By Jon Peterson
Wilton, Conn.-based Westport Capital Partners and San Francisco-based Cannae Partners have placed on the market for sale the three-building office/R&D complex known as Sycamore Technology Center in Milpitas. The potential pricing on the asset could be as much as $48 million, or $224 per square foot, as stated by sources that track the sale of properties in the region.
The sellers have hired Cushman & Wakefield to be the listing agent on the sale. Those working on the sale includes Eric Fox, Steve Hermann and Seth Siegel. Cushman declined to comment when contacted for this story.
The three buildings in the complex total 213,519 square feet. They are located at 475, 501 and 525 Sycamore Drive. The asset as it stands now is 85 percent leased to two tenants. These are Spectra Laboratories and SpiderCloud Wireless.
There will be a chance for the new owner to add some value to the asset. Spectra has been in its space at 525 Sycamore since 2006. The company has invested significant capital in building out the facility for its use, and the building has a heavy power infrastructure allowing for flexibility in use. It has a lease that lasts until 2022. Its rental rate is approximately 80 percent below market rates, according to some estimates. The lease with SpiderCloud is roughy 10 percent below market rates.
The current ownership has made some improvements to the property. This includes the building located at 501 Sycamore. It now has a ‘market-ready’ interior make-over including a new lobby, new ceiling grid, Title 24 lighting and a new break room.
Sycamore Technology Center is located in a market with strong regional fundamentals. Through the end of the second quarter 2019, the Silicon Valley office/R&D vacancy was at 9.1 percent. This compares to the pre-recession low of 15.5 percent in 2007, according to sources that track leasing information. This lower level of vacancy has resulted in consistent increases in average asking rents that have more than doubled since 2010.