Dermody Properties has cut a deal to buy a 29-acre office campus in Milpitas with approved plans to redevelop it into a 490,000-square-foot warehouse or manufacturing site.
The Reno-based real estate investor bought the Metro Corporate Center, a 395,300-square-foot office property at 1001 South Milpitas Boulevard, the San Francisco Business Times reported. The price was undisclosed.
The seller was Amazon.com, which bought the vacant four-building campus for $123 million in October 2021, six months after it successfully entitled the land for a distribution center. The purchase was part of a strategy to acquire real estate near big cities for future growth.
The sale, first reported by Bloomberg, marks a year-long Bay Area pullback for the Seattle-based ecommerce company, which hoped to rein in $2 billion in excess industrial leases nationwide.
Amazon serves the South Bay with two other delivery stations in Milpitas, a company spokesman told the newspaper.
George Condon, a partner with Dermody Properties, declined to discuss the details of the sale. A source close to the deal expects Amazon will take a loss on the sale, Bloomberg reported.
The deal is expected to close by the end of April, and Dermody is looking for warehouse tenants, Condon told Bloomberg. The commercial real estate firm plans to move forward with a 490,000-square-foot industrial facility approved for the site, and intends to break ground in July, according to the Business Times.
Brokers Sam Higgins and Tom Damaschino of KBC Advisors represented Amazon in the deal. Dermody represented itself.
Condon said Dermondy was drawn to the Milpitas property because of its proximity to both Silicon Valley and Interstate 880, a main transportation corridor from San Jose to Oakland.
Once built, he said, the industrial facility will be among a small group of Class A industrial properties in the I-880 corridor and could be occupied by a traditional warehouse user or an advanced manufacturing tenant.
Amazon bought 58.5 acres in Pleasanton, 30 miles northeast of Milpitas, about the same as it acquired the Milpitas property. It’s not clear whether Amazon wants to sell it as well, according to the Business Times.
In the past year, the company has halted moves to lease a Prologis-owned facility in San Leandro. It also subleased nearly 1 million square feet of industrial space in the East Bay.
— Dana Bartholomew
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