Office building changes hands: Foreign investor pays $90M for Virgin America headquarters

The acquisition marks the second large deal H&Q Asia Pacific has struck in Burlingame over recent months, as the firm also bought the former drive-in site at 300 Airport Blvd. in March.

The purchase of the Bay Park Plaza is part of a larger vision by H&Q Asia Pacific to revitalize the region east of Highway 101 in Burlingame, according to the company’s Managing Director Mark Hsu.

“We think there is substantial growth potential there in terms of both commercial real estate demand and a developing environment for global technology companies looking to further plug into the innovation track record of the Bay Area,” Hsu said in an email.

Burlingame is an especially attractive location for investment, due in part to the city’s proximity to San Francisco International Airport, as well as the rest of Silicon Valley, he said.

Beyond the $90 million spent to buy the Bay Park Plaza, the company invested another $10 million to further the development of a business park at the site it will call the Global Innovation Center, Ta-lin Hsu, the founder of H&Q Asia Pacific, said in a prepared statement.

“Our goal is to create a unique ecosystem to foster innovation and provide growing technology companies with access to crucial relationships and value-added services,” he said.

In all, the company has pumped nearly $150 million in investment to the Burlingame Bayfront in the past six months.

H&Q Asia Pacific spent $47.7 million to purchase the vacant 18.13 acres where the Burlingame Drive-in used to sit. The Burlingame City Council has already approved construction of four buildings, including 767,000 square feet of office and retail space on the property.

The eventual development of the drive-in site is expected to bring roughly 3,000 new jobs to Burlingame, officials have said.

Councilman Michael Brownrigg said he is thrilled to see H&Q Asia Pacific further its investment into the city.

“The fact that they are betting on Burlingame makes us very excited,” he said.

The company is known for building and developing the growth of small technology companies, which creates the types of jobs that are sustainable in San Mateo County, said Brownrigg.

Though the drive-in site sale had been long rumored, the sale of the Bay Park Plaza developed relatively quickly, according to those with intimate knowledge of the deal.

Alex Vouvalides, chief investment officer of Hudson Pacific Properties, said the company had not planned to sell the property that it had recently acquired in April, but the offer from the eventual buyer was too good to pass up.

“The offer was compelling enough to move forward with the transaction,” he said.

Virgin America occupies a majority of the Bay Park Plaza, said Vouvalides, but there some smaller, less notable companies renting space at the site as well.

He said the negotiations for the all-cash sale took about two months to come to fruition.

“The transaction highlights our ability to generate additional value from these newly acquired properties, and is another sign of the Bay Area economy’s strength,” said Victor Coleman, CEO and chairman of Hudson Pacific Properties in a prepared statement.

Brownrigg said the sale is also an indication of the economic viability of the Bayfront region of the city, which had long gone ignored by city officials as well as businesses.

But as officials express continued interest in developing a park alongside the Bayfront on a piece of property owned by the State Lands Commission, Brownrigg said a great opportunity is presented to invest in the region.

“We have big ambitions for the Bayside and it’s nice to see the private sector sharing that vision,” he said.

The development of Burlingame is not without consequences though, said Brownrigg, who noted the opportunity for acquisitions such as the Bay Park Plaza to further affect the shortage of affordable housing plaguing the city and region.

“It is not as though embracing this opportunity means we are ignorant or unconscious of the consequences,” he said. “But these are problems that can be managed or mitigated.”

austin@smdailyjournal.com

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