Morgan Stanley to Sell Industrial Assets in Richmond and San Jose, Could Fetch Pricing of $50MM

By Jon Peterson

New York City-based Morgan Stanley Real Estate has placed on the market for sale two cold storage industrial properties in Richmond and San Jose totaling 174,188 square feet. The pricing on these properties could total somewhere in the $50 million range, or around $287 per square foot combined, as stated by sources familiar with the sale of the properties.

Morgan Stanley is selling the properties through CBRE. A person involved with this assignment is Rebecca Perlmutter, a senior vice president in the company’s San Francisco office. CBRE declined to comment when contacted for this story.

The properties involved in the sale are located at 2041 Factory Street in Richmond and 1130-1170 Olinder Court in San Jose. Morgan Stanley had acquired both of these properties in September of 2016. The real estate manager had paid $26 million for the Richmond property and $14.5 million for the asset in San Jose, according to public records.

The sale of these assets could be sold either to a single buyer or each property could be sold to a different investor.

The property in Richmond has a current square footage of 109,594 square feet. The property is 100 percent leased to HelloFresh. The lease with this tenant runs through June 2023. This building would also offer the new owner a chance to expand the property by an additional 46,365 square feet. The property was first constructed in 2000 and then expanded in 2005.

The asset in San Jose totals 64,594 square feet. The property has Sun Basket as its only tenant, and its lease will expire in March of 2023. This building is a 1980 vintage property and was renovated three years ago.

The two properties in the sale are located in very strong industrial markets. The Richmond property is considered to be part of the Oakland industrial market. As of late, institutional interest for industrial properties is up in the Oakland market. During the first quarter of 2018, institutional sales accounted for 83 percent of the market’s total sales volume, compared to 32 percent for the same time period in 2017.

The Silicon Valley industrial market also has very strong operating fundamentals. It has a current vacancy of 1.8 percent. Industrial lease rental rates have grown by 22 percent over the past two years.