CBRE Investors Buy Milpitas’ Murphy Crossing

Murphy Crossing, Milpitas, CBRE Global Investors, San Francisco, Embarcadero Capital Partners, Newmark Grubb Knight Frank, CBRE Strategic Partners U.S. Value 6, BART

Murphy Crossing Milpitas The Registry real estate

By Jon Peterson

griddig testLos Angeles-based CBRE Global Investors has acquired the Murphy Crossing office and research and development campus in Milpitas from San Francisco-based Spear Street Capital.

The company paid $262 a square foot, or $95 million for not quite 362,000-square-foot property, according to sources familiar with the transaction.

With Murphy Crossing, CBRE Investors has now acquired three Silicon Valley properties this year for its CBRE Strategic Partners U.S. Value 6 investment fund, which has $1.6 billion in equity.

The other acquisitions were the 506-room Downtown San Jose Marriott Hotel and the 344,000-square-foot 50 W. San Fernando St. office building, commonly known as the Knight-Ridder building, which is also in downtown.

Philip Hench, a principal with CBRE Global Investors, said the five-building Milpitas property is fully leased to integrated circuit-maker Intersil Corp., touch-screen company Elo Touch Solutions Inc., medical-products maker Conceptus Inc., and software maker Phoenix Technologies Ltd. At the end of October, Phoenix is to leave 915 Murphy Ranch Road, vacating 70,000 square feet. Occupancy will fall to 81 percent.

“This scenario will create a leasing opportunity for us where we can create value for the property,” Hench said. “The current lease with Phoenix is 25 percent below market.”

The other addresses for the buildings are 1001 McCarthy Blvd., 1011 McCarthy Blvd., 1033 McCarthy Blvd. and 933 Murphy Ranch Road.

CBRE believes the property, which is on the border of Milpitas and North San Jose, represents the kind of real estate that technology, software and Internet firms want for headquarters operations with rents that are a bargain relative to other South Bay locations. About 15 percent of the total square footage is lab space; the remainder is offices.

“Rents in Mountain View can be 40 percent to 50 percent higher and up to 30 percent more in Sunnyvale than Milpitas-North San Jose,” Hench said.

Besides Phoenix, the three other tenants have signed leases with terms that extend through 2020. Elo signed its headquarters lease for nearly 75,000 square feet at the end of last year in part because company executives felt the location would give them an edge in the East Bay as they recruited talent to fuel anticipated growth. The company expected to do both engineering work and prototype manufacturing. In April Bayer Healthcare acquired Conceptus, which leased its Murphy Crossing space this spring.

CBRE would not confirm the purchase price, but Hench noted that properties in this marketplace have traded from about $250 a square foot to $325 a square foot. He originates, underwrites and structures West Coast investments for CBRE Strategic Partners U.S.

CB Richard Ellis’ San Jose office will market the soon-to-be empty space. The leasing team will be senior vice presidents Michael Grado, Shane McNulty and Christian Marent.

The buyer remains very bullish on Silicon Valley office-rent growth. “Our company research ranks Silicon Valley as the No. 2 office market in the country based on rent growth, only surpassed by Boston. Rent growth for this year for Silicon Valley is projected to be 5 percent to 7 percent,” Hench said.

The property was sold through Holliday Fenoglio Fowler. The lead person on the sale was David Karol, a director in its San Francisco office. Karol also declined to disclose a purchase price.

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West Coast Commercial Real Estate News