Alibaba arranges big lease for Silicon Valley outpost in Sunnyvale

SUNNYVALE — Alibaba Group, a China-based technology behemoth, has struck a deal for a big office building in Sunnyvale.

The e-commerce, Internet, tech and retail titan has agreed to a rental deal that will enable it to lease 166,000 square feet at 525 Almanor Ave. in Sunnyvale, according to several sources with knowledge of the transaction.

Alibaba now occupies one floor in the gleaming office building, which is near U.S. 101 and Mathilda Avenue.

“Several Chinese companies are seeking locations in Silicon Valley,” said Dave Sandlin, executive vice president with Colliers International, a commercial realty brokerage. “What’s attracting companies like Alibaba to expand here is the entrepreneurial spirit of Silicon Valley. There is no place like Silicon Valley for entrepreneurs.”

The deal was arranged through brokers from Newmark Knight Frank and CBRE.

Alibaba is in 35,000 square feet on the building, according to market research from realty brokerages. Tenants in the building have included Ooma, Riverbed and Fiserv. The building is owned by an entity controlled by Invesco Real Estate.

“This deal provides Alibaba with room for expansion without having to move,” Sandlin said.

Invesco has confirmed to multiple brokers that Alibaba will gradually expand in the building as existing leases expire or the other tenants exit. Invesco and Alibaba didn’t respond to separate requests for a comment.

“Developers are upgrading a lot of buildings in this area,” said Chad Leiker, a first vice president with Kidder Mathews, a commercial realty brokerage. “You have the big project nearby that Irvine is doing. That’s attracted Proofpoint as a tenant. A lot of the buildings here are old and they are being replaced by new buildings.”

These kinds of alternatives can be attractive to tenants in a section of Silicon Valley that’s dominated by mega deals and property purchases being completed by tech behemoths such as Google, Apple, Facebook and Amazon.

The location also has the advantage of being close to the tech hotbeds of Mountain View and Palo Alto.

“Tenants in this part of Sunnyvale can be considered to be on the Peninsula but they don’t have to pay Mountain View rents,” Sandlin.

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