Patriot American Parkway, Allentown, PA
Partial Sale Leaseback
Office, Lab, and Data Centers
600,000 Sq. Ft. – Two Buildings
At first glance, 1110 American Parkway is a building that could be found in Silicon Valley rather than the Lehigh Valley. The 600,000 square feet (SF) class A office building was originally developed to be the international headquarters for Agere Systems, a technology company, in 2002. Shortly after completion, the “dot com bubble” burst. Agere’s eventual spin-off led to a series of ownership turnovers until 2014 when Avago Technologies purchased LSI Corporation (Agere’s successor) for $6.6 Billion.
Avago’s ongoing office, data center, and lab requirement only planned in approximately 20% of the entire building. Avago’s requirement along with existing third-party tenants Intel and the United Way left the building less than 50% utilized. No longer a strategic headquarters site for Avago, Avago decided to sell the site to allow it to reinvest the capital into its core semiconductor business and reduce operating costs.
Patriot had followed the site for many years after making an original acquisition offer in 2007 to then owner, LSI Corporation. Patriot tracked the opportunity ever since. The situation and asset matched Patriot’s typical project profile: a top quality corporate asset requiring a full-scale rebranding as a multi-tenant facility. When news of the sale to Avago was released, Patriot again made a push to acquire the site.
Patriot was able to create a vision for the site with Avago as an anchor tenant in a vibrant multi-tenant setting with large-scale improvements. Avago agreed to lease back 110,000+ SF on a long-term basis. Already an existing tenant, Intel expanded by 80,000 SF and signed a new long-term lease. With one of the two wings of the building now stabilized, Patriot prepared to unveil 300,000 SF of Class A space within a bucolic 145- acre campus setting.
The Avago campus acquisition demonstrates how the Patriot Operating Platform can create value for corporations. With a partial sale/leaseback transaction, Avago was able to retain its necessary office, lab, and data center space for the next decade with minimal transaction costs. Patriot believes it has an unrivaled building in the marketplace. This belief was validated when St Luke’s Health Network leased over 250,000 SF shortly after Patriot closed on the acquisition. Subsequent leasing has the property currently stabilized at above 90% occupancy.