RUE FERRARI - LoopNet€¦ · story and one two story, totaling 286,330 square feet, the project is...
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SAN JOSE, CALIFORNIA SILICON VALLEY VALUE-ADD INVESTMENT OPPORTUNITY 5853 5863 & RUE FERRARI INVESTMENT SUMMARY
Transcript of RUE FERRARI - LoopNet€¦ · story and one two story, totaling 286,330 square feet, the project is...
S A N J O S E , C A L I F O R N I A
SILICON VALLEY VALUE-ADD INVESTMENT OPPORTUNITY
5853 5863 &R U E F E R R A R I
INVESTMENT SUMMARY
5853 5863 &R U E F E R R A R I
COTTLE TRANSIT VILLAGE
RECENTLY COMPLETED DATA CENTERS
CBRE, as exclusive advisor, is pleased to present the outstanding opportunity to acquire the fee simple interest in 5853 & 5863 Rue Ferrari, located in San Jose, California.
The“Property” or “Buildings” consist of two buildings totaling 286,330 square feet located on a 17.38-acre parcel that fronts Highway 101. The Property is 100% leased to
Western Digital through December 2020. Western Digital is anticipated to vacate the Buildings at the end of their lease term, offering an investor the ability to re-lease or
redevelop the Property in a consistently supply-constrained R&D/industrial market. This opportunity is being made unpriced and on an “as-is”, “where-is” basis.
THE OFFERING
CALTRAIN
OFFERING SUMMARYAddress 5853 & 5863 Rue Ferrari
San Jose, CA 95138
APN 678-05-057
Total Leased Area 286,330 Square Feet
5853 Rue Ferrari - 155,405 Square Feet
5863 Rue Ferrari - 130,925 Square Feet
Year Built 1992
Floors 5853 Rue Ferrari - Single Story
5863 Rue Ferrari - Two Story
Land Area 17.38 Acres
Parking Ratio 3.4 Stalls per 1,000 Square Feet
Power 4,000 Amps @ 277/480 V for Each Building
Loading Six Dock High Doors/Five Grade Level Doors
% Leased 100%
Tenant Western Digital Corp. (NASDAQ: WDC)
Lease Expiration December 2020
Lease Type Absolute NNN
Year-1 NOI $2,627,847*
*7/1/19 - 6/30/20
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FUNCTIONAL R&D BUILDINGS WELL-SUITED FOR A VARIETY OF TENANTSThe South San Jose overall market has undergone a fundamental shift over the past
couple of years due to a wave of tenant migration into the submarket. Many of these
companies are relocating from Northern Silicon Valley submarkets due to minimal
options in those markets and/or the high cost of occupancy, as well as due to San
Jose maintaining a large employee population. The companies moving to South San
Jose represent a wide variety of industries, including automotive, technology and
advanced manufacturers. The Property offers a functional design and layout that
allow for a variety of uses and tenancy types, with a combination of open office,
lab/production space and warehouse space with dock and grade-level loading. Each
building offers excellent power with 4,000 amps at 277/480 for a total of 8,000 amps
for the project. This substantial power is highly sought-after by today’s tenants. In
addition, the Property has excellent freeway visibility, offering signage on the heavily
traveled Highway 101.
FLEXIBLE EXIT STRATEGIES5853 & 5863 Rue Ferrari offers investors the ability to acquire a high-quality R&D
project at an attractive basis with multiple opportunities to increase value.
» The re-tenanting or renewal of one or both buildings will result in significant value
creation that will command a deep buyer pool. Western Digital’s in-place rent
is currently 45% below market, in the chance they renew, their option is at fair-
market-value, offering a sizable mark-to-market opportunity.
» The functional, rectangle design of the parcel allows for the ability exists to
separately parcel each building making the Buildings desirable to owner/users, as
well as to sell the two buildings separately.
» Redevelopment of the site is also possible, as a lack of available industrial land
throughout Silicon Valley results in limited opportunities for new construction.
The Property is zoned Industrial Park (IP) that provides for a wide spectrum
of development options including warehouse, industrial and advanced
manufacturing. In addition to flexible zoning, the 17 acre parcel offers an efficient,
rectangle shape that would allow for a potential increase in the Floor Area Ratio
(FAR) with a new development.
» The ability also exists to raise the roof on the single story building resulting in
additional clear height.
INVESTMENT HIGHLIGHTS
RARE VALUE-ADD, R&D OPPORTUNITY5853 & 5863 Rue Ferrari represents the rare opportunity to acquire
a large, value-add R&D project at an attractive basis that is well
below replacement cost. Consisting of two buildings, one single
story and one two story, totaling 286,330 square feet, the project
is 100% leased to Western Digital through December 2020.
Western Digital is anticipated to vacate the Property at the end
of their lease term, offering an investor a stable, in-place income
from a credit tenant in the near-term with the opportunity to re-
lease the Property in an extremely supply-constrained submarket.
