Competition Intensifies for Light Industrial

The business center was 96% leased at the time of sale.

  FREMONT, CA— Stockbridge Capital Group purchased the Warm Springs Business Center in early 2014 as part of a larger portfolio acquisition that also included property in North San Jose. Stockbridge invested more than $1 million into the property during the past two years in terms of roof replacements, new HVAC units, market-ready improvements, property signage, painting and landscaping upgrades. Those efforts paid off recently as the multi-tenant project sold for $21.45 million to West Valley Properties Inc. The 146,661-square-foot business park consists of units ranging from 800 square feet to approximately 6,700 square feet and was 96% leased at the time of sale. Warm Springs Business Center is composed of four multi-tenant office/R&D/flex buildings located at 48501 to 48531 Warm Springs Blvd. All of the suites feature a storefront office space and an industrial/warehouse area, which are designed to cater to small businesses, regional sales locations and distribution offices that rely upon having office and shipping/receiving in one space. The property also serves as an incubator setting for smaller start-up tenants. The center has historically been able to accommodate the growth of existing tenants, keeping them in the project even after expansions. Steve Hermann, Robert Gilley and Eric Fox with Cushman & Wakefield along with Vince Machado of CBRE represented Stockbridge in the transaction. Hermann, an executive managing director, tells GlobeSt.com: “Under the proactive ownership of Stockbridge, the occupancy in the project improved from 65 to 100%  due to a targeted capital improvement program. There is also, however, still further upside for the new ownership as more than half of the tenant leases are set to expire within a few years that could present opportunity for increased rental income.” The location boasts immediate access to Interstates 880 and 680, and provides direct, signaled access to Warm Springs Boulevard. There are also nearby retail services that include restaurants, banks and health-related facilities. Fox tells Globest.com: “Over the past decade, much of the region’s light industrial product has been converted to higher-density office and residential product, thereby intensifying competition for high quality light industrial space in good locations. This property experienced strong interest from many investors, both institutional and local, seeking to gain a foothold in the market in an ever scarcer product type.”