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BKM Capital Partners Completes $31 Mil Industrial Buy in Silicon Valley

1/09/24

BKM Capital Partners has acquired Junction Business Park, a multi-tenant, light industrial property in Silicon Valley’s sought-after Golden Triangle market, for $31 mil. The San Jose property consists of two buildings totaling 119.1k sf ($260/sf) of space.

Built in 1978, the asset is situated at 1911-1943 Hartog Dr and 1914-1968 Junction Ave. It contains 16 units ranging in size from 6.2k sf to 12.7k sf, with office space accounting for just 30% of its net rentable area. The property features 16 grade-level and 14 dock-high loading doors, 16-foot clear heights and an above-average parking ratio.

“Although San Jose has seen significant industrial development in recent years, the availability of smaller, high-quality light industrial assets remains at a minimum,” said Brett Turner, Senior Managing Director of Acquisitions and Dispositions at BKM. “Our certainty of close and solid financing helped us purchase the property at a significant discount to replacement cost. We’re confident that once we complete our upgrades and leasing plans, Junction Business Park will be a highly sought-after location for the market’s top light industrial tenants.”

As part of its value-add strategy, BKM is implementing a $1 mil capital improvement plan to improve the asset’s efficiency and appeal, bringing it up to Class A standards. Plans call for upgrades to HVAC systems and parking lots, as well as improved landscaping, signage and paint scheme.

BKM has also budgeted $873k in tenant improvements to elevate unit interiors to its brand standards to attract San Jose’s premium industrial users. The property is currently 100% leased to 13 tenants, and the firm intends to take advantage of a 2.5-year WALT to correct an 18% market rent deficiency over its four-year hold period.

Junction Business Park is located adjacent to San Jose International Airport, the Port of Oakland, US-101 and I-880, providing access to both international and domestic markets, including parts of the Bay Area and the larger Northern California region. The broader South Bay market has benefited from substantial economic activity, driven by a 20% increase in the labor force over the past decade and an increasingly educated population that feeds the local high-power technology and life science industries that are often supported by ancillary industrial-using tenants.

BKM was represented in the deal by Cushman & Wakefield’s National Industrial Advisory Group, including Jeff Chiate, Rick Ellison, Scott Prosser, Steve Hermann, Jack Depuy, Mike Adey, Brad Brandenburg, and Matt Leupold. Stockbridge Capital Group was the seller.




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