EFFECTIVE SOUTH SAN JOSE R&D VACANCY RATE IS LESS THAN 4%
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
2014 2015 2016 2017 2018
South San Jose R&D Vacancy Rate
25.0%
22.5%
20.0%
17.5%
15.0%
12.5%
10.0%
7.5%
5.0%
2.5%
0.0%
% Vacancy
21.6%
17.0%
17.6%
12.5%
14.0%
7.7%
Silicon Valley/South San Jose R&D Vacancy Rates (2014-2017)
EFFECTIVE VACANCY RATE
4.0%
STRONG MARKET FUNDAMENTALS The Property is located in South San Jose, a rapidly evolving
submarket in Silicon Valley that has witnessed near 1.7 million
square feet of tenant migration since the end of 2013. This
migration significantly decreased the vacancy rate, which was
7.7% at the end of the fourth quarter of 2018. Excluding the
vacancy of a large, non-competitive project of 400,000 square
feet (3403 Yerba Buena Road), the vacancy is below 4%.
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The Property fronts Highway 101 and offers excellent access to Highways 101 and 85 offering a true reverse commute, benefiting tenants as the Northern Silicon Valley
becomes increasingly congested. In addition, 20% of Santa Clara County’s population resides within a five-mile radius of the Property, providing a significant nearby workforce
for tenants to draw upon. The population growth surrounding South San Jose with several new residential projects and the ability for the submarket to attract tenants has
resulted in limited supply in the submarket with an effective occupancy of over 96% at the end of 2018.
Public Transportation OptionsThe Blossom Hill Caltrain Station and the Santa Teresa VTA Light Rail Station are less than one and one-half miles from
the Property. Proximity to mass transit has become an increasingly important factor for tenants seeking new space.
Significant New Residential and Retail DevelopmentThe former 332-acre HGST Western Digital campus located across Highway 101 from the Property was rezoned in
2005, and has been redeveloped into the Cottle Transit Village. The City of San Jose approved the redevelopment
of 172 acres into a mixed-use transit village including 2,930 homes, 460,000 square feet of retail and commercial
space and 17 acres of parks and open space. Since it was approved, nearly all of the new residential units are under
construction or have been completed including apartments, townhomes and single-family homes. An additional 76
acres was rezoned in 2014 at the intersection of Great Oaks Boulevard and State Route 85, and a recently completed
Costco and additional under construction retail and residential developments will fill in the remaining land.
LOCATION HIGHLIGHTS
Quality of Life and CommuteNumerous housing options in South San
Jose provide for an abundant workforce in
the immediate vicinity, making it an attractive
location for employers. In addition, the
reverse commute to and from South San
Jose offers employees a respite from the
increasingly congested Northern Highway
101 submarkets. Reduction in drive times at
peak commute periods is approximately 60%.
NEARBY AMENITIES
5853 5863 &R U E F E R R A R I
Cottle Transit Village:
2,930 Homes
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5853 RUE FERRARIONE-STORY BUILDING
155,405 SQUARE FEET
5863 RUE FERRARITWO-STORY BUILDING
130,925 SQUARE FEET
LoadingDock
LoadingDock
BasketballCourt
VolleyballCourt
CanopyOverhang
LoadingDock
LoadingDock
SITE PLAN
Total Square
Footage:
286,330
Total
Acreage:
17.38
Parking Ratio:
3.4 Spaces per
1,000 Square Feet(Potential for Additional Parking)
APN: 678-05-057
Potential for Additional Parking
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DEBT AND STRUCTURED FINANCE
BRAD ZAMPAExecutive Vice President
+1 415 772 0225
Lic. 01174366
© 2019 CBRE, Inc. The information contained in this document has been obtained from sources believed reliable. While CBRE, Inc. does not doubt its accuracy, CBRE, Inc. has not verified it and makes no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. CBRE and the CBRE logo are service marks of CBRE, Inc. and/or its affiliated or related companies in the United States and other countries. All other marks displayed on this document are the property of their respective owners. Photos herein are the property of their respective owners and use of these images without the express written consent of the owner is prohibited.
INVESTMENT ADVISORS
LEASING CONTACTS
SCOTT J. PROSSERExecutive Vice President
+1 408 453 7454
Lic. 01104754
RUSSELL INGRUMVice Chairman
+1 415 772 0103
Lic. 01921454
JOSEPH MORIARTYExecutive Vice President
+1 408 453 7480
Lic. 01224328
JACK DEPUYVice President
+1 408 453 7466
Lic. 01796176
CHIP SUTHERLANDExecutive Vice President
+1 408 453 7410
Lic. 01014633
BEN KNIGHTSenior Vice President
+1 408 453 7441
Lic. 1850353
MICHAEL WALKERSenior Vice President
+1 415 772 0278
LIc. 01843658
S A N J O S E , C A L I F O R N I A
5853 5863 &R U E F E R R A R I
CAPITAL MARKETSOFFICE | WESTERN U.S
BAY AREA Russell Ingrum
Joe Moriarty
Scott Prosser
Mike Taquino
Kyle Kovac
Jack DePuy
DENVER Tim Richey
Mike Winn
Chad Flynn
Jenny Knowlton
LOS ANGELES Todd Tydlaska
Sean Sullivan
Mike Longo
ORANGE COUNTY Anthony DeLorenzo
PHOENIX
Barry Gabel
PORTLANDTrevor Kafoury
Charles Safley
Paige Morgan
SALT LAKE CITYEli Mills
SAN DIEGOLouay Alsadek
Hunter Rowe
SEATTLETom Pehl
Lou Senini
DEBT & STRUCTURED FINANCE
Brad Zampa
Michael L. Walker
Brady O’Donnell
Bruce Francis
Mark McGovern
Val Achtemeier
INVESTMENT SUMMARY
