Prepared for Vivotek USA & Delta Electronics ConfidentialStrategy draft

An empty building worth about $7.6 million.

Vivotek's building at 2050 Ringwood Avenue, San Jose · 24,175 sq ft · about to sit empty

$0M
About what it is worth
0
About to be empty
0
To use it
Scroll

The situation

One vacant building. One decision.

The team is consolidating into Delta's Fremont office, leaving this building vacant. Its current market value is likely around $7.6M. The question is not whether to act, but which option realizes the most value from that capital.

Three options are available. This dossier reviews each one, with the supporting figures.

A
Rent it out
Retain the building and lease it to a tenant.
B
Sell and swap
Sell, then do a 1031 Exchange1031 Exchange. An IRS provision permitting the sale of one investment property and reinvestment of the proceeds into another without immediate tax on the gain, provided the replacement is acquired within the required timeframe (45 days to identify, 180 days to close). The tax is deferred, not erased, and is owed later. Eligibility depends on the property and the taxpayer, so whether it applies here is for your tax advisor to determine. into a replacement building to potentially defer the tax.
C
Sell for cash
Sell and deploy the proceeds into the business.

Valuation

What the building is worth

Each option below proceeds from this figure. Based on nearby buildings that recently sold, 2050 Ringwood should sell for roughly $7.6 million, in a range of about $7.2 to 8.2 million. Here is how we get there.

~$7.6M
Likely price, about $315 per sq ft · range $7.2 to 8.2M · 24,175 sq ft
This figure assumes the building is delivered move-in ready, with the solar system repaired and minimum other updates throughout. Delivered as-is, expect a lower figure.
Three pricing approaches

Overpriced buildings in this submarket have remained unsold for extended periods. Priced to the market, the building transacts. We recommend the middle approach.

Sell fast
~$7.2 to 7.5M
about $298 to 310 per sq ft
Priced to move quickly. It sells, but leaves money on the table.
Fair market
~$7.6 to 7.9M
about $314 to 327 per sq ft
What similar buildings actually sold for. We use ~$7.6M as our working number.
Aim high · risky
~$8.0 to 8.2M
about $331 to 339 per sq ft
Top of what the comps support. Priced at this level, buildings here have sat unsold.

Throughout this dossier we use ~$7.6M (about $315 per sq ft), a realistic price. Priced to the stronger comps, $8.2M is possible.

Recent nearby sales
AddressSizeBuiltPrice/sq ftNotes
1321 Ridder Park Dr~36,030 SF1984$368Top of the range
832 Charcot Avelarger box$320Middle, bigger building
2205 Fortune Dr~31,445 SF1979$294Bottom of the range
350 E Plumeria Dr$231Older, sets the floor

Recent sales ran from $294 to $368 per sq ft. For an older building like this one, a fair middle is about $300 to $340 per sq ft.

Currently listed, still unsold
AddressAsking price/sq ftHow long for saleWhat it means
2040 Ringwood Ave next door$361~911 daysPriced high, no buyer in over 2.5 years
2109 O'Toole Ave$360~474 daysAlmost fully rented, still no buyer
193-199 Topaz St, Milpitas$338~474 daysFor sale over a year
1570 Oakland Rd$342~2 weeksNewly listed, priced at the high end

Buildings priced at $338 to $361 per sq ft have sat 15 months to over 2.5 years with no buyer. The clearest example is the adjacent property, 2040 Ringwood. Overpricing results in extended time on market.

Sold prices come from public county records (Santa Clara County). Asking prices and time-for-sale come from listing sites. Rough for now, to be confirmed with a full pricing report.

A
Summary: modest return, elevated risk

Rent it out

Retain the building and lease it to a tenant. The rental return appears reasonable on paper. However, it depends entirely on securing a tenant, and the capital remains tied up in an aging building throughout.

$1.85 to 2.50
Asking rent per sq ft per month nearby, realized only upon securing a tenant2
Market data · sourced
$0M
Capital tied up (the $7.6M value, less transaction costs)
0%
Vacancy in comparable nearby buildings, and rising1

Assessment Market context

Asking rents in the area run roughly $1.85 to $2.50 a square foot a month2, though these are asking rates, not concluded transactions. This building will be vacant in a submarket with substantial existing vacancy, so securing a tenant may take considerable time and carry real cost. Any income projection is for your advisors to determine.

