San Jose — Internet giant ByteDance, whose app includes TikTok, is considering subleasing several large office buildings on the tech campus of San Jose, according to commercial real estate sources.
High-tech companies are discussing subleasing buildings on Coleman Avenue in 1193 and 1199, according to at least five sources with controversial knowledge.
The building under consideration by ByteDance is rented to the legendary internet portal Yahoo !.
Currently, no lease agreement has been signed and there is no guarantee that the transaction will be completed.
The total number of buildings that ByteDance is aiming for is approximately 658,000 square feet.
Verizon, which acquired Yahoo in 2019 and 2017, has signed an agreement to lease the Coleman Highline building.
But in 2021, Verizon sold Yahoo to private equity firm Apollo Global Management.
Private equity firms often seek cost savings as a way to create value and efficiency in their assets and often abandon their ownership of real estate.
Attempting to withdraw from rental space through a sublease can be a tactic adopted by private equity companies to reduce operating costs for acquired companies.
China-based ByteDance has scouted several locations in Silicon Valley looking for a large new site to accommodate its South Bay business.
However, the company has tried to find a new location at this point, and although extensive, it has yet to reach a successful conclusion.
Similarly, potential trading of space on the Coleman Highline has been nearly completed, but not yet fully completed, sources said.
The three buildings that ByteDance is looking for subleasing potential were purchased in December 2021 by London-based investment firm AGCEquity Partners for $ 780 million.
At that time, the $ 780 million transaction was the largest real estate purchase in Silicon Valley in 2021. The purchase price is now about $ 1,185 per square foot. This is a very high value for an office space in the Bay Area.
Building purchases and interest in buildings on the ByteDance side continue from large investors in other sections of Silicon Valley and the Bay Area, even in the face of economic uncertainty unleashed by the coronavirus. Shows interest.
Coleman Highline has become one of Silicon Valley’s most successful high-tech campuses. The other five buildings in the complex are fully leased to the streaming service giant Roku.
Real estate experts did not know when the ByteDance sublease transaction would be completed, but some said the transaction was almost complete.