Vivotek's building at 2050 Ringwood Avenue, San Jose · 24,175 sq ft · about to sit empty
The situation
The team is moving to Delta's Fremont office, so this building is about to sit empty. Its current market value is likely around $7.6M. The real question is not whether to do something with it. It is which choice gets the most out of that money.
There are four things you can do with it. Here is what the numbers say about each, plainly.
What it is worth
Every choice below starts from this one number. Based on nearby buildings that recently sold, 2050 Ringwood should sell for roughly $7.6 million, in a range of about $7.3 to 8.2 million. Here is how we get there.
Ask too much and it sits, like the empty buildings next door. Price it to the real market and it sells. Our pick is the middle.
Throughout this dossier we use ~$7.6M (about $315 per sq ft), a realistic price. Priced to the stronger comps, $8.2M is possible.
| Address | Size | Built | Price/sq ft | Notes |
|---|---|---|---|---|
| 1321 Ridder Park Dr | ~36,030 SF | 1984 | $368 | Top of the range |
| 832 Charcot Ave | larger box | – | $320 | Middle, bigger building |
| 2205 Fortune Dr | ~31,445 SF | 1979 | $294 | Bottom of the range |
| 350 E Plumeria Dr | – | – | $231 | Older, 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.
| Address | Asking price/sq ft | How long for sale | What it means |
|---|---|---|---|
| 2040 Ringwood Ave next door | $361 | ~911 days | Priced high, no buyer in over 2.5 years |
| 2109 O'Toole Ave | $360 | ~474 days | Almost fully rented, still no buyer |
| 193-199 Topaz St, Milpitas | $338 | ~474 days | For sale over a year |
| 1570 Oakland Rd | market | ~8 days | Just listed, too soon to tell |
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 right next door: 2040 Ringwood. Price it too high and it just sits.
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.
Keep the building and rent it to someone else. The rent looks like a decent return on paper. But it only works if you find a renter, and the money stays stuck in an old building the whole time.
| Rent level2 | Per sq ft, month | Per sq ft, year | Rent per year | After costs | Yearly return |
|---|---|---|---|---|---|
| Low, for an old building | $1.85 | $22.20 | ~$537K | ~$456K | ~6.5% |
| Average asking rent | $2.10 | $25.20 | ~$609K | ~$518K | ~7.4% |
| High asking rent | $2.50 | $30.00 | ~$725K | ~$616K | ~8.8% |
The higher rents are for buildings that already have renters. This one is about to be empty, in an area where lots of buildings are already empty. So the low number is the honest one, and only after months with no rent and real money spent to find a renter.
Sell this building and use the money to buy one Delta actually needs in Texas, where it is growing. A tax rule called a 1031 Exchange1031 Exchange. An IRS rule that lets you sell one investment building and move the money into another one without paying the profit tax right away, as long as you buy the replacement on time (45 days to pick it, 180 days to close). The tax is delayed, not erased. It has to be a similar, investment-use property. lets you swap one building for another and put off the tax. So the full ~$7.1M goes toward a building Delta was going to buy anyway, and the ~$1.3M tax bill waits instead of being paid now.
How much this earns depends on what you buy. The main plan above is the safe one, a building Delta uses in Texas. The same money could instead buy homes for staff, or a rental that brings in income. Three options, lowest to highest return, all rough estimates.
Rough ranges only, to be checked for any real building. These assume no loan; borrowing could raise the rental case. The same swap rules and deadlines apply to all three (IRS).
Delta uses the building, so there is no rent. Each year it saves about $36K in taxes, plus the one-time ~$1.3M tax delay and the building going up in value. Rules from IRS swap rules and IRS Publication 946; confirm with a tax advisor.
Sell the building and put the cash into the business. No swap, no new building. You pay the tax now, and Delta gets about ~$5.8M of free cash to use however it wants. A growing company usually earns more on its cash than an old building earns in rent. This is the likely choice if the money is worth more in the business than tied up in a building.
These returns are examples, not promises; Delta's real number replaces them. Even the low one beats the ~$345K an old building earns in rent. Tax per IRS; confirm with a tax advisor.
Put the building up for sale and for rent at the same time, and see which brings a better offer first. Whoever shows up first with the better deal wins. It is a smart way to keep your options open, not a sign of being unsure.
The whole story, simply
Renting looks free, but it keeps ~$7.1M stuck in an old building earning maybe 6.5% a year, and only if you find a renter. That same money, freed up and used by the business, earns a lot more. The gap is what renting really costs you.
Renting earns about 6.5% a year, and only after you find a renter, which for a big old building in a slow market can take months to years. The same cash in the business earns Delta's own return, usually much higher. The percentages below are examples, not promises.
