By Meghan Hall
Palo Alto, Calif.-based Peninsula Land and Capital (PLC) is continuing to build its Silicon Valley portfolio with the acquisition of 1561 Buckeye Court in Milpitas. According to public documents, PLC purchased the 44,399 square foot property at the end of June for $11 million, or about $247.75 per square foot. The seller was a private entity associated with Newport Beach, Calif.-based A E Peterson Enterprises, Inc.
Public documents indicate that A.E. Peterson Enterprises had owned the property since 2010, and according to PLC’s website, the property is currently 100 percent leased and is a mix of office, research and development and warehouse space. The property is situated south of downtown Milpitas in a cluster of other technology and manufacturing companies such as Nanometrics, Analog Devices, Spectra Laboratories and XL Construction Corporation. The McCarthy Ranch Marketplace, and numerous restaurants such as Banana Leaf, In-N-Out Burger and Black Bear Diner are about ten minutes to the north, where State Rout 237 and Interstate 880 meet.
Both investor and tenant interest is slowly gaining in Milpitas, which is located just north of San Jose and south of Fremont along the Interstate 880 and Interstate 680 corridors. While the office and industrial markets in Milpitas are much smaller than its other Silicon Valley counterparts, there is room to grow. According to two Cushman and Wakefield office and industrial reports released at the end of the second quarter, there is approximately 979,437 square feet of office and 8,150,702 square feet of industrial space, and the vacancy rates for the submarkets stand at 4.6 percent and 8.3 percent, respectively. Rental rates are also less expensive in Milpitas than in other Silicon Valley cities, as Class A office rents for around $3.60per square foot and industrial asking rates, on average, are around $0.98 per square foot.
Two of the top industrial leases for Silicon Valley were in Milpitas; Flextronics worked with its current landlord, Yosemite Road Associates, and renewed its 131,900 square foot lease at 890 Yosemite Drive. One Workplace also signed a new lease at 999-1075 Montague Expressway, taking 82,179 square feet from Warehouse Properties. In November of last year, Floor & Décor took a 75,000 square foot build-to-suit project at 1585 N. McCarthy Blvd. Construction on the project is anticipated to start during the fourth quarter of this year.
On the capital markets front, Hudson Pacific agreed to sell its Milpitas Campus Center to PCCP and Embarcadero Capital Partners in May. According to previous reporting done by The Registry, the Campus Center asset and some of the property’s adjacent land will be traded for approximately $150 million. The campus is located at 115-155 North McCarthy and includes a 471,580 square foot office campus. The adjacent land that will be purchased as part of the transaction could be used for up to an additional 950,000 square feet of development.
As of this writing, PLC had not yet returned The Registry’s request for comment.