South Bay Development Sells R&D Asset in Milpitas at 9.5% Cap Rate

Santa Clara county, Milpitas Transit Area Specific Plan, City of Milpitas, DR Horton, Harmony development, Centre Pointe Development, Sunnyhills

By Jon Peterson

Campbell-based South Bay Development Company has sold the 77,200 square foot R&D facility at 195 South Milpitas Boulevard in Milpitas at a cap rate of 9.5 percent.

“This return is based on the current net operating income in the property,” says Mark Regoli, a partner with South Bay Development. The company had owned the property with no outside equity partners for the past two years. It had hired Craig Fordyce, executive vice president, Mike Rosendin, executive vice president and Shane Minnis, associate vice president, of the San Jose office of Colliers International on the sale of the property.

[contextly_sidebar id=”W5fusJX4ovItvPI1buhr5CUSuByyDkyM”]The sales price on the property was $8.4 million or $110 per square foot.

The property was acquired by Palo Alto-based Peninsula Land & Capital. Roger Fields, principal of the company, declined to comment when contacted for this story.

The buyer was represented in this transaction by the San Jose office of CBRE. “This property was sold in an off market transaction. It was not heavily marketed,” says Charles Strouss, a vice president with CBRE. He and Burke Weismann, senior vice president, of CBRE represented the buyer in the acquisition.

There is a new lease that has been signed with the existing tenant in the property, View Glass. “There was a new three-year extension that was signed, and it starts six months after the close of escrow, “ said Strouss. The company uses this site for its corporate headquarters, according to its Web site.

From a leasing standpoint, areas like Milpitas have received the spillover effect from other markets for R&D properties. “In recent years, tenant demand has cascaded out from Palo Alto, Mountain View and Sunnyvale. Markets like Milpitas have benefited greatly from this effect,” said Strouss.

The R&D market in Milpitas has been on the upswing. “Whether we’re discussing market fundamentals or investment capital, we’ve seen improvement across all metrics that we track,” said Strouss.

Peninsula Land & Capital is a private real estate firm that looks to buy properties along the Peninsula and the South Bay, according to its Web site. Its current portfolio includes properties in Fremont, Palo Alto, East Palo Alto and Milpitas.

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