Two office towers in North San Jose that sat empty since Qualcomm moved out have found both a buyer and a tenant in the same transaction. TMG Partners, acquiring with accounts managed by KKR, has purchased Skyport Plaza from Hudson Pacific Properties for $75.5 million, and Santa Clara County has signed on as the anchor tenant at the site.
The deal closed as Hudson Pacific Properties sold the property, according to Connect CRE, which reported the $75.5 million price tag and described Skyport Plaza as a 435,000-square-foot office and retail complex spread across addresses on Technology Drive and Skyport Drive. Yahoo Finance reported the same $75.5 million sale price but characterized Skyport Plaza as a 419,000-square-foot office property, a discrepancy that remains unresolved between the two accounts. Hudson Pacific, for its part, told Yahoo Finance the asset had been largely vacant and would have required significant capital to lease up.
The office buildings at Skyport Plaza were formerly occupied by Qualcomm and are currently 100% vacant, per Connect CRE's reporting, even as the retail portion of the complex remains fully occupied. TMG Partners has signed a 30-year lease with the County of Santa Clara for 393,000 square feet of space, according to the same report, which the outlet said follows extensive renovations to the two office buildings.
What TMG Says Comes Next
Ben Kochalski said TMG is pleased to support the County of Santa Clara's consolidation at Skyport Plaza and looks forward to property improvements, according to Connect CRE's account of the deal. He added that the planned improvements will modernize infrastructure and provide convenient access to services and restaurants, the same report states.
For Hudson Pacific, offloading the largely vacant asset also serves a balance-sheet purpose. The real estate investment trust said proceeds from the Skyport Plaza sale and another transaction would reduce its unsecured revolving credit facility, leaving an outstanding balance of $30.0 million, Yahoo Finance reported.
A Market Finally Showing Signs of Life
The sale lands at a moment when Silicon Valley's office market has been climbing out of a prolonged slump. The region's office vacancy rate fell to 15.9% in the third quarter of 2026, down 30 basis points from the prior quarter and 160 basis points from a year earlier, according to Kidder Mathews. Leasing activity totaled 2.9 million square feet for the quarter, nearly double the volume recorded in the same period of 2025, the firm reported, and the region logged its fourth consecutive quarter of positive net absorption at 491,072 square feet.
San Jose specifically has had a tougher time shaking off vacancy. The city's office vacancy rate stood at 18.3% in the third quarter of 2026, only slightly above the 18.2% recorded the previous quarter, according to the East Bay Times. The same report noted that South Bay office tenants occupied roughly 829,600 more square feet than became vacant during the quarter, a sign of improving demand even as overall vacancy stays elevated. Downtown San Jose's vacancy rate was measured at 30.8% earlier in the year, according to The Mercury News, which also reported that the 971,000-square-foot tower at 200 Park Ave. was being marketed to tenants willing to take as few as one or two floors.
Big Tech Tenants Still Driving Demand
Skyport Plaza's new government tenant arrives alongside a wave of large tech leases reshaping the broader market. Kidder Mathews reported that Google recommitted to approximately 2.1 million square feet across Moffett Place and Moffett Gateway in Sunnyvale, while OpenAI signed a 447,000-square-foot lease in the first quarter of 2026, according to a Colliers report. Amazon also leased 318,300 square feet at 1000 Enterprise Way in Sunnyvale during the third quarter, per the East Bay Times.
On the investment-sales side, Kidder Mathews tracked 1.1 million square feet across 12 office transactions in Silicon Valley during the third quarter, totaling $374.6 million in volume. The largest of those deals was 400 Castro Street in Mountain View, a 150,416-square-foot building that sold for $121.5 million, the firm reported. Against that backdrop, the Skyport Plaza sale adds another notable transaction to a South Bay office market that is, by several measures, showing its first consistent signs of stabilizing.
