TA Realty Sells Bay Area R&D Assets

47200 Bayside Parkway. Photo courtesy of Newmark.

Kennedy Wilson, through its Kennedy Wilson Fund VI, has acquired a two-building R&D portfolio in Fremont, Calif., for $32.3 million. 

TA Realty sold the assets, which total 115,537 square feet and are fully leased to Intuity Medical and Mercury Systems. According to CommercialEdge data, the seller had acquired the two properties in 2018, in a $25 million portfolio transaction. 

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The two-story office building located at 47200 Bayside Parkway comprises 53,713 square feet and is fully leased to aerospace and defense company Mercury Systems since 2005. The property, constructed in 1992, offers a parking ratio of 3/1,000.

The building occupied by Intuity Medical is located at 3500 W. Warren Ave. The two-story, 61,824-square-foot Class B office was initially constructed in 1986. It serves as the headquarters for the medical device manufacturer, where it develops its proprietary diabetes management solutions. The traded assets sit less than a mile from each other in Fremont’s dense tech market, with immediate access to Interstate 880 and various shopping and dining destinations.

A team of Newmark brokers led by Head of Northern California Capital Markets Steven Golubchik represented TA Realty in the transaction. 

A desirable alternative

Due to its lower rates, Fremont is a sought-after alternative to the overall pricier Silicon Valley. As of last year’s fourth quarter, the submarket reached an average triple-net asking rent of $1.39/square foot for R&D space, much lower than the Silicon Valley average of $2.37, according to a recent Newmark report.

Kennedy Wilson raised $775 million in capital commitments for its Kennedy Wilson Real Estate Fund VI, according to a 2019 press release. The fund is focused on the Western U.S., targeting value-add opportunities. Kennedy Wilson owns more than 20 office properties across the wider Bay Area totaling more than 1.6 million square feet, according to Commercial Edge data.

Deals still happening in the Bay Area

While overall office rates continued to drop across both Silicon Valley and San Francisco due to uncertainty brought by the health crisis and ensuing work-from-home policies, properties anchored by strong tenants with long-term commitments continued to trade in the area.

Earlier this month, Brookfield Property Partners paid $630 million for a Mountain View campus leased to WeWork and occupied by Facebook through an enterprise lease. In March, Kilroy announced the record $1 billion sale of The Exchange on 16th, Dropbox’s Mission Bay base. The buyer was later identified as KKR. And across the bay, CIM Group sold Oakland’s Uptown Station, a mixed-use asset whose office component is occupied by Square Inc., for more than $400 million.