Sutter Health Eyes Huge Santa Clara Lease in Boost for Office Market
Sutter Health has struck a deal to lease a huge amount of office space at a high-profile Santa Clara campus in a deal that bolsters the Bay Area’s wobbly commercial property sector.
The health services titan has agreed to lease three buildings in Mission Technology Park, a four-building office complex in Santa Clara that is owned by Sobrato Investments, a legendary Bay Area real estate firm.
Sutter Health is renting well over 300,000 square feet in the office buildings, according to several commercial property experts familiar with the transaction.
The buildings that Sutter Health has agreed to lease are all located on Mission College Boulevard next to California’s Great America amusement park in Santa Clara.
The three office buildings that Sutter Health is leasing total a combined 324,900 square feet, according to regulatory filings and commercial property databases.
The addresses of the buildings that Sutter Health is leasing are 2431, 2441 and 2451 Mission College Boulevard, real estate sources say.
Sutter Health intends to use the three buildings as medical office sites, according to the commercial property experts familiar with the leasing deal.
It wasn’t immediately clear when Sutter Health would be moving into the buildings. Financial terms of the lease weren’t disclosed.
What is certain is that the Sutter Health rental agreement in Santa Clara is one of the Bay Area’s largest office leases so far in 2023. Colliers, a commercial real estate firm, helped to arrange the lease, according to sources.
The 2451 Mission College building totals 136,700 square feet, the 2441 Mission College office is 103,500 square feet in size, and the 2431 Mission College office site is approximately 84,700 square feet.
Sobrato Investments, one of the Bay Area’s most savvy and successful real estate firms, had previously launched a wide-ranging renovation and upgrade of the four-building campus in recent years.
The renovation produced a dramatic modernization that greatly increased the appeal of the office complex.
The upgrade appears to be a big-time success since the four buildings have all landed tenants.
In 2022, Nvidia leased an office building totaling 102,900 square feet at 2421 Mission College Boulevard, according to a Colliers quarterly report.
The Sutter Health rental deal is a reminder of the fast-shifting office market in the Bay Area.
The coronavirus in 2020 prompted state and local government agencies to impose draconian business shutdowns to help curb the spread of the deadly bug.
The lockdowns chased countless office employees away from their workplaces. Even after the restrictions were eased, the return to the office has been uneven because many people are still choosing to work from home or remotely.
At the same time, tech companies slashed their respective appetites for office space, trimmed their property footprints and embarked on layoffs.
As a result, the medical, life sciences and healthcare industries are among the few sectors that continue to seek out office space consistently.
Sutter Health’s leasing agreement fits that trend.
What’s more, the deal by Sutter Health offers a hopeful counterpoint to the rising vacancy rates, loan defaults and empty buildings that now haunt the Bay Area office market.
