Quantum Scape Building in San Jose Sells for $103M

A class-A industrial facility in San Jose that is occupied has traded hands for $103 million. Quantum Scape fully occupies the property, which is used as a battery development facility. Located at 1710 Automation Parkway, the property is 196,647 square feet and has recently been updated.

Newmark executive vice chairman and president of the western region capital markets Steven Golubchik, vice chairman Nicholas Bicardo, senior managing director Jonathan Schaefler and director Darren Hollak brokered the transaction. According to Golubchik, the deal generated significant investor interest due to the strong infill location and strong in-place cash flow.

According to research from Newmark, the San Jose industrial market has performed well this year, despite low availability of supply. The first quarter saw 124,000 square feet of absorption with average asking rates increasing quarter-over-quarter to $1.49 per square foot and the vacancy rate falling to 3.7%. The single-tenant market, of which this facility is a part of, is particularly strong. The sector totals 2 million square feet, and since 2016, it has recorded more than one million square feet of positive net absorption.

There is some new construction activity that is aiming to help boost supply and meet demand. Last year, for example, Bridge Industrial, a privately-owned, vertically integrated real estate operating company and investment manager, completed the development of Bridge Point Silicon Valley—a 388,240-square foot state-of-the-art industrial facility in Milpitas, CA, located on 34.5 acres. Bridge purchased the site in 2019 and was able to secure a long-term lease agreement with a major e-commerce company prior to groundbreaking. The development began in spring 2020.

Overall, San Jose has experience growth across asset classes, thanks in large part to the presence of high-profile employers like Google, Apple, Samsung, Netflix and LinkedIn. There is a lot of activity in the market. Most notably, construction on the first phase of Platform 16 in San Jose started earlier this year after pausing in 2020. The mega office project is being developed by a joint venture between Boston Properties and Canada Pension Plan Investment Board. The first phase of the development is a 390,000 square foot class-A creative office building and an underground parking garage. Located in Downtown San Jose on a 5.6-acre site, Platform 16 is a 1.1 million-square-foot office campus with 16 private outdoor terraces offering tenants city views, two pedestrian plazas for social gatherings and corporate events, a large fitness and wellness center and a café.