Four Tenants Lease 358,000 SF From CarrAmerica

SAN JOSE, CA-AT&T, Covad Communications, Proxim Networks and Trimble Navigation have inked lease deals in Silicon Valley properties owned by CarrAmerica Realty, a Washington, DC-based public REIT. Three of the deals were in San Jose and the fourth was in Sunnyvale. Combined, they total 358,000 sf.In the most recent deal, which was signed this week, publicly held Trimble Navigation Ltd. leased 160,000 sf, 138,874 sf at Oakmead West and 21,032 sf at Sunnyvale Technology Center, taking both properties to 100% occupancy. Trimble Navigation is expected to occupy its new headquarters space starting in the fourth quarter of 2005. Lease rates at Oakmead West are in the mid $20s per sf per year on average, according to the company‘s most recent annual report. At Sunnyvale Technology Center, lease rates are in the mid teens on average.In San Jose, AT&T signed a 10-year lease for a 76,000-sf building at CarrAmerica’s Corporate Technology Center (400 Holger Way), where the average lease rates are in the mid teens per sf per year. CarrAmerica’s Christopher Peatross tells GlobeSt.com that CarrAmerica acquired the 500,000-sf, multi-building development last year at 45% occupancy. The AT&T lease takes occupancy to 77% and bumps its GAAP yield to 9.8%, says Peatross. “We bought it right,” says Peatross. Also in San Jose, Covad Communications expanded its leasehold from 28,000 to 75,000 sf at Rio Robles Technology Park, where the average lease rate is in the high $12 range, and Proxim Networks has signed a lease for 74,979 sf at Bayshore Centre, a 95,000-sf building that was vacant. Although new leases still have lower rates than expiring leases, Peatross says the gap is beginning to narrow. “Good space in the Silicon Valley has been renting at historically low rates,” says Peatross. “We are now starting to see a distinction between class A space in the Silicon Valley and the more commodity space.” The brokers in the deals included Ron Kilby of CB Richard Ellis, who represented AT&T, and Gregg von Thaden and Don Reimann of Colliers International, who represented CarrAmerica; Scott Churchley and Sharon Barrett of Liberty Greenfield, who represented Covad Communications, and Mike Rosendin and Craig Fordyce of Colliers, who represented CarrAmerica, and; Bill Baldwin of Liberty Greenfield and John McMahon of Colliers International, who both represented Trimble Navigation.In Northern California, CarrAmerica owns interests in 85 office and R&D buildings containing approximately 6.3 million sf. Nationwide, CarrAmerica owns 290 operating office properties totaling approximately 27 million sf.