MORGAN HILL — A big Morgan Hill building that’s suitable for advanced manufacturing has been bought at a hefty discount to its most recent price by a group headed up by the top boss of retailing giant Shoe Palace.
The building, located at 755 Jarvis Avenue in Morgan Hill, was bought for $22 million, according to documents filed on April 11 at the Santa Clara County Recorder’s Office. CBRE commercial real estate brokers Chip Sutherland and Brian Matteoni helped to arrange the transaction.
The buying group, led by shoe retailing executive George Mersho, has been active recently with purchases — also at bargain prices — of multiple office towers in downtown San Jose, part of a trend of fading commercial real estate values throughout the Bay Area.
The Morgan Hill building’s current price is 51.1% below — or less than half — the $45 million the seller paid for the building in 2022. The seller was an affiliate of Westbrook Partners, a real estate investment firm based in the Florida city of Palm Beach Gardens.
Shoe Palace Chief Executive Officer George Mersho, acting through affiliates, appears to be scouting for an array of South Bay properties to buy at relatively low prices.
This assessment emerges from multiple deals led by Mersho’s affiliates to buy office towers in downtown San Jose of late.
Here are some details of the downtown San Jose deals that Mersho led:
— An office tower at 303 Almaden Blvd. in San Jose was bought by a Mersho affiliate for $23.8 million in December 2023. That price was 70% below the $80.2 million the seller paid in 2017 for the highrise.
— A two-tower office complex at 111 North Market Street and 111 West St. John Street was bought by Mersho’s group for $34.2 million in February 2024 — 77% below the $141.4 million the seller paid in 2019.
The just-completed Morgan Hill deal does more than offer evidence that Mersho’s bargain hunting extends well beyond downtown San Jose.
It’s also a reminder that even commercial property types that are deemed to be in high demand might still sell for reduced prices.
Still, the Morgan Hill transaction arranged by CBRE is a reminder that real estate investors continue to see plenty of upside potential in the South Bay commercial real estate market despite some ongoing difficulties.
The building that the Mersho group bought in Morgan Hill totals 258,100 square feet, according to a CBRE marketing brochure.
Although empty at present, the building offers excellent access to top-notch workers in southern Santa Clara County and could ease the commute for people who live north of Morgan Hill, according to a CBRE marketing brochure for the property.
“The building provides an easy commute for employees from the West Valley and easy access to the deep talent pool of South County,” CBRE stated in the marketing materials.
