One of the listing brokers, Colliers SVP Andy Zighelboim tells GlobeSt.com that Seagate it would cost $2,500 per sf to replicate the existing improvements in Milpitas and is paying a below-market rent of $0.94 under a lease that it can – and presumably will – cancel after three years. "Current market rent is $1.35 per sf (NNN), so there's a lot of intrinsic value, especially considering the high-end improvements," Zighelboim says.
With a lot of clean energy tenants looking for clean room space right now, Zighelboim says bidders could include investors as well as clean-energy companies, possibly a company in the burgeoning solar photovoltaic sector or the medical device space because the reduced time-to-market could present a competitive advantage.
"An investor could hold it and realize the rental cash while marketing it for sale or for lease to a clean-tech tenant in year three," Zighelboim says.
The going-in NOI is 882,000, stabilizing upon re-leasing at $1.3 million in year four, according to the pro forma. "It's a value-add opportunity," Zighelboim says.
Partnering with Zighelboim on the listing are fellow San Jose-based Colliers International brokers Michael Rosendin and Craig Fordyce. Property tours are underway. The offer deadline is Aug. 26.
Seagate and affiliates have occupied the entire building for 14 years. The company told investors in July that it would vacate the building in early October and consolidate production capacity in Singapore, where it recently completed a third media manufacturing facility.
"Singapore is a highly efficient and cost-effective manufacturing site for Seagate recording media operations, thanks to …the country's availability of utilities, favorable logistics infrastructure and a collaborative partnership in terms of local governance and regulations," a company official said when the project was announced in 2006.
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