Washington Holdings acquired a 14-building campus in Milpitas, increasing its research-and-development portfolio in Silicon Valley to almost 2.5 million square feet across seven properties, the firm said Thursday.
The West Coast real estate investor paid $170 million, or about $279 a square foot, to buy the Milpitas campus from a joint venture of Orchard Partners and Lionstone Investments, according to The Registry, which attributed the sale price to people with direct knowledge of the transaction. Dubbed Tasman Tech, the almost 609,000-square-foot complex is tucked between East Tasman Drive, Coyote Creek, Interstate 880, and a row of mid-to-large-sized industrial and research facilities.
The deal is the latest Silicon Valley business park acquisition by Washington Holdings. Based in Seattle, it’s bought three office and research complexes in San Jose, which borders Milpitas, in the last four years. Earlier this year, it snapped up the seven-building RioTech R&D Park in north San Jose for almost $170 million, or about $451 a square foot, according to Old Republic Title records.
Orchard Partners and Lionstone acquired Tasman Tech from Deutsche Asset & Wealth Management, now known as DWS, for about $116 million, or about $190 a square foot, in 2014. Besides being close to Interstate 880, a major north-south highway, the property also offers access to Highway 237, sits along a light-rail line, and is one stop from the Milpitas Transit Center, which opened for BART and light-rail service last year.
When the joint venture took over Tasman Tech in 2014, the business park had “solid bones” but lacked the amenities that today’s tenants want, Mike Biggar, co-founder and managing partner of Orchard Partners, said in an email on Thursday. During the last seven years, Orchard Partners worked with Studio G Architects and South Bay Construction to update the complex’s interiors and exteriors, add outdoor gathering areas and a fitness center and open three on-site restaurants.
“Our success in boosting our occupancy over the last 18 months by about 20 percent is testament to the business plan we executed,” Biggar said . Together with Sherman Chan and Bob Steinbock of CBRE, Tasman Tech’s listing broker, the campus’ previous owners signed more than 120,000 square feet of new leases since April 2020, Biggar said. They included recently completed deals with Sentient Energy and Virtusa and an expansion of Advanced Energy’s existing, 25,000-square-foot presence by another 14,000 square feet.
Tasman Tech is 81 percent leased to 17 tenants, according to a Thursday news release by Washington Holdings republished by The Registry. Some of the complex’s newer tenants are reportedly paying less than $2 a square foot a month, excluding expenses, at the start of their lease terms. Available space within the business park costs $2.05 a square foot a month to rent, excluding expenses, according to CBRE’s website. That asking rental rate may change now that the property is under new ownership.
Biggar declined to comment on Tasman Tech’s sale price or why Orchard Partners and Lionstone felt that now was the right time to sell the campus. Representatives for Lionstone and Washington Holdings didn’t respond to emails seeking comment.