Bay Area Tech Space Is Rented by County

Santa Clara County agreed to rent 290,000 square feet in San Jose, the second-biggest office lease in Silicon Valley this year and a reflection of the decline in leasing activity by Internet and other technology companies.

The 20-year lease at the River Corporate Center is valued at about $200 million, said Phil Taylor, senior vice president of Sobrato Development Cos., the building owner. Sobrato built the space for Metricom Inc., a company that provides wireless Internet access and has been in bankruptcy since July.

Silicon Valley’s office vacancy rate has topped 15%, the highest since 1993, as Yahoo Inc., Cisco Systems Inc. and other technology companies fire workers and give up space.

This has allowed companies, government agencies and others shut out of the market in the late 1990s to add space at rents half of what they were a year ago.

“We knew we had leverage and property owners had a lot of room to negotiate,” said Craig McGahey, vice president at property broker Staubach Co., who represented the county.

The size of the lease trails only a 340,000-square-foot deal signed by Handspring Inc., a hand-held computer maker, in March, according to CPS Commercial Property Services Inc.

Handspring later put 134,000 square feet of the space up for sublease.