Tricon Developments Bayside property is a 95,372 gross square foot office
development situated in the foothills of Kayla Park, California, a prized location for companies servicing high tech firms in Silicon Valley. The office space is situated within a desirable large-‐scale business community, where a number of other services and amenities are conveniently available for office workers in the area. As the construction of the Bayside office development has been completed nearly one year ago, the leasing team has struggled to sign on new tenants in a skeptical market, where only 38% of the building has been leased out to date. This is likely due to the cooling market, where potential tenants have become elusive, and where the recent tragedy that had occurred on September 11, 2001 shocked the system into a new set of values and priorities.
The Bayside office building offers an efficiency ratio of 86%, which translates
into a rentable area of 82,020 square feet (95,372 sq. ft. * 86%). Through a variety of sourcing materials, information regarding the nearby competitors has been obtained. These reports indicate that 700 Hillsborough Road, which is considered a prime location, is a 220,000 sq. ft. site offering 180,000 sq. ft. of rentable space. Another competitive property, Scott Plaza, located at Hillsborough and Highway 101, offers a 66,000 sq. ft. site, with a rentable space of 52,800 sq. ft. We felt that these sites were good comparisons for our Bayside property as they offered similar qualities to our site, and were in close proximity to the subject.
When looking at the lease rate at Bayside, we can see an average rate of
$33.16 per sq. ft. across the six current tenants. This figure is several dollars higher
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Case #2 – Bayside REAL*4830
Feb 3, 2015 Winter 2015
than the competing 700 Hillsborough Road, and Scott Plaza properties, which have a $31.00 per sq. ft. and $27.75 per sq. ft. rental rate respectively. The higher rental rate that is charged at Bayside can be attributed to being one of the newest buildings in the immediate market, offering tenants a high quality space in a well-‐situated environment. As a reputable developer, Tricon has earned its name as a desirable landlord, offering its tenants high quality support and services, which may rectify the higher rental rates that are imposed.
The occupancy rate at 700 Hillsborough Road is only 29%, whereas Scott
Plaza was seeing a 62% in total lease up space. The higher lease up space at Scott Plaza could be
