Duke Realty Spends $60.5MM to Buy Milpitas Industrial Campus from Vertical Ventures

Duke Realty, Vertical Ventures, Sycamore Technology Center, Milpitas, Cannae Partners, Westport Capital
Courtesy of Vertical Ventures

By Meghan Hall

Indianapolis-based Duke Realty is quickly expanding its Bay Area portfolio, closing on its third local deal in a matter of a few months. According to reporting by The Mercury News, the firm has acquired the Sycamore Technology Center in Milpitas for $60.5 million, or about $283 per square foot. The seller of the property was Walnut Creek, Calif.-based Vertical Ventures, who originally bought the asset in the fall of 2020.

The three-building complex is located at 475, 501 and 525 Sycamore Drive. Vertical Ventures originally paid $45.5 million, or about $213 per square foot, when it purchased the center from a joint venture of Westport Capital Partners and Cannae Partners. In all, the property was originally built in 1983 and totals 213,519 square feet.

Vertical Ventures had intended to hold onto the property for a period of three years, according to its website. By the end of the holding period, the company had a projected 26.1 percent internal rate of return and 1.99 equity multiple. The company states on its website that the property has a strong existing rent roll with staggered lease roll and credit tenancy, and that in-place contract rents are about 60 percent below market. It boasts that the property also has “excellent regional fundamentals” and is located “in one of the most vibrant economies in the nation.”

In recent months, Duke Realty has made two other acquisitions. In October of 2021, the firm spent $40.2 million to acquire a vacant parcel in South San Jose. In January of this year, the company would later spend $34.4 million on a former Oakland glass factory, where it is planning a 426,000 square foot project.

According to the company’s website, Duke Realty is a pure-play, domestic-only REIT. The company’s portfolio includes 160 million square feet of space across 19 markets, such as Seattle, New Jersey, Washington D.C., Nashville and others. The company currently has $21 billion in enterprise value. As of the third quarter of 2021, 98.3 percent of Duke’s portfolio was lease stabilized, and the firm reported tenant retention of 86.2 percent.

West Coast Commercial Real Estate News