Boston Properties Raises Its Bet on Silicon Valley With New-Office Deal
(Bloomberg) -- Boston Properties Inc. is increasing its investment in California’s Silicon Valley with a new office development that could attract some of the biggest names in technology.
The company is teaming up with San Francisco-based TMG Partners to develop Platform 16, a 1.1 million-square-foot (102,000-square-meter) urban campus in downtown San Jose that will have 16 outdoor terraces, a gym and a conference center. The three-building project is near the Diridon Station transportation hub and where Google is planning an 8 million-square-foot project with offices, retail and housing.
The venture marks a significant expansion for Boston Properties in California, where it also developed Salesforce Tower, San Francisco’s tallest skyscraper and one of the most visible symbols of the city’s skyline. The real estate investment trust is initially leasing the land from TMG and Valley Oak Partners, but next year will have the option to buy it for $134.8 million.
“Large-scale, transit-oriented sites in the Silicon Valley are in high demand and rare,” Chief Executive Officer Owen Thomas said Wednesday during the REIT’s quarterly earnings call.
Boston Properties said it plans to take ownership of Platform 16 but is in serious discussions with a partner who may take a significant stake in the property. Work on the site is expected to start in the spring, and the project may be finished as early as 2021.
Shares of the Boston-based company climbed 2.8 percent to $129.87 at 2:14 p.m. in New York Wednesday. The stock has gained 8.8 percent in the past year, compared with a 0.8 percent drop in an S&P index that tracks 14 office REITs. On Tuesday, Boston Properties raised its forecast for 2019 funds from operations to $6.88 to $7.00 a share, up from its prior expectation of $6.75 to $6.92.
©2019 Bloomberg L.P.