SoftBank moving into county-owned Circle Star tower

Shortly after the CEO of SoftBank reportedly bought a Woodside estate for the record-breaking price of $117.5 million, his telecom company appears poised to move into one of two county-owned office buildings in San Carlos. On Tuesday, the Board of Supervisors will consider a 75-month lease with Starburst 1, Inc., a subsidiary of SoftBank Corp., for One Circle Star Way. If approved, the agreement will rent out the entire 103,948-square-foot building and in approximately 18 months begin generating roughly $3 million annually for San Mateo County. SoftBank did not respond to an inquiry and Deputy County Manager Peggy Jensen said she could not provide any further information on the tenant. However, Board President Don Horsley confirmed Starburst 1, Inc. is a subsidiary of SoftBank although he wasn’t certain in what form the company will call the space home. Regardless of who moves in, Board President Don Horsley said of the pending occupancy "it’s about time.” Supervisor Warren Slocum said the occupancy will contribute to the local economy and add to the area’s bottom line. "I am pleased that we have attracted such an icon to San Mateo County,” Slocum said. The new tenant also means new patrons for the surrounding cities, said Supervisor Carole Groom. Supervisor Dave Pine couldn’t confirm the link between Starburst 1, Inc. and SoftBank, saying the board was kept at arms-length because of confidentiality during negotiations. However, if true, Pine said it would "be a superb tenant for the facility” and a "a real win-win for the county.” The new tenant is expected to immediately begin building improvements and fully move in by November. The county purchased One and Two Circle Star Way, two four-story office buildings plus parking, for $40 million two years ago as a way to escape pricey leases for several departments and relocate 911 dispatch. However, officials ultimately decided leasing the buildings was a more financially prudent choice, particularly because making Circle Star compliant for dispatch would cost more than constructing an entirely new building. "Leasing it out turns out to be the best deal,” Horsley said. The agreement with Starburst 1, Inc. calls for an initial monthly rent of $233,833 which will jump to $271,304.28 by year six. The lease allows a 36-month extension after the June 2019 expiration with rent adjusted to 100 percent of the prevailing market rate. Maltbie’s recommendation also calls for a broker commission of $1.3 million to Cornish & Carey Commercial Newmark Knight Frank. Maltbie estimates the county will need about 18 months to make up the costs and fees before seeing revenue of about $25,000 stream in per month. That estimate does not include repaying the purchase price, Jensen said. SoftBank’s CEO, Masayoshi Son, raised eyebrows after he was linked to the sale of a nine-acre Woodside estate on Mountain Home Road that made it the most expensive private residence on record in California and potentially the nation. Although the sale was kept hush-hush, it was alleged Son, Japan’s second-richest man, was behind the deal. Starburst I, Inc.’s pending deal with San Mateo County over Circle Star lends further weight. In October, SoftBank announced plans to acquire 70 percent of Sprint Nextel for $20.1 billion. The Board of Supervisors meets 9 a.m. Tuesday, Feb. 26 in Board Chambers, 400 County Government Center, Redwood City. michelle@smdailyjournal.com (650) 344-5200 ext. 102.