Walmart Pulls Silicon Valley Office Market Back from the Brink with 720,000 SQFT Lease in Sunnyvale
By The Registry Staff | The Registry | PUBLISHED: November
In a leasing deal that will likely reverberate throughout the entire Northern California commercial real estate market – and perhaps across the country – the online arm of mega-retailer Walmart is set to take over the entire 720,000-square-foot property formerly occupied by Meta in Sunnyvale. This is according to sources knowledgeable about the Silicon Valley leasing market. The building, known as Moffett Green, is located at 1395 Crossman Avenue in Sunnyvale and is owned by CommonWealth Partners.
Perhaps the most significant leasing deal in the Silicon Valley office landscape, Walmart’s expansion is happening in a region where vacancy rates have risen to nearly 20 percent.
CommonWealth Partners acquired Moffett Green in June of 2022, according to earlier reporting by The Registry, for $707 million, or roughly $983 per square foot. The property was sold by Tishman Speyer, who had previously purchased the asset from NetApp in April 2021 for $356 million. Tishman Speyer announced that it had leased the entire property to Meta just seven months later. By February of 2022, it had placed the property on the market and found a buyer two months later.
The campus houses four buildings and is situated in the Moffett Park neighborhood of Sunnyvale. It features easy accessibility across Silicon Valley and the San Francisco Peninsula, thanks to the nearby Highways 237 and 101. The campus buildings offer a comprehensive range of on-site amenities and foster an exceptional work environment, according to CommonWealth Partners’ website. Facilities include a gym equipped with lockers, cozy cafes, a basketball court, a theatre, and outdoor sports courts.
“This was a compelling investment for CommonWealth Partners, increasing our presence in this strategic, high-growth submarket of Silicon Valley to more than a million square feet in the Moffett/Sunnyvale area,” said Brett Munger, CEO and Managing Partner of CommonWealth Partners at the time of the purchase. “The acquisition of a top-quality asset in this dynamic submarket that has become a hotbed for expansion by Google, Amazon, Meta, and other high credit tech companies diversifies our portfolio’s tenant mix and reinforces our commitment to being a leading provider of high-quality office space in the region.”
Accoding to industry sources, the lease deal was completed this week. Colliers represented the tenant, Walmart, while JLL represented the landlord in the transaction.
The Silicon Valley office market is contending with a 19.8 percent vacancy rate, driven by tech layoffs and hesitations in returning to the office, states a recent report by Colliers. This has led to 1.8 million square feet of negative absorption in Q3 alone, a record number not seen since the Great Recession in 2009. Cities like Santa Clara and Mountain View have seen availability rates of 29.1 percent and 26.6 percent. However, the arrival of hybrid work schedules and fear of layoffs could potentially drive workers back to offices, improving occupancy rates.