SAN JOSE — A co-working company that hopes to tap the employment boom and the quest for office space in fast-growing Silicon Valley has bought a north San Jose office building where it plans to offer as-needed work spaces.
Novel Coworking this week bought a six-story office building at 2150 N. First St. in San Jose, paying $42 million for the property, according to Santa Clara County public documents filed April 3.
“San Jose’s high concentration of revolutionary companies is impressive, and north San Jose in particular is an attractive growth area,” said Bill Bennett, founder of Novel Coworking.
Acting through an affiliate, 2150 N First Novel Coworking, the Chicago-based co-working company obtained a $31.2 million loan from CLNC Credit to finance the purchase, county property documents show.
The purchase of the 124,000-square-foot building was arranged through brokers Steven Golubchik, Edmund Najera, Tyler Meyerdirk and Darren Hollak of NKF Capital Markets, a commercial real estate firm.
The office building, constructed in 1984, is perched on a key stretch of the light rail line on North First Street in a bustling section of Silicon Valley that has attracted numerous tech companies in recent years, as both buyers and tenants.
“The demolition of nearly 20 million square feet of office product in the Silicon Valley has created substantial tenant and investor demand for office product throughout the area,” Golubchik said.
In many instances, developers have bulldozed older, multi-tenant office and research buildings and replaced them with sleek new offices that cater to single big tenants that hope they can dangle the attraction of big and modern spaces with plenty of amenities to help them recruit and retain talented workers.
To be sure, the redevelopment efforts have enticed major players such as Apple, Google, Samsung and Micron Technology to gallop into north San Jose. The push to replace older buildings also has prodded other big tech companies like Amazon and Facebook to expand in multiple Silicon Valley cities, seeking large office buildings for their operations.
Still, the pivot to large buildings with single occupants has, in more than a few instances, squeezed out smaller and even mid-sized companies that have encountered a scarcity of offices for multiple tenants.
WeWork also is very active with its co-working endeavors throughout Silicon Valley and adjacent regions such as the East Bay and San Francisco.
In the 2150 N. First St. building that Novel Coworking bought, pre-leasing is under way for private offices, office suites and co-working leases, which Novel Coworking calls memberships.
“We are excited to offer local business owners and enterprise companies flexible, budget-friendly work space in one of San Jose’s strongest employment districts,” Bennett said.