Considerations What it carries

  • About $7.1M remains tied up in a depreciating building, the $7.6M valuation less the transaction costs to realize it
  • Ongoing landlord obligations: repairs, maintenance, and tenant management
  • In a soft market, tenants typically require free rent periods and improvement allowances
  • The building continues to age and require capital investment during the hold period
1 R&D vacancy (~12%, rising) and softening rents: 2026 Silicon Valley Index, Joint Venture Silicon Valley.
2 Asking rates for comparable flex and R&D space, from listing marketplaces (asking prices, not final deals; real signed rents still to be confirmed): LoopNet, CityFeet, CommercialCafe.
3 Any yearly income or return figure depends on the rent actually signed, downtime, and costs, and is for your financial advisors to work out.
The potential tax-deferral option
B
Summary: funds Delta's expansion, tax potentially deferred

Sell and swap into a Texas building

Sell this building and apply the proceeds toward a property Delta requires in Texas, where it is expanding. A tax rule called a 1031 Exchange1031 Exchange. An IRS provision permitting the sale of one investment property and reinvestment of the proceeds into another without immediate tax on the gain, provided the replacement is acquired within the required timeframe (45 days to identify, 180 days to close). The tax is deferred, not erased, and is owed later. Eligibility depends on the property and the taxpayer, so whether it applies here is for your tax advisor to determine. may let you swap one building for another and defer the tax, if you qualify. The full ~$7.1M is then applied to a building Delta intended to acquire regardless, and the tax owed could be deferred rather than paid now.

$0M
Goes into a Texas building Delta needs, with tax potentially deferred
Hypothetical example
Potential deferral
The tax owed could potentially be deferred through a 1031 exchange1
Concept, not a figure
Saves cash
Pays for growth Delta would buy anyway
Texas
A building Delta uses itself, where it is growing
This option does not generate rental income. The ~$7.1M acquires a building Delta occupies itself. The payoff: the tax bill potentially deferred, the proceeds put toward growth Delta was going to pay for anyway, a depreciation deduction that lowers Delta's taxable income, and the new building going up in value.
Hypothetical example, not tax advice. Every tax figure in this section is an illustration to explore with your own tax and financial advisors. We do not know the actual amounts, and nothing here is tax advice or a tax analysis.

Advantages Why it can work

  • May defer the tax owed, allowing more of the capital to remain deployed instead of shrinking1
  • Converts a vacant building into funding for expansion Delta had already planned
  • The new building comes with a depreciation deduction that lowers Delta's taxable income2
  • Adds a real building that should go up in value

Requirements What it takes

  • You must pick the new building within 45 days and close within 180 days1
  • The same company that sells this one has to buy the new one
  • No free cash: the money is locked into a building, not freed up for the business
  • Any deferral is not forgiveness. The tax is owed later, and only if you qualify in the first place.
Potential uses of the proceeds

A couple of ideas to explore with your advisors, not a recommendation or a return estimate. What any of them earns is theirs to model.

Idea 1
A Texas building Delta uses
The main idea above: a building Delta needs anyway in its Texas growth market. No rent, the value is in owning what Delta uses and the potential tax deferral.
Idea 2
Corporate housing
Housing the company provides to employees. No rent collected, but it can help hire and keep people, and it is a building the company owns.
1 The tax-free swap rules and deadlines, and the rule that the same company must buy the new building: IRS, Form 8824.
2 The yearly tax write-off for a building you own and use: IRS Publication 946.
Delta's growth in Texas (its Plano campus, new phases, and hiring) is documented by the City of Plano. Any tax figures are examples only, to be worked out with a tax advisor.
The likely choice
C
Summary: maximum capital available to deploy

Sell for cash

Sell the building and deploy the proceeds into the business. No exchange, no replacement property. Any tax owed would likely be due now, and Delta receives the sale proceeds as unrestricted capital. A growing company typically earns more on its capital than an aging building earns in rent. This is the likely selection if the capital is worth more in the business than held in real estate.

Free cash
The sale proceeds go into the business as cash it can use
Concept, not a figure
Delta's return
The cash earns whatever Delta earns on its money
After transaction costs, the proceeds are deployed into the business as free cash. From there it earns whatever Delta earns on its money, not a building's rent.
Hypothetical example, not tax advice. The sale, tax, and return figures here are illustrations to explore with your own tax and financial advisors. We do not know the actual amounts.

Advantages Why select cash

  • Delta earns more on its capital than an aging building earns in rent
  • The business has a real use for it: day-to-day money, research, or operations
  • No deadlines to find and buy another building
  • The simplest option, just sell

Trade-offs What you give up

  • No property retained, so no asset appreciation from this capital
  • You skip the potential tax deferral and the Texas building from Option B
  • Turns a building into cash that then has to earn its keep

Summary

The cost of holding the asset

Leasing appears to cost nothing, but it retains the capital in an aging building. The same capital, released and deployed in the business, may earn more, and that difference compounds over time. Exact amounts are for your advisors to determine. This illustrates the pattern only.

1 These options, over time

Capital retained in the building (A) tends to appreciate slowly. Exchanged into a Texas building Delta occupies (B) it grows with that building, with tax potentially deferred. Deployed in the business (C) it may grow fastest. No dollar figures are shown, by design; this illustrates the pattern only.

Year 1
Year 5
Year 10
A · Capital retained in the building B · Swapped into a Texas building C · Capital deployed

Illustration of the idea only. No dollar amounts, because the real numbers depend on Delta's return and its tax situation, which are for your financial and tax advisors to work out.

Comparison

The three options, compared

The same criteria applied to all three, measured against the first option, leasing. Short-term refers to the first year; long-term to the years following. Figures remain preliminary pending confirmed data.

