Tasman Tech in Milpitas Trades Hands for $170M

Lionstone Investments has sold Tasman Tech to Washington Holdings LLC, a West Coast-based institutional investment firm, for $170 million. The investor recently completed a renovation of the 14-building property, which attracted new tenants.

Located at Tasman Drive at I-880 in Milpitas, the property has a full suite of amenities, including on-site retail, outdoor collaboration areas, fitness center and ChargePoint vehicle chargers. It is also proximate to the VTA Light Rail ride to Milpitas BART station, and there is a BART expansion planned in the area in the future. Thanks in large part to the upgrades, the property maintained strong leasing through the pandemic and has strong in-place cash flow.

The Silicon Valley office market, overall, was impacted by the pandemic, but new deliveries helped to drive leasing activity in the market. In the first quarter of the year, office inventory in the market increased by 17 million square feet, according to research from Savills. It was welcome news for office users looking for high-quality space at a discount. The construction pipeline, however, has driven the vacancy rate to 14.4% to 18.4% and asking rates have decreased to $4.82 per square foot, down $0.08 from the first quarter 2020. With new product continuing to arrive, tenants will find plenty of opportunities to secure quality space.

Despite the challenges, office properties have continued to trade. In August, Dollinger Properties purchased Valley Creative Center, an office property in the Silicon Valley, for $56 million from Vista Investment Group. The property is a six-building R&D/office campus totaling 166,928 square feet. Like the Tasman Tech deal, Vista Investment Group had completed several capital improvements before the sale of the property. Those improvements included a new exterior façade, grade loading and additional parking.

Also in August, KKR’s fund KKR Real Estate Select Trust acquired HQ @ First, a 603,000-square-foot office campus in Silicon Valley, from Japanese developer MORI TRUST CO. The property is currently fully leased to an investment-grade tenant. The sales price of the campus was not disclosed. Located in North San Jose, the property is a trophy asset, featuring 60,000 square-feet in lab space and it has a LEED certification. The property is part of the fund, KREST’s single-tenant investment strategy, which targets high-quality properties leased to a single tenant on a long-term basis.

In the Tasman deal, Newmark vice chairman and head of Northern California capital markets Steven Golubchik, vice chairman Edmund Najera, senior managing director Jonathan Schaefler and director Darren Hollak brokered the transaction.