Social media giant LinkedIn may have landed a buyer for an office building near its Silicon Valley headquarters, but the price tag underscores dwindling valuations and a depressed sales climate that has now spread to the tech-concentrated area.
The Microsoft-owned company sold its property at 880-888 W. Maude Ave. for $23 million, according to documents filed with the Santa Clara County Recorder’s Office, slightly above the $22.4 million that LinkedIn paid for the Sunnyvale, California, building in late 2015. The deal shakes out to about $562 per square foot for the nearly 41,000-square-foot property, less than half what other high-end Silicon Valley office transactions have commanded in recent years.
IHealth Labs, a San Jose-based healthcare management company, was the buyer in the deal with LinkedIn. Neither iHealth nor the social media company responded to CoStar News' requests for comment.
Silicon Valley has been largely insulated from some of the challenges plaguing nearby markets such as San Francisco. However, a worrisome combination of widespread layoffs, depressed leasing activity and overall economic uncertainty has spooked potential buyers.
Investors have collectively spent less than $169 million to acquire properties in the Sunnyvale area over the past year, according to CoStar data, far below the nearly $445 million reported over the same period a year ago.
For the West Maude Avenue building, the price in the LinkedIn disposition means it has only risen about 2.7% in value since the social media company acquired it, missing out on the tech boom that bolstered Silicon Valley's property valuations up until earlier this year. LinkedIn itself purchased its Sunnyvale headquarters nearby at at 950, 1000 and 1020 W. Maude Ave. in mid-2021 for $323 million, or just shy of $1,123 a square foot.
To be clear, the property LinkedIn sold to iHealth is significantly smaller, older and includes few — if any — amenities, all of which play a leading role in price determination. Even so, the property was assessed for $25 million as recently as July 2022, according to county property records, another indicator that valuations across the Silicon Valley area are finally softening under the macro-economic pressure.
Transaction volume across the San Jose market, which includes Silicon Valley's top-tier suburbs, has slowed as investors contend with rising interest rates and the threat of a recession, according to CoStar analysis. At the start of the month, about $1.4 billion worth of sales among flex properties in the region closed over the past year, about half of the average annual sales volume over the past five years.
Even with the sale, LinkedIn still maintains a significant foothold in Silicon Valley.
In addition to its headquarters, the company owns or leases roughly 1.8 million square feet of office space throughout the Bay Area, much of which is concentrated around Sunnyvale.