Amazon buys site of 395K sf commercial campus in Milpitas for $123M

The four-building office and research complex has been vacant since at least 2015; it will very likely be redeveloped, an Amazon spokesperson said

Amazon buys site for 395K sf commercial campus in Milpitas for $123M
Amazon CEO Andy Jassy and different angles of the Metro Corporate Center in Milpitas. (Wikipedia, Newmark)

Amazon acquired the site of a four-building office and research campus in Milpitas for $123 million, the e-commerce giant’s second large property purchase in the Bay Area in two months.

The company’s latest acquisition is the Metro Corporate Center, a 395,335-square-foot complex located between Gibraltar Drive to the west and south, South Milpitas Boulevard to the east and a separate office and research campus at 691 S. Milpitas Boulevard to the north. It paid about $311 a square foot to acquire the former headquarters of LifeScan Inc. — a maker of blood glucose monitoring systems and a subsidiary of Johnson & Johnson — from Westport Capital Partners, a real estate investment firm. The deal was recorded in the Santa Clara County Clerk-Recorder’s Office on Friday.

Amazon spokesperson Natalie Wolfrom confirmed details of the transaction and said the Metro Corporate Center site will most likely be redeveloped. The company hasn’t solidified plans for what it intends to build there, she said.

The site allows Amazon to achieve “an efficient and effective delivery schedule for customers located in the East Bay through Highways 880 and 680 and in Silicon Valley vis-a-vis Highways 237 and 101,” said Alex Andrade, Milpitas’ economic development director, in a Monday email. The company aims to attain a two-hour delivery schedule for its East Bay and Silicon Valley customers, and the site “creates many opportunities for their regional operational network,” he said.

“The City of Milpitas looks forward to continuing to foment a mutually beneficial relationship with Amazon as it continues to increase its presence in Milpitas and Silicon Valley,” Andrade said in a statement.

The 29-acre property has been vacant since at least 2015, when Westport bought it from Johnson & Johnson for about $45 million, or about $114 a square foot, according to the Silicon Valley Business Journal. The campus that sits on the property includes four buildings ranging from 54,601 to 153,372 square feet in size, an ample amount of surface parking, a park area, and a swath of vacant land that can reportedly accommodate a new structure of up to 120,000 square feet.

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A representative for Westport declined to comment.

With this latest deal, Amazon now owns or rents more than 1.1 million square feet of building space in Milpitas, which borders the cities of Fremont and San Jose in the southern half of Silicon Valley.

In 2019, the company agreed to lease 353,000 square feet across three industrial buildings between 707 and 907 N. McCarthy Boulevard to create an around-the-clock delivery hub. Last year, it signed a lease on a 388,240-square-foot warehouse project at 205 N. McCarthy Boulevard and came to terms with Bridge Industrial, the structure’s developer, to lease and pave land where the latter initially planned to construct an adjacent building. Amazon also operates a 30,000-square-foot lab near McCarthy Boulevard and Montague Expressway, Andrade said.

While Amazon hasn’t publicly outlined its plans for the Metro Corporate Center property, it has a variety of different options if it does end up deciding to redevelop the campus. The site is zoned M2 Heavy Industrial District, which allows for office, research, general manufacturing, warehousing, and distribution uses, among others, according to the City of Milpitas’ zoning guidelines.

In March, the city approved a development application from Overton Moore Properties to demolish the existing campus and construct a one-story, 503,000-square-foot warehouse building in its place, Andrade said Monday. Although the site is entitled to accommodate an industrial development of that size, Amazon could also decide to re-entitle it. Andrade referred questions about the company’s vision for the land to its representatives.

Members of Overton Moore’s team did not respond to requests for comment. A spokesperson for CBRE, which created an online property listing marketing Overton Moore’s approved Milpitas project for lease, said the company could not comment on Amazon’s purchase of the Metro Corporate Center.

Elsewhere in the Bay Area, Amazon plans to build a distribution center on almost 60 acres of undeveloped land in the Tri-Valley city of Pleasanton. The company intends to build a distribution center on the site that will either be a 520,000-square-foot sorting center for about 800 employees or a 201,000-square-foot delivery station for 100 to 200 workers, Wolfrom told The Real Deal last month. It hasn’t yet decided between them, she said.