Property Repositioning

2011 Case Study: Fremont Business Park

Reversing an Office Building’s Decline During the Great Recession


•   Needed to revitalize an aging multi-tenant office project and reverse declining momentum in a difficult market

•    Invested in a sweeping $2,500,000 renovation that included smaller spaces tailored to market requirements

•    Created a marketing web site with active blog, and developed an aggressive marketing program

•    Achieved 95% occupancy and increased rents within 18 months of makeover

What happens when an office complex goes into decline? How does one stop the slide and regain momentum in the marketplace? And what if these challenges occur under extraordinarily difficult economic conditions such as the Great Recession of 2008-2010?


Fremont Business Park is a three-building, two-story, multi-tenant office complex with approximately 120,000 sq. ft. of space near Auto Mall Parkway and I-880 in southern Fremont. The complex was built in the early 1980s, and by the late 2000s, it was clearly showing its age.

The exteriors and common interior areas were in serious need of refurbishing. Restrooms were old and not very inviting. One of the three buildings had roof issues. Even the office spaces presented challenges – with many of them too large for smaller companies that were the most active segment of the leasing market.

Building occupancy percentages had steadily fallen to 35% at its lowest point. Rents had been discounted, and still, new tenants wouldn’t come. To complicate matters, this all occurred during the Great Recession – a time when most real estate firms were unwilling to make moves or invest new money.


Borelli Investment Company had the vision and creativity to see viable alternatives to simply waiting out the downturn. In mid 2009, Ralph Borelli convinced the ownership group that it needed to invest in the future to achieve the return it wanted.

Borelli began a sweeping $2,500,000 renovation that included a new roof on one building, exterior painting, extensive new landscaping, parking lot resurfacing, redesigned professional entries with tiled floors and ample lighting, bright corridors with new carpeting throughout, a variety of new spaces including micro-spaces as small as 375 sq. ft., new restrooms with granite countertops, a fully equipped fitness facility, common conference room, new signage, energy-efficiency improvements, ADA upgrades, the complex’s own affordably priced high-speed fiber optic Internet service, the free TEAMChristy business-acceleration and mentoring group, and more.

Borelli also launched an aggressive marketing effort that included a new web site with an active – and highly read – blog, marketing collateral, e-mail messages, blogs or e-mails written on every new tenant signing, and significant outreach efforts to the city of Fremont and the local brokerage community.


By the end of the first quarter of 2010, new tenants were starting to flow in to the revived Fremont Business Park at Christy Street. The momentum continued to build and accelerate throughout the year as word spread of the exciting, newly renovated office complex at the gateway to Silicon Valley – close to freeways, shopping and services.

Eighteen months and more than 60 transactions later, Fremont Business Park entered 2011 as arguably one of the most successful multi-tenant office complexes in Northern California, with more than 95% occupancy by late April and rent increases in place. The owners’ group was obviously thrilled with one of the more notable real estate success stories in Northern California to emerge from the Great Recession.

  • Negotiated with previous lender to pay off existing loan and obtained $2.5 million construction loan component from Bridge Bank
  • Repositioned existing two-story, multi-tenant office building into 32 office condominiums for sale
  • Completed major building renovation/condo conversion while space was substantially occupied
  • Sold two-thirds of the office condos within the first six months of marketing

Since the mid 1980s, Borelli Investment Company has managed Airport Plaza Office Center, a three-building, two-story garden office complex on Technology Drive in San Jose. Located minutes from Mineta San Jose International Airport, the complex has enjoyed high occupancy rates over the years. But by 2004, one of the three buildings was facing challenges.


Borelli Investment Company’s 55,870 square foot building at 1754 Technology Drive had reached a vacancy rate of approximately 50 percent. A solution would have been to divide the larger suites into smaller office spaces, which would have been easier to lease. But to do this would have required a significant investment in tenant improvements by the owners, and with “Class B” office rents being driven down by highly competitive market conditions, it was clear that projected revenues would not meet debt expense and other costs.


Drawing upon its previous success in converting an industrial building into condominiums, Borelli Investment Company devised a plan to create AirTech Office Condos-with 32 highly marketable business condominiums in a single building.

Borelli assembled a team of design professionals and worked closely with the City of San Jose to get a condominium plan approved. Once this was done, the company began a $2.5 million renovation of the partially occupied building, which required precise planning and experienced construction management.

Major property improvements included a common conference room for all tenants with the latest meeting tools and Web access, a full seismic retrofit to the latest standards, renovations to achieve ADA compliance, multi-stalled restrooms on each floor with quality finishes, a new roof, upgraded elevator, and extensive landscaping.

The 32 suites ranged from 380 square feet to 4,930 square feet. Each was renovated with new paint and carpeting; adjustable heating and air conditioning with separate metering for electric, gas and HVAC usage; coffee bar; and access to the building’s fiber optic cable for high-speed Internet service. In addition, on-site building management and maintenance assured condominium owners of prompt service, when required.


The market responded immediately to the AirTech conversion. In addition to pride of ownership, significant tax benefits, the potential for long-term appreciation, and a low interest rate environment that made financing terms quite favorable attracted smaller enterprises. Borelli Investment Company enhanced the financing options by working with Bridge Bank to make SBA financing available-requiring only a 10 percent down payment.

With a very limited supply of smaller office condominiums on the market, two-thirds of AirTech’s units were sold within the first six months. The successful conversion revived a building that needed an innovative plan to regain its appeal, and ensured an attractive return for the property’s owners.