SAN JOSE – Cisco Systems on Monday sold multiple office buildings in north San Jose to a group controlled by realty firm Divco West, according to Santa Clara County property records.
DWF V Tasman, which county documents show is an affiliate controlled by Divco West, paid Cisco $50 million for the buildings, which are near the corner of West Tasman Drive and Rio Robles Drive, adjacent to North First Street.
“These buildings are in a fantastic location,” said Dave Sandlin, an executive vice president with Colliers International, a commercial real estate firm. “They are by the light rail, right across from the Samsung campus and they are near new housing. North San Jose has a lot of the amenities that tenants are seeking all in one place.”
The transaction emerged amid the backdrop of a slew of job cuts and property sales by Cisco.
San Jose-based Cisco eliminated roughly 710 jobs in 2017, according to official notices the company has filed with state labor officials.
In the last five years, Cisco has sold numerous properties, including sales of San Jose sites to TMG Partners, Trammell Crow and South Bay Development, according to county records. The prices of these earlier transactions were not disclosed at the time of the deals.
In multiple cases, Cisco wound up exiting some office buildings that they sold to the real estate developers.
“Cisco has peeled off a lot of buildings in recent years,” said Craig Leiker, a first vice president with Kidder Mathews, a commercial realty brokerage. “They have been selling a lot of properties.”
The buildings that Cisco sold to Divco West in the most recent deal are at 10 W. Tasman Drive, 80 W. Tasman and 125 Rio Robles Drive, county records show. Property listings show that each building is slightly smaller than 105,000 square feet. Sandlin said the price per square foot was around $166.
“We continuously evaluate our long term real estate strategies which includes investing in growth, innovation and talent,” Cisco spokeswoman Robyn Blum said. “Our San Jose master plan includes investing in and ongoing review of space requirements.”
San Francisco-based Divco West declined to comment.
The buildings appeared to be largely empty on Monday, based on an inspection of the parking lots. The offices and lobbies of the buildings also appeared to have been vacated.
“Divco does a great job with these kinds of projects,” Sandlin said. “Divco got a good price on these buildings, a price that is indicative of the work that needs to be done to bring the three buildings up to market standards.”
Industry experts said that the three buildings were among the early sites once occupied by Cisco.
“Projects next door that other developers have renovated have done very well in attracting tenants,” Sandlin said.
Renovations for these kinds of older buildings have been successful in recent years.
“Divco knows this area very well, so they probably see this as a long-term value-added play,” Leiker said. “With the price they paid, they have some room to spend money on renovations. This is really a wonderful location, and there is a real push now to get companies located near mass transit.”
It also appears that Cisco’s strategy over the decades to construct an array of office buildings rather than a single gigantic campus complex has proved to be a wise one.
“Cisco built good buildings that they could exit in the future, rather than building one or two monument buildings,” Sandlin said. “This is showing that strategy has played off well.”
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