Regions West
Dec 28, 2007
By: Barbra Murray, Contributing Editor
Westcore Properties L.L.C. has snapped up a nine-structure manufacturing complex in Milpitas, Calif., owned by electronics manufacturing services provider Flextronics International USA Inc. Flextronics will stay put as the sole occupant of the buildings, which account for an aggregate 499,200 square feet of industrial space, under a 10-year lease agreement with the new owner.
Carrying addresses on Gibraltar Dr., the multi-structure complex occupies 33.5 acres in Silicon Valley's South 88 Corridor, less than nine miles from San Jose. Singapore-based Flextronics came into possession of the buildings, which average 15 years of age, when it acquired rival Solectron in a $3.6 billion deal earlier this year.
Westcore, which purchased the property through its Westcore Milpitas L.L.C. entity, relied on Bank of America for financing for the acquisition and turned to CPS/CORFAC International for representation in the deal; CPS/CORFAC also represented Flextronics. Specific terms of the sale and lease agreements have not been disclosed; however, the average asking rate for manufacturing space in Milpitas is $0.73 per-square-foot, triple-net, according to a third quarter report by real estate services firm NAI BT Commercial.
Flextronics' decision to leaseback the space as opposed to leasing elsewhere was a practical one, according to Dan Hollingsworth, senior vice president & principal with CPS/CORFAC. "These are nine individual buildings; that's a campus," Hollingsworth told CPN today. "To find a campus of 500,000 square feet--that you (typically) can't find."
The South 880 Corridor--encompassing the cities of Milpitas, Fremont and Newark--experienced a vacancy rate jump over the last year, but the submarket came out on top in the third quarter as the most active market in the Silicon Valley, recording seven of the top 10 most notable lease transactions, as per the NAI BT report. And although its size pales in comparison to the San Jose market, the South 880 Corridor posted 47 percent of the overall gross absorption in the entire Silicon Valley, compared to San Jose's 20.6 percent absorption.
Still, Silicon Valley in general is doing relatively well. "There's good demand and it's increasing," Hollingsworth said. "The economy in the Valley is doing pretty well, but it's still challenging for manufacturers to do business here with the costs. You're not going to see companies like Flextronics building full-blown campuses in the Valley."
San Diego-based Westcore was quite active in the Silicon Valley market in 2007, even beyond the industrial sector. The company purchased the 430,000-square-foot International Business Park, consisting of five office and R&D buildings in San Jose, for nearly $47 million in May, and acquired a two-structure office building totaling 51,900 square feet in Milpitas as part of a joint venture for $14 million in July. Westcore also shelled out nearly $2 million for a 3,700 square-foot retail property in Milpitas three months ago, and paid just over $18 million for a 53,400 square-foot office property in Sunnyvale in November.
Headquartered in San Diego, Westcore is a private commercial real estate investment firm focusing on markets in the Western U.S. During its seven-year existence, the company has invested over $2.2 billion in properties accounting for more than 10 million square feet in industrial, office and retail space.
By: Barbra Murray, Contributing Editor
Westcore Properties L.L.C. has snapped up a nine-structure manufacturing complex in Milpitas, Calif., owned by electronics manufacturing services provider Flextronics International USA Inc. Flextronics will stay put as the sole occupant of the buildings, which account for an aggregate 499,200 square feet of industrial space, under a 10-year lease agreement with the new owner.Carrying addresses on Gibraltar Dr., the multi-structure complex occupies 33.5 acres in Silicon Valley's South 88 Corridor, less than nine miles from San Jose. Singapore-based Flextronics came into possession of the buildings, which average 15 years of age, when it acquired rival Solectron in a $3.6 billion deal earlier this year.
Westcore, which purchased the property through its Westcore Milpitas L.L.C. entity, relied on Bank of America for financing for the acquisition and turned to CPS/CORFAC International for representation in the deal; CPS/CORFAC also represented Flextronics. Specific terms of the sale and lease agreements have not been disclosed; however, the average asking rate for manufacturing space in Milpitas is $0.73 per-square-foot, triple-net, according to a third quarter report by real estate services firm NAI BT Commercial.
Flextronics' decision to leaseback the space as opposed to leasing elsewhere was a practical one, according to Dan Hollingsworth, senior vice president & principal with CPS/CORFAC. "These are nine individual buildings; that's a campus," Hollingsworth told CPN today. "To find a campus of 500,000 square feet--that you (typically) can't find."
The South 880 Corridor--encompassing the cities of Milpitas, Fremont and Newark--experienced a vacancy rate jump over the last year, but the submarket came out on top in the third quarter as the most active market in the Silicon Valley, recording seven of the top 10 most notable lease transactions, as per the NAI BT report. And although its size pales in comparison to the San Jose market, the South 880 Corridor posted 47 percent of the overall gross absorption in the entire Silicon Valley, compared to San Jose's 20.6 percent absorption.
Still, Silicon Valley in general is doing relatively well. "There's good demand and it's increasing," Hollingsworth said. "The economy in the Valley is doing pretty well, but it's still challenging for manufacturers to do business here with the costs. You're not going to see companies like Flextronics building full-blown campuses in the Valley."
San Diego-based Westcore was quite active in the Silicon Valley market in 2007, even beyond the industrial sector. The company purchased the 430,000-square-foot International Business Park, consisting of five office and R&D buildings in San Jose, for nearly $47 million in May, and acquired a two-structure office building totaling 51,900 square feet in Milpitas as part of a joint venture for $14 million in July. Westcore also shelled out nearly $2 million for a 3,700 square-foot retail property in Milpitas three months ago, and paid just over $18 million for a 53,400 square-foot office property in Sunnyvale in November.
Headquartered in San Diego, Westcore is a private commercial real estate investment firm focusing on markets in the Western U.S. During its seven-year existence, the company has invested over $2.2 billion in properties accounting for more than 10 million square feet in industrial, office and retail space.
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