's $181.1 million estimated value as of January, according to assessor data. At about $197 per square foot, the campus traded roughly 42% below the third-quarter Silicon Valley average office price.

KBS and Newmark Comment on the Sale

Giovanni Cordoves, KBS' Western regional president, said the transaction reflects the firm's disciplined portfolio management approach and its continued commitment to Silicon Valley. "San Jose remains a market where we see durable, long-term value," Cordoves said. He pointed to recent leasing success at nearby Ten Almaden, including a long-term lease with a well-known law firm, as a demonstration of KBS' continued presence in the submarket.

Tim Helgeson, senior vice president and investment manager for The Almaden at KBS, said the sale reflects proactive asset management and significant investment in the property. "The campus benefited from more than $49 million in capital improvements during our ownership, helping maintain the property's competitive position in the market," Helgeson said.

Newmark President of Western Capital Markets and Executive Vice Chairman Steven Golubchik, Vice Chairman Edmund Najera and Senior Managing Director Darren Hollak represented KBS in the transaction. "Investors continue to prioritize campuses with a stable, creditworthy tenant base as Silicon Valley's office market moves through its recovery," Golubchik said. "The Almaden's long-term anchor tenant and well-maintained campus made it a compelling opportunity in today's environment."

Greenberg Traurig LLP attorneys Bruce Fischer and Howard Chu, along with paralegal Amanda Kennedy, represented KBS in the disposition. Fischer, chair of the firm's West Coast practice, said the transaction required careful coordination among the parties.

Silicon Valley Office Market Backdrop

According to Newmark Research, year-to-date net absorption in Silicon Valley surpassed 1.3 million square feet, marking the market's seventh consecutive quarter of positive absorption. Vacancy declined to 15.2%. First-half lease volume reached its highest level since 2018, and gross absorption exceeded 3.1 million square feet for a second consecutive quarter.

Kidder Mathews data places third-quarter Silicon Valley vacancy at 15.9%, down from 16.2% in the second quarter and 17.5% a year earlier. The differing figures likely reflect differences in geography, inventory definitions and measurement periods.

The sale shows improving leasing demand coinciding with office valuations that remain well below earlier levels. Vacancy in the market remains above pre-pandemic norms, and the pricing of The Almaden provides a benchmark of about $197 per square foot for a downtown San Jose office campus.

About KBS

KBS is a private equity real estate firm and SEC-registered investment adviser founded in 1992 by Peter Bren and Chuck Schreiber. The firm and its affiliated companies have completed more than $45.9 billion in transactional activity on behalf of private and institutional investors and have invested in nearly 1,700 multifamily, industrial, office and retail assets.

Sources

• KBS, "KBS Announces Sale of The Almaden in Downtown San Jose": https://kbs.com/insights/kbs-announces-sale-of-the-almaden-in-downtown-san-jose/
• Newmark Research, Silicon Valley market reports: https://www.nmrk.com/insights/market-report/silicon-valley-market-reports