The Irvine Company just chipped off another piece of Sunnyvale.
The Newport Beach developer on Tuesday acquired the 32.5-acre Advanced Micro Devices headquarters campus, paying $175 million for one of the region’s largest infill residential plays, public records confirm.
The Newport Beach developer is not saying just yet what its plans are for the sprawling campus, which includes AMD’s 319,000-square-foot R&D and office complex. But the site is already zoned for residential and Irvine has held talks with the city about residential concepts for the land, officials said. I first reported the deal was in the works in April.
“I don’t know exactly what their schedule is or when they’ll be coming back with more information to look at,” said Trudi Ryan, Sunnyvale’s community development director. She added that the site could contain up to 830 residential units, but noted that Irvine has not submitted any formal or preliminary plans.
In a statement, Irvine Company’s Carlene Matchniff, vice president of entitlement and public affairs, said: “We are currently exploring the best use for the property and haven’t made any final decisions.”
The seller of the property at 1090 E. Duane Ave. was the real estate investment trust W.P. Carey, which acquired it in 1995 for $95 million.
Irvine did not confirm the price of the sale, which was disclosed in county tax information filed with the Recorder’s Office.
It’s another example of a storied Silicon Valley hardware maker’s real estate being sold to make way for homes — a fate that also recently befell the campuses of Spansion and Wyse.
Significantly, the deal puts in play the headquarters one of Silicon Valley’s most storied technology companies. As previously reported, the chipmaker has been seeking a new office amid the potential redevelopment of the Sunnyvale site and the impending renewal of its lease. According to a recent annual report, AMD’s Sunnyvale lease ends in 2018, with two, 10-year renewal options.
AMD has fewer employees than it did several years ago, meaning it might not need as much real estate as it currently leases in Sunnyvale. According to AMD’s 2016 business license, AMD has 559 employees in the city.
It’s possible that Irvine could satisfy that requirement. One option? Santa Clara. Irvine is under construction on five, 220,000-square-foot office towers at Santa Clara Square, a massive mixed use project at Highway 101 and Bowers Avenue that will include 1.7 million of office space, 1,800 apartments and 165,000 square feet of retail on roughly 80 acres.
Theresa Chavez, a corporate communications representative for AMD in Sunnyvale, said AMD always evaluates its real estate options as it nears lease renewals but added that “we have not made a decision” on whether to move.
AMD stock has been trading near a four-year high after reporting its first sales increase in almost two years on July 22 thanks to strength in sales to the video game industry. “While it’s too soon to call this is a ‘comeback,’ they could very well be on the cusp of one, and no one can deny they have momentum and doing for the most part, what they said they were going to do,” Patrick Moorhead, president and principal analyst of Moor Insights & Strategy, wrote in a note after last month’s earnings.
A representative for W.P. Carey didn’t immediately return a phone call on Wednesday.
The deal comes at an interesting time for the Irvine Company in Silicon Valley. Following an aggressive expansion over the last five years in both office and residential and mixed-use, Irvine may be taking a step back to digest its existing pipeline, multiple sources tell me. Irvine, which almost never sells its holdings, is still bullish on Silicon Valley. But some sources have told me they expect Irvine to do fewer new deals going forward.
Still, Irvine’s existing development pipeline is enough to keep it busy for some time. Its Santa Clara Square — whose retail component opened last month — will take years to build out. The Hamptons apartment redevelopment in Cupertino has not yet started construction. And in Sunnyvale’s Peery Park, Irvine is still moving forward with entitlements for more than 1 million square feet of office space there. (Whether Irvine builds it following approvals is unclear.)
The AMD site — which Irvine tied up quite a while ago — is another major bullet point on the list, and experts consider it an attractive site for apartments. Situated off Lawrence Expressway near Highway 101, it’s near big employment centers including Google and Apple offices. And it’s already zoned for residential, taking away much of the risk associated with buying a commercial property in hopes of converting it to housing.
Irvine is also well familiar with the area, having built Stewart Village, a 259-unit project on 8.6 acres located immediately adjacent to the AMD campus.