BKM Capital buys 119K sf office-industrial complex in North San Jose for $31M

Investor pays $258 psf, plans renovation and tenant upgrades at Junction Business Park

BKM Capital Pays $31M for San Jose Office-Industrial Site
BKM Capital Partners Brian Malliet with Junction Business Park at 1911-1943 Hartog Drive and 1914-1968 Junction Avenue (BKM Management)

BKM Capital Partners has purchased a 119,100-square-foot industrial and office complex in North San Jose for $30.7 million.

The Newport Beach-based investor bought the two-building Junction Business Park at 1911-1943 Hartog Drive and 1914-1968 Junction Avenue, the San Jose Mercury News reported. The seller was Stockbridge Partners, based in Boston.

The deal works out to $258 per square foot.

Globest, citing a report in Green Street, said the seller was San Francisco-based Stockbridge Capital Group, which listed the Junction Business Park in August as part of a portfolio of five industrial campuses encompassing 1.9 million square feet.

It’s not clear how much either Stockbridge firm paid for the property.

BKM bought the business complex as part of its purchase of three industrial parks in Phoenix and Silicon Valley for a total of $79 million, in two separate deals with Stockbridge Capital Group, according to Commercial Property Executive.

BKM Capital borrowed $20.6 million from First Citizens Bank & Trust at the time of the purchase, according to the Mercury News, citing Santa Clara County public records.

The deal was arranged by brokers Will Strong, James Carpenter, Kirk Kuller, Robert Buckley, Tracey Cartledge, Michael Matchett and Molly Hunt of Cushman & Wakefield’s National Industrial Advisory Group.

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Junction Business Park, built in 1978, includes two buildings with 16 units ranging from 6,200 to 12,700 square feet. The fully leased complex, with 30 percent offices, has an industrial capacity of 16 grade-level and 14 dock-high loading doors and 16-foot clear heights.

BKM plans to sink $1 million in capital improvements to bring it up to Class A standards. The firm has also budgeted $873,000 in tenant upgrades.

Brian Malliet, CEO at BKM, said the company now owns more than 900,000 square feet of space in five properties throughout Northern California.

“Like with all of our acquisitions, Junction Business Park aligns perfectly with our proven investment strategy,” Mallet said in a statement. “We identify a well-located light industrial asset, buy it at a significant discount to replacement cost, and then leverage our expertise and resources to maximize its value.”

In May last year, BKM paid $280 million for 35 industrial buildings in Los Angeles, Las Vegas and Portland, Ore. The buildings are spread over 10 light industrial properties that together have more than 1.1 million square feet.

Since it was founded by Brian Malliet in 2013, BKM has completed more than $3.2 billion in acquisitions involving 89 light industrial properties containing more than 16 million square feet, according to its website.

— Dana Bartholomew

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