A three-building Santa Clara office campus sold for $210 million, a figure revealed by a grant deed filed Aug. 27. Buyers included Ellis Partners and Baupost Group, and the purchase price is roughly 47.7% below the assessed value of $401.9 million. The new owners paid about 31.2% less than the 2015 purchase price of $305.1 million. The campus is about 84% leased with Applied Materials as the major tenant. Stagnation in commercial real estate produced the smallest annual assessment increase in Santa Clara County since 2012, raising concerns about public revenue impacts if values soften further.
The $210 million price is roughly half, or 47.7% below, the property's assessed value of $401.9 million. The new owners paid 31.2% less than the $305.1 million that the seller, Clarion Partners, paid for the site in 2015. The deal shows that even the presence of tech company Applied Materials as a tenant doesn't guarantee immunity from the economic maladies that have come to afflict the Bay Area office market.
Declining property values have begun to show up on a widespread basis. Stagnation in commercial real estate has hobbled growth in assessed values for Santa Clara County real estate, producing the smallest rate of increase in more than a decade, a new report states. While the annual assessment roll for the county did manage to reach an all-time high of $725.7 billion, the 4.15% increase marked the slowest annual increase in combined values since 2012, the County Assessor's Office reported in recent weeks.
Property value outcomes can affect revenue for an array of public agencies. If real estate values turn soft in a region, the decline could choke a crucial revenue stream for cities, counties, regional agencies and school districts. Applied Materials, one of the world's largest and most successful semiconductor equipment makers, is the major tenant in the just-bought Santa Clara office complex, which is about 84% leased.
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