Brookfield to buy San Jose office property for $128m

Brookfield Asset Management, a Toronto-based global alternative asset manager, has plans to acquire a downtown San Jose office property for $128 million, according to news sources. No official release has been issued.

Towers @ 2nd is a two-building complex located at 75 E. Santa Clara St. and 4 N. Second St. in downtown San Jose.

Brookfield acquired the property through its second opportunity fund, Brookfield Strategic Real Estate Partners II, a comingled real estate fund that held a $9 billion final close last year. The fund more than doubled the $4.4 billion its predecessor, Brookfield Strategic Real Estate Partners I, raised in 2013.

The seller of the property is a partnership between Invesco Real Estate and Harvest Properties, according to news sources.

During the third quarter of 2017 office leasing activity was steady in the Silicon Valley registering a total of 3 million square feet of gross absorption, according to Colliers. With the strong demand measured during the third quarter of the year, gross absorption year to date totals 9.3 million square feet in the Silicon Valley office market. In only three quarters the office market has surpassed the 7.9 million square feet of space demand measured in all of 2016.

This is also the 21st straight quarter that the office market has recorded positive net absorption, bringing the total occupancy gain in the Valley to more than 15.8 million square feet over the five-plus-year period of continued growth.

Despite the positive net absorption measured during the third quarter, the Silicon Valley office market measured an increase in vacancy. Total vacant sublease space increased from 1.7 million square feet to 2.2 million during the third quarter, a 23.1 percent increase quarter over quarter. Total available space in the Silicon Valley office market measures 10.9 million square feet. This amount of space translates to an overall availability rate of 12.2 percent, up 257 basis points from one year earlier when the availability rate stood at 9.6 percent.

Lastly, there is currently more than 5.1 million square feet of office space under construction in the Silicon Valley, with total potential development reaching more than 70 million square feet in the form of proposed developments.