Blackstone buys Sunnyvale plant with Nvidia as tenant for $95 million

Blackstone has paid $95 million, roughly $709 a square foot, for the 134,000-square-foot manufacturing plant at 350 Cobalt Way in Sunnyvale, a 1978 building upgraded in 2022 where Nvidia is a tenant and staying. SFF Realty Partners sold the property, and because the building has already been upgraded, the buyer is not paying for a shell.

The reason for the price, according to the Silicon Valley Business Journal as cited by Connect CRE, is the power: nearly 10 megawatts at the site. R&D and advanced manufacturing tenants are asking for more electricity than Silicon Valley can readily add to its grid, and that shortfall pushes pricing toward buildings that already have capacity in place. The report notes that investors and tenants are pursuing properties with that profile, and square footage alone does not get a 1978 plant to $709 a foot; existing capacity is the likeliest explanation for the number.

The tenant side is shopping on the same metric and in the same constrained grid, with OpenAI closing in on a lease for the 70,000-square-foot building at 2950 Zanker Road in North San Jose that has about 19 megawatts of electrical capacity, roughly double the Sunnyvale load in about half the footprint. Nothing is signed, and the coverage puts no rent on it, but the direction is plain: the buildings drawing AI tenants are the ones where the utility has already done the work.

The infrastructure angle is where Blackstone has been loudest. Chief Financial Officer Michael Chae told investors this month that investments in data centers, power and other digital infrastructure have contributed significantly to the firm's infrastructure business, and the wider tape agrees: data-center deals carried July's commercial real estate volume to a two-decade high on a $33.8 billion month, as this publication reported. Blackstone's real estate arm has been working the larger end at the same time, including the consortium it leads that is taking H&R REIT private for C$6.7 billion. Sunnyvale is the small version of the same demand — one plant, bought for the service behind the wall.

The follow-on to watch is Zanker Road. If OpenAI signs, Nvidia and OpenAI will hold buildings in the same region selected for the same reason, and the next power-rich seller will get to test whether $709 a foot travels. What the Sunnyvale price does not settle is duration: the coverage does not say how long Nvidia's lease runs, and that lease is the underwriting. A second energized building trading at a similar premium would show whether South Bay landlords are now paid for amperes rather than square feet.