TMG Partners and Grove Real Estate Partners have teamed up in a joint venture with Lone Star Funds in the acquisition of Washington Holdings’ Class A R&D portfolio, a 2.2 msf collection of predominantly single-story research and development product in Silicon Valley. The portfolio consists of six projects spanning 140 acres across Santa Clara, San Jose, and Milpitas, all within Silicon Valley’s highly desirable Golden Triangle submarket.
The portfolio is approximately 87% leased to a diverse roster of 63 tenants spanning the semiconductor, medical device, telecom, data security, and automation/AI industries, with a weighted average lease term of 3.3 years. Over its ownership, Washington Holdings invested approximately $173 mil ($87 per square foot) into base building, exterior, and interior renovations across the portfolio, resulting in high tenant retention and reduced capital requirements going forward. The specialized, mission-critical nature of the R&D improvements, including clean rooms, semiconductor wafer fabs, data centers, and wet labs, creates meaningful tenant investment and operational dependency on the space, further supporting occupancy and retention.
The compilation of properties sits within the Golden Triangle, a transit-oriented submarket formed by the intersection of Highways 101, 237, and Interstate 880 and anchored by Santa Clara, North San Jose, and Milpitas. The submarket is home to headquarters and major R&D footprints for companies including NVIDIA, Intel, Cisco, Broadcom, Samsung, TSMC, PayPal, and Apple, and has added approximately 8,000 residential units since 2010 to support its workforce. With no new R&D development economically feasible given current land and construction costs, the portfolio is well positioned to benefit from continued rent growth and long-term covered land value.
“This acquisition represents a rare opportunity to secure the most cohesive assemblage of mission-critical R&D space in Silicon Valley in a single transaction,” said TMG Partners Co-CEO Ben Kochalski. “Silicon Valley’s R&D inventory has declined nearly 20% since 2003, and new development remains economically unfeasible given today’s land and construction costs. This portfolio’s combination of scale, specialized infrastructure, and irreplaceable Golden Triangle locations gives us a durable, high-quality income stream today and significant long-term upside as the world’s most important technology ecosystem continues to grow.”
The portfolio comprises six campuses:
• Mission Park R&D, a 500.3k sf, 12-building campus on 33 acres in Santa Clara that includes a 73k sf standalone data center, an on-site retail center anchored by Mendocino Farms, and a 175-room Element by Westin hotel, situated adjacent to the NVIDIA, Intel, and Oracle campuses
• Montague Square, a 251.2k sf, six-building project on 15 acres at the corner of Montague Expwy and North First St, steps from the Orchard VTA light rail station
• North First @ Orchard Station, an entirely single-story, 266.8k sf, six-building campus on nearly 17 acres that is 96% leased
• Montague Oaks, a 295k sf, eight-building campus on 18.5 acres that includes a 5,000-amp Verizon (MCI Metro) telecom switch facility sited atop a critical fiber intersection
• Zanker Place, a 141.9k sf, four-building campus on 9.4 acres near PayPal’s headquarters and Google’s Brokaw campus
• Tasman Tech Center, the largest asset in the Portfolio at 736.8k sf across 14 buildings on 47 acres in Milpitas, recently renovated with new landscaping, a tenant fitness center, three restaurants, and 15 EV chargers
An Eastdil Secured team that included Managing Directors Stephen Van Dusen and Nate Jones, Senior Vice President Kurt Chong, and Associate Will Crummey advised Washington Holdings in the deal. Eastdil Managing Director Matt Haden and Director Jim Castignani advised on financing. Brokers from four teams representing the buyers in the transaction include: Newmark’s Mike Saign, Jeff Arrillaga, Joe Kelly, and Grant Meylan; CBRE’s Chris Shepherd, Christian Marent, Mark Christierson, Sherman Chan, Bob Steinbock, and Joey McSweeney; Colliers’ Craig Fordyce and Mike Rosendin; and Cushman & Wakefield’s Colin Feichtmeir, Gregory Davies (now with JLL), Steve Horton, and Kelly Yoder.
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