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November 7, 2013

MWest Spends $200M for 825 KSF Office, R&D Portfolio in Silicon Valley

By Barbra Murray, Contributing Editor

BayTech Business Park

BayTech Business Park, California

MWest Properties’ Silicon Valley footprint just grew by 825,000 square feet. The company, a year-old venture comprised of DivcoWest, Ivanhoé Cambridge and TPG Real Estate, has acquired a three-campus portfolio encompassing 12 R&D and corporate office buildings in San Jose, Calif., for approximately $200 million. Carr Properties was the seller.

From the perspective of hopeful buyers, MWest is in an enviable position. “The Class A and nicely-positioned properties in Silicon Valley are very difficult to find right now,” Douglas Sharpe, a director with commercial real estate services firm NAI Northern California, told Commercial Property Executive.

MWest’s newly acquired portfolio consists of BayTech Business Park, Valley Technology Centre and the building at 3025 Orchard Parkway. It also includes a notable tenant roster featuring the likes of Boston Scientific, Taiwan Semiconductor Manufacturing Co., which maintains its North American headquarters at 2585 Junction Ave. within Valley Technology Centre, and Tessera Technologies, headquartered at 3025 Orchard.

“These are quality, well-managed assets with good credit tenancies in place in a market which has seen rental increases and improved vacancy rates and which continues to experience strong employment growth,” Justin Wesley, managing director at MWest, said in a prepared statement. “The addition of these assets creates tremendous synergies within our existing platform and significant value-add opportunities.”

Everyone wants a piece of Silicon Valley, and MWest grabbed a huge chunk of it with its creation; the venture was formed in December 2012 to acquire the majority of assets owned by Mission West Properties. The transaction gave MWest a portfolio of 73 buildings containing 6.4 million square feet of leasable space in one fell swoop.

“There’s no shortage of appetite for investors looking go get into Silicon Valley, that’s for sure,” Sharpe said. However, while multiple offers are commonplace and price tags are growing bigger, investors are still keeping their heads.

“They haven’t completely lost their minds in the sense of taking on speculative risks, even in Silicon Valley,” Sharpe added. “So we’re seeing as much attention being paid to the financial stability of the groups that are the tenants in the buildings.”

 

 

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