Selling for cash starts behind, because you pay the ~$1.3M tax up front, so only ~$5.8M goes to work. But earning Delta's return, it catches up within a few years and then pulls well ahead. Shown at an example 12%; Delta's real number applies.
Rough estimate. Renting assumes the building goes up ~1% a year plus ~$345K rent from year one, which is generous since it may sit empty a while. Selling for cash is shown at an example 12% a year; Delta's real return could be higher or lower. The full list of assumptions is below. Option B, the Texas swap, is not shown here because it earns no rent; its value is the ~$1.3M tax delay, ~$7.1M toward growth, and the building going up in value.
Side by side
The same questions for all four, so you can compare them fairly. We compare each one to the first choice, renting. Short-term means the first year. Long-term means the years after. Numbers are rough until the real ones come in.
| A · Rent it outCompare to this | B · Sell and swap | C · Sell for cash | D · Try both | |
|---|---|---|---|---|
| Where the ~$7.6M goes | Stays in the building | ~$7.1M into a new building, tax delayed | ~$5.8M cash to the business | Becomes A, B, or C |
| Tax paid now | None | None, delayed | ~$1.3M | Depends |
| Money in year one (short-term) | ~$345K, if rented | No rent; ~$36K/yr in tax savings | ~$465K to $870K | Depends |
| Cash each year after that | ~$345K, if rented | ~$36K/yr, plus the tax delay and value gain | Delta's return on ~$5.8M | Depends |
| Worth in ten years (long-term) | ~$10 to 11M | A Texas building + ~$1.3M tax delayed | ~$12 to 22M | Depends |
| Cash you can use | Low, tied up in a building | Some, a building you can sell | Most, cash in hand | Depends |
| Helps Delta grow | No | Yes, buys a Texas building it needs | Somewhat, frees up cash | Not on its own |
| Work and risk | High, being a landlord in a slow market | Some, owning a building | Low, no building to run | Low, just listing it |
Read across each row to compare all four to the first choice, renting. Choice D (try both) is just a way to pick among the others, so its result matches whichever one the market picks. Income and tax numbers are rough until confirmed.
Selling for cash (C) frees up ~$5.8M for the business to put to work. The Texas swap (B) delays the ~$1.3M tax and pays for a building Delta needs anyway. Renting (A) frees up nothing and earns the least, and only if you find a renter.
Selling for cash (C) can build the most wealth if Delta earns more on the money than a building would, though it pays the tax now. The Texas swap (B) turns the sale into tax-delayed growth plus a building that gains value. Renting (A) is the weakest, with the money stuck in a building losing value.
What we'd do
Get out of an empty building that is losing value, and put the money where it earns more: into the business, or tax-delayed into the Texas growth Delta is already paying for. Either one beats leaving ~$7.1M stuck in an old building.
Every number, in the open
Every number in this dossier comes from something below. Each one is marked so you can see what is confirmed, what is our best guess, and what we are still waiting on.
| What it is | Number we used | How sure | Where it is from |
|---|---|---|---|
| Sale price | ~$7.6M | rough | Priced to sell; nearby sales suggest up to $7.7 to 8.2M; full pricing report still due |
| Selling costs | ~$0.5M | our guess | ~6%, normal |
| Left after costs, to reinvest | ~$7.1M | from the math | Sale price minus costs |
| What it was bought for | ~$2.2M | waiting | Waiting on the original purchase records |
| Profit on the sale | ~$4.9M | from the math | Sale price minus what was paid |
| Tax on the profit | ~$1.3M | waiting | ~27%; waiting on company type and a tax advisor; IRS |
| Free cash if sold (C) | ~$5.8M | from the math | Sale minus costs and tax |
| Rent per year (A) | ~$345K/yr | waiting | If rented; waiting on Paul's real rent number |
| Time to find a renter (A) | months to years | waiting | Waiting on Paul; old building, slow market |
| Empty space nearby | ~12%, rising | confirmed | 2026 Silicon Valley Index |
| Rents being asked | ~$1.85 to 2.50 | confirmed | Per sq ft a month, asking prices: LoopNet, CityFeet, CommercialCafe |
| What Delta earns on its money (C) | 8 to 15% | Delta's call | A range; Delta's real number applies |
| How fast it gains value (A) | ~1%/yr | our guess | Old building |
| Yearly tax write-off (B) | 39-yr straight line | IRS rule | For a building Delta uses; IRS Pub 946 |
| Swap deadlines | 45 / 180 days | IRS rule | IRS 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, Paul's rent, and Delta's tax advisor and target return.
Sources & references
We use neutral, outside sources, government data and public records, not other brokers' reports. Every link opens the source so you can check it yourself.
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.