CIP Offers Industrial Asset in Fremont for Sale with $52MM Price Guidance

Links Logistics, Blackstone, Fremont, Frontier Elm Business Center, Bay Area
Photo by Marcin Jozwiak on Unsplash

By Jon Peterson

Newport Beach, Calif.-based CIP Real Estate has placed on the market for sale the 148,926 square foot Fremont Business Center in Fremont. The pricing guidance on the sale is $52 million, or roughly $350 per square foot, according to sources familiar with the sale of the property.

The seller has picked CBRE to be the listing agent on the sale. Those working on the sale are Rebecca Perlmutter, executive vice president, and Darla Longo, vice chairman and managing director with the firm. CBRE declined to comment when contacted for this story.

CIP has held ownership of the property for a little more than three years. The real estate investment firm had purchased the asset for $30.5 million in February 2019, according to previous reporting by The Registry.

Should the price point be reached it would produce a 4.6 percent one-year cap rate and a 5.6 percent market cap rate, as stated by industry sources. This pricing would produce a sale at approximately $350 per square foot. This would come in well below replacement cost, which industry market sources believe is currently at $680 per square foot.

Fremont Business Center is an asset made up of five advanced manufacturing buildings. The addresses are 101,103, 213 and 225 Hammond Avenue, 47800, 47810 and 47850 Westinghouse Drive and 47747, 47757, 47777, 47811, 47825 and 47853 Warm Springs Boulevard. The property was developed over three years from 1981 to 1983, and it covers a total of 9.84 acres.

The property is fully leased to a total of 13 tenants. Some of the tenants within the property are Tesla, InTest Corporation, Hewlett Packard Enterprise and Actelis Networks. The average remaining lease term left with current tenants is approximately three years. The new owners will have an opportunity to increase the property’s income as the in-place rents are currently around 20 percent below market rates.

The overall industrial market in Silicon Valley continues to show very strong market dynamics. The vacancy rate is currently at 3.3 percent and has been below 5 percent for the past 32 quarters. The Fremont/Newark sub-market has an even lower vacancy rate of 2.4 percent. The rental rate growth for Silicon Valley has grown 9 percent over the past seven years and lease rates are anticipated to grow another 9 to 10 percent in 2022 and 2023.

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