San Francisco real estate firm Ellis Partners has teamed up with Boston-based hedge fund Baupost Group to buy a three-building office complex in the heart of Silicon Valley, as local investors and tech companies continue prop up the Bay Area’s office market in the absence of institutional investors.
Ellis and Baupost did not disclose the purchase price for the Campus at Scott, a three-building office park consisting of 3315, 3325, and 3355 Scott Blvd. in Santa Clara that together totals more than 460,000 square feet. But industry sources with knowledge of the deal said the property sold for around $207 million, or $450 per square foot, making it one of the biggest deals in years for the county.
Still, the sale marks a significant discount from the amount involved when it last changed hands, a decade ago, at the height of the Bay Area tech boom. In 2015, New York City-based Clarion Partners paid approximately $305 million, or around $664 per square foot, for the three buildings.
Office valuations in Silicon Valley remain well below pre-pandemic levels, paving the way for a new wave of office investors to snap up properties at discounts. Across the nation, “private capital and owner-users continue to dominate the bid side, with institutions and REITs largely staying on the sidelines,” according to a CoStar market report.
Ellis Partners is one of a handful of locally based investment firms such as Presidio Bay Ventures and Flynn Holdings that have taken advantage of these lower valuations to reposition offices for what they are betting will be an imminent rebound.
Earlier this month, Apple agreed to buy a four-building campus in Sunnyvale for $365 million. Once finalized, the Mathilda Campus acquisition will be Apple’s third major Silicon Valley real estate purchase this year, boosting the company’s total investment to nearly $900 million within the past couple of months.
‘Inflection point’ for recovery
The latest deal appears to be among the largest acquisitions on record for Ellis Partners, an investment and development company that’s been active in Northern California since the early 1990s.
The firm has picked up South Bay business parks and downtown San Francisco office buildings in the last few years. Recent purchases included the 105,000-square-foot Mathilda Tech Park in Sunnyvale from Clarion Partners, which it acquired for a bargain $15.5 million, well below the $25.7 million the flex property last sold for back in 2006. Late last year, Ellis partnered with another San Francisco investor, Flynn Properties, to buy a 1929 office building at 631 Howard St. in downtown San Francisco for $39 million.
At the time, Ellis Co-founder Jim Ellis said in a press release that the city was at an “inflection point” and that renovated properties would stand to benefit greatly from what he believed would be an imminent rebound.
It’s also the latest deal between Ellis and the Baupost Group. In 2023, the duo acquired the State Bar of California headquarters building at 180 Howard St. for $54 million.
The firms described the recent office park deal in Silicon Valley as “coming at a time of significant renewed leasing activity in Silicon Valley and a national flight to quality within the office sector.” They noted that the property is “surrounded by some of the technology industry’s most recognizable and profitable companies” and that “the Campus at Scott is well-positioned to serve Silicon Valley’s next phase of growth.”
“We are thrilled to add these high-quality buildings to our growing portfolio of Silicon Valley office and research and development assets,” said Kevin Bocci, an Ellis Partners senior vice president, in a statement. “We are excited to reintroduce the project and partner with Silicon Valley companies on their real estate needs going forward.”
Big tech investments
Big tech companies, which clearly have the sense that the Silicon Valley office market is on its way back, have been moving to buy their critical corporate office spaces in recent months, seeing an opportunity to secure ownership of their campus buildings and acquire nearby properties for growth. Three of Silicon Valley’s largest employers, Microsoft, Apple and Nvidia, spent over $1.1 billion on office acquisitions in the San Jose market in the past 12 months, and another $250 million on flex buildings.
Microsoft kicked off the buying spree in September 2024 with the $350 million purchase of one of its office campuses in Mountain View. Apple has shelled out nearly $900 million in the last few months on a series of office acquisitions in and around its decades-long hometown of Cupertino, California.
Not to be outdone, AI chip-making giant Nvidia has been on a real estate expansion tear, spending about $836 million on real estate in the region since last May. The company spent $123 million in cash for a 10-building office and research park earlier this spring and, days later, plunked down another $339 million for three office buildings it already occupied on San Tomas Expressway. With its market value swelling to $3.4 trillion thanks to the AI boom, Nvidia’s latest purchases mirror a real estate buying spree the company went on last year, when it dropped a nine-figure sum to acquire most of its Santa Clara headquarters from its soon-to-be-former landlord, Preylock Holdings.
The Campus at Scott complex currently houses several notable tech tenants, with the primary occupant being semiconductor equipment giant Applied Materials. Others include autonomous vehicle technology company Plus AI and chipmaker Rivos, according to CoStar.
Ellis Partners said it’s planning upgrades to help attract tenants to the park, including amenities tied to fitness, food and outdoor areas. Santa Clara Square, a retail and restaurant hub, is within walking distance.
“Having witnessed the dynamism of the Valley ecosystem through multiple cycles, we have high conviction that providing quality and amenitized workplaces to the market in Class A settings like the Campus at Scott will continue to be a winning thesis,” said Jason Morehouse, chief investment officer with Ellis Partners.