Federal Realty Locks In Serious Profit on Mountain View Retail Center

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The Los Altos School District purchased approximately one third of the 33-acre San Antonio Center, located in Mountain View. The retail destination houses such national chains as Kohls, 24 Hour Fitness, and Jo-Ann, as well as numerous local merchants.

The property changed hands under threat of condemnation, with LASD paying $155M to acquire the 11.7 acre parcel from Federal Realty Investment Trust. To put this purchase in perspective, Federal Realty acquired the entire 33-acre property in 2015 – just four years ago – for $62.2 million.  To sell a third of the site for 2.5 times the original purchase price demonstrates the powerful forces at work in the technology-driven Silicon Valley real estate markets.

“We paid $62 million for the entire 33-acre shopping center at about a 6 cap four years ago. Please let that sink in, in terms of what that says about the implied land value and tech-centric Silicon Valley,” commented Donald Wood, CEO of Federal Realty Investment Trust. Wood made this statement during the company’s 2nd quarter earnings conference on August 2, 2019.

The San Antonio Center enjoyed 97% occupancy, housing more than 30 tenants. Several of these tenants, including Kohls, will be displaced as part of the transaction. A total of five parcels are impacted, including 435 San Antonio Road, 2535 California St., 350 Showers Drive, 506 Showers Drive and 510-520 Showers Drive.

Image via Google Maps

Impacted tenants will vacate approximately 190,000 square feet of space, and will receive condemnation awards out of the proceeds paid to Federal Realty. According to the LASD Board of Trustees, the school system plans to build public school on the site, which will include academic buildings, sports facilities, playground and recreational space, and a 2-acre community park.

While the torrent of tech development has long been understood to be the driver of housing constraints in Silicon Valley area, what often gets left out of the conversation is the additional needs to support growing populations – including schools. The expansion of LASD is to meet current and anticipated future needs as the tech giants continue to expand throughout the area.

Let my team at Keystone Realtors® meet all your real estate needs. We can help you find the perfect investment property to get started, and provide advice on your investing journey. Paul Phangureh has over 16 years of experience in buying and selling in the Santa Clara and San Mateo County areas, specializing in the high-end, luxury market, as well as commercial and multi-use real estate. We can help you navigate the process of getting started with real estate investment. Visit our website at Keystonesv.com for listings and information. You can contact Paul at 650-924-2544, or email at paul@keystonesv.com.