A · Rent it outCompare to this B · Sell and swap C · Sell for cash
Where the ~$7.6M goes Stays in the building ~$7.1M into a new building, tax potentially deferred The proceeds, as cash to the business
Potential tax now None None, if a deferral applies Likely due now (your advisor calculates it)
Income each year Some rent, only if leased No rent; a yearly tax write-off Delta's own return on the cash
Over the long run Grows slowly A Texas building, tax potentially deferred Can grow faster if the cash is put to work
Capital available to deploy Low, tied up in a building Partial, a saleable asset Most, cash in hand
Helps Delta grow No Yes, buys a Texas building it needs Somewhat, frees up cash
Work and risk High, being a landlord in a slow market Some, owning a building Low, no building to run

Read across each row to compare each choice to the first one, renting. Any income, return, or tax figures are examples only, for your own advisors to work out.

The property numbers behind this. Sale price ~$7.6M [nearby sales suggest up to $8.2M; a full pricing report is still due]; after ~6% selling costs, about ~$7.1M is left to reinvest. We do not show tax amounts, yearly returns, or ten-year figures here on purpose: those depend on Delta's tax situation and its return on its own money, which are for your tax and financial advisors to work out, not us.
Short term, Year 1

Selling for cash (C) frees up the most cash for the business to put to work. The Texas swap (B) could defer the tax and pays for a building Delta needs anyway. Renting (A) releases no capital and earns the least, and only upon securing a tenant.

Long term, ten years

Selling for cash (C) can build the most wealth if Delta earns more on the money than a building would, though any tax owed is likely due now. The Texas swap (B) may turn the sale into tax-deferred growth plus a building that gains value. Renting (A) is the weakest, with capital tied up in a depreciating building.

Recommendation

Convert a vacant building into capital for the business, or into potentially tax-deferred funding for Delta's own expansion.

Step 1 · Most likely
If Delta earns a higher return on its own capital than real estate provides, sell for cash (C) and deploy the proceeds into the business.
Step 2 · The potential tax-deferral option
If Delta would prefer to seek deferral of the tax while funding required expansion, sell and exchange into a Texas building it occupies (B).
Step 3 · Backup
If the only acceptable offer is a strong long-term tenant and no suitable sale materializes, lease it (A), for whatever income results, and only once leased.
If a decision were required today
Sell. For cash (C) if Delta earns more on its capital; the Texas exchange (B) if a potential deferral funding expansion carries greater weight. Both are preferable to holding a vacant building.

Exit a vacant, depreciating building and redirect the capital where it earns more: into the business, or potentially tax-deferred into the Texas expansion Delta is already funding. Either outcome is preferable to leaving ~$7.1M tied up in an aging building.

Inputs and assumptions

Basis of this analysis

These are the property and market figures underlying this dossier, each marked confirmed, calculated, a rough estimate, or pending. Tax amounts and investment returns are deliberately excluded; they are for your tax and financial advisors to determine.

What it isNumber we usedHow sureWhere it is from
Sale price~$7.6Mrough estimatePriced to sell; nearby sales suggest up to $8.2M; full pricing report still due
Selling costs~$0.5Mrough estimate~6%, normal
Left after costs, to reinvest~$7.1McalculatedSale price minus costs
Time to find a renter (A)months to yearspendingOld building, slow market
Empty space nearby~12%, risingconfirmed2026 Silicon Valley Index
Rents being asked~$1.85 to 2.50confirmedPer sq ft a month, asking prices: LoopNet, CityFeet, CommercialCafe
Yearly tax write-off (B)39-yr straight lineIRS ruleFor a building Delta uses; IRS Pub 946
Swap deadlines45 / 180 daysIRS ruleIRS swap rules

The confirmed numbers link to their source. The rough and waiting ones are placeholders, to be swapped for real numbers once we have the pricing report, the original purchase price, achievable market rent, and Delta's tax advisor and target return.

Sources & references

Sources and references

We use neutral, outside sources, government data and public records, not other brokers' reports. Each link opens the source for independent verification.

How the local market is doing
Empty space and falling rents: 2026 Silicon Valley Index, from a neutral local research group.
Rents being asked
Asking prices, not final deals, from listing sites: LoopNet, CityFeet, CommercialCafe. Real signed deals still to be confirmed.
Nearby buildings that sold
Sale prices from public county records (Santa Clara County).
Delta's growth in Texas
Delta's growth in Texas (Plano campus, new phases, hiring): City of Plano and Delta statements.
How the tax rules work
The swap rules and deadlines: IRS Form 8824; the yearly tax write-off: IRS Publication 946. Confirm with a tax advisor.

We do not rely on other brokers' reports. Anything marked rough is a best estimate, to be checked against the real purchase price, current rents, and an advisor. This is not tax, legal, or investment advice.

Please read. This was prepared by licensed real estate agents for Vivotek USA and Delta Electronics, for discussion only. We are not tax, legal, accounting, or financial advisors, and nothing here is tax, legal, accounting, or investment advice, or a recommendation to buy or sell anything. All the numbers are rough estimates that depend on things still to be confirmed, like the original purchase price and current rents. Please talk to qualified tax, legal, and financial advisors before deciding anything.