By Nancy Amdur
Palo Alto-based Menlo Equities plans to start construction in the next two months on a six-story build-to-suit office property for Aruba Networks, Inc. at its office campus in the 3300 block of Scott Boulevard in Santa Clara.
Sunnyvale-based Aruba, a computer networking vendor, recently confirmed plans to be acquired by Hewlett-Packard Co. and finalized a lease for about 240,000 square feet at the Scott Boulevard campus. The company will take one floor of an existing building at 3315 Scott Blvd. and five of six stories, or about 200,000 square feet, at the to-be-built property at 3335 Scott Blvd., said Henry Bullock founder and chairman of Menlo Equities.
Menlo Equities also is seeking city approval to build to the site’s maximum approved square footage. The campus is entitled for 735,000 square feet and the city’s General Plan allows it to go up to 1.3 million square feet of Class A office space, said Kevin Riley, Santa Clara’s director of planning and inspection. Buildings at the site could reach a maximum of 12 stories. The city is reviewing the company’s application and tentative parcel map.
The company wants to maximize what it can build on the property as neighboring towns of Mountain View, Cupertino and Sunnyvale have little vacancy. There is strong demand for new high-quality office space in the area—especially among companies competing for talent, Bullock said, because office space and amenities can give companies a competitive edge.
“We see the demand for our project going up pretty dramatically since there’s very little space in any of the markets immediately north of us,” he said.
Once its plans for the land is complete, Menlo Equities will decide its next step for the property. Options include doing spec construction, selling the property with the higher FAR or possibly working on another build-to-suit project, Bullock said.
Bullock also noted that growth in Santa Clara is a benefit to the Scott Boulevard campus. For instance, the Newport Beach, Calif.-based Irvine Co. is building its mixed-use Santa Clara Square project nearby at Highway 101 and Bowers Avenue. Global networking company Ericsson leased 410,000 square feet at the property.
“That [lease] just helps us with our Santa Clara campus because it makes the location that much more prominent,” Bullock said.
Also, Irvine is bringing a 125,000-square-foot shopping center and a Whole Foods Market to the neighborhood.
“It’s a big plus for tenants that are going into our complex,” Bullock said. “[Irvine] is putting in retail amenities and making that location more vital.”
Menlo Equities, in a joint venture with Beacon Capital Partners, bought the 30-acre property on Scott Boulevard in 2011 and in its first phase of development built three four-story buildings comprising 460,000 square feet. The campus is now about 95 percent leased with tenants also including technology companies Hitachi, Ltd., Akamai Technologies, Inc. and Lenovo Group Ltd. Another tech firm is expected to ink a lease for 65,000 square feet in the next couple months, Bullock said.
Menlo Equities follows a strategy of acquiring, developing and operating office, industrial and research and development properties geared toward tech companies in Western markets including Silicon Valley, Orange County, San Diego, Seattle, Portland and Phoenix.