Photo courtesy of Blue Marlin Partners
YouTube purchased the Bayhill Office Center in San Bruno on Bayhill Drive.
YouTube, one of the largest and most notable companies in San Bruno, gobbled up more office space located close to the headquarters of the Internet video streaming titan, according to a deal announced Tuesday.
YouTube purchased the Bayhill Office Center, a five-building office park close to the intersection of Interstate 380 and El Camino Real, for $215 million from Hudson Pacific Properties.
The deal, unveiled Tuesday, Jan. 19, marks the second large San Bruno property acquisition YouTube has completed in recent months, as the company spent $88 million in August to purchase twin office towers housing its company headquarters at 900 and 1000 Cherry Ave.
The Bayhill Office Center is comprised of 554,328 square feet of class A office space, which currently serves high-profile companies such as Oracle and Walmart.com, according to Alex Vouvalides, chief investment officer of Hudson Pacific Properties.
Vouvalides said his company acquired the site last year as part of a larger transaction with global investment firm the Blackstone Group, and had initially identified it as a property which company officials would like to resell.
“It’s a great project,” Vouvalides said. “But we deemed it was not strategic for the long term in the Bay Area.”
Vouvalides said typically when Hudson Pacific Properties purchases land, officials prefer the site is located near other assets owned by, or available to, the company.
In the instance of the Bayhill property, Vouvalides said Hudson Pacific did not see a chance for further nearby growth, so the company elected to sell.
“When we invest in a certain submarket, we do it with an eye to aggregating more property, and we like to have a larger presence,” said Vouvalides. “But we didn’t see it as a submarket where we were able to buy additional properties.”
Those sentiments were echoed by Victor Coleman, CEO of Hudson Pacific Properties, in a prepared statement.
“The asset was non-core to our portfolio, and we sold it at a premium to our original purchase price allocation as part of the Blackstone portfolio acquisition,” he said.
The deal took a few months to come to fruition, said Vouvalides, and transaction was completed using exclusively cash, despite the property never being placed on the open market.
Google, which owns YouTube, declined to comment on the deal.
For his part, Vouvalides praised the buyer and said the deal is representative of a growing desire for high-end office space throughout the Bay Area.
“It’s a great execution for the company,” he said. “It’s obviously a great party to do a transaction with. This just highlights the demand of tech companies for class A office space.”
YouTube has 800 workers in San Bruno, housed primary in the company’s headquarters at Cherry Avenue, making it the city’s largest private employer, according to a city report.
The sale marked the second in the area over recent months for Hudson Pacific as well, as the company sold the building housing the headquarters of Virgin American airlines in Burlingame to an international investment firm in September.
H&Q Asia Pacific purchased the Bay Park Plaza on Airport Boulevard in Burlingame for $90 million from Hudson Pacific Properties last year.
Both the Burlingame and San Bruno properties were acquired by Hudson Pacific from the Blackstone Group, said Vouvalides, in a deal which landed the company 9.2 million square feet of office space ranging throughout Silicon Valley, from San Jose to San Francisco.
And though the sales of the Burlingame and San Bruno sites come only months apart from each other, Vouvalides said the deals are unrelated.
“These two asset sales are independent, but they are similar, because the Burlingame property was less strategic too,” he said.
The Bayhill Office Center is nearly 90 percent occupied currently, said Vouvalides, and is less than half a mile away from the YouTube headquarters.
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