SAN JOSE — A tech company whose sales are on the rise has struck a deal to buy a big San Jose site where a Fry’s Electronics store operated for decades until it went out of business three years ago.
Super Micro Computer has agreed to pay roughly $80 million to buy the one-time site of Fry’s Electronics in North San Jose, the tech company stated in a regulatory filing on Feb. 1 with the Securities and Exchange Commission.
The tech company bought a 19.7-acre property at 550 East Brokaw Road, a choice location next to an interchange with Interstate 880.
Along with a Mayan-themed Fry’s store, the property once accommodated the consumer electronics retailer’s headquarters and warehouse. The now-defunct San Jose Sabercats Arena Football League team’s head offices were located there.
Caracol Property Owner is selling the property to Super Micro Computer. Caracol is an affiliate controlled by Bill Poland and Matthew Gingery, principal executives of Campbell-based Bay West Development.
By happenstance, in 2022, the Bay West Development affiliate landed a loan modification with an amount that topped $100 million for the 550 East Brokaw property, Santa Clara County real estate documents show. Acore Capital Mortgage provided the financing for the site.
Caracol Property Owner, the Bay West Development affiliate, obtained in August 2022 a modified loan allowing the entity to borrow up to $102.6 million, using the 550 East Brokaw property as collateral. This August 2022 mortgage was a modification of an April 2020 loan of $80.4 million, which itself was a modification of a February 2020 loan of $38 million, according to county documents.
Of note: Super Micro made it clear in the regulatory filing that the company is keeping open the possibility of the development of a tech campus at the Fry’s Electronics site.
“The seller previously obtained, and the company is acquiring under the purchase agreement, discretionary entitlements for a potential redevelopment of the property” as an office campus, the SEC filing states.
The San Jose-approved development allows for the phased construction of seven office buildings totaling about 1.92 million square feet and two parking structures totaling roughly 1.65 million square feet.
The project that has gained final approval from San Jose officials envisions the demolition of the existing store, office and warehouse structures on the property. The existing space totals 293,900 square feet, according to the purchase documents.
Super Micro is already leasing part of the Bay West Development-owned property for warehouse space.
As part of the purchase agreement, Super Micro Computer provided a $10 million deposit to the seller, the tech company stated in the SEC filing. The $10 million deposit is non-refundable except in limited circumstances, according to the regulatory documents.
Commercial real estate firms Colliers and Newmark are the brokerages that arranged the property deal, according to a sales agreement included in the SEC filing.
The location is less than a mile away and about a five-minute drive from the Super Micro primary headquarters campus at 980 Rock Ave. in San Jose, according to Google Maps.
Super Micro has been in big-time expansion mode in recent years in San Jose.
In 2013, the tech company bought the former headquarters campus of the San Jose Mercury News, which is now located in downtown San Jose. In 2018, the tech company bulldozed the newspaper’s former newsroom building.
Super Micro then embarked on a redevelopment of the former newspaper property, located on Ridder Park Drive near Brokaw Road. The redevelopment includes some new office and research buildings. The Ridder Park site is known as the company’s green computing campus.
The company is pushing forward with this purchase at a time when its sales have hopped higher but profits have drifted lower.
During the 12 months that ended in December, Super Micro earned $612.6 million on revenue of $7.39 billion. Over the one-year period that ended in June 2023, the company earned $640 million on revenue of $7.12 billion.
By purchasing the development site on East Brokaw, Super Micro gains access to a third major potential corporate and job hub in North San Jose. The sites are all within a mile of each other.
The East Brokaw property deal is slated to be completed by Feb. 9, although it’s possible the closing date could be delayed, the SEC documents show.