Madison Capital Pays $260M for Bay Area Campus
The sale-leaseback comes a decade after the previous transaction.
Madison Capital Group has acquired a 575,775-square-foot R&D campus in Fremont, Calif., The Real Deal reported. Hard drive manufacturer Seagate Technology sold the asset for $260 million.
The property, a former Solyndra manufacturing plant, originally came online in 2010 at a cost of $300 million. At that time, the company received a $535 million federal loan guarantee to develop the property. A year later, Solyndra filed for bankruptcy. In 2013, Seagate purchased the asset for $90.3 million, a third of its initial cost.
After the acquisition, the facility underwent a $200 million capital investment in 2016. The redevelopment plan included the transformation of the plant into an R&D/advanced manufacturing campus.
Situated on 30.1 acres, the LEED Gold certified facility encompasses a two-story and mezzanine building and includes more than 100,000 square feet of clean room and laboratory build-out, a two-level office space component, on-site lounge and conference room, heavy power and MEP infrastructure. The property also includes 590 parking spaces, 20 dock roll-up doors and 10.1 undeveloped acres for potential expansion. Seagate remains the sole tenant as part of the sale-leaseback transaction, according to the San Francisco Business Times.
The Fremont campus at 47488 Kato Road has access to interstates 880 and 680. The Silicon Valley property is 12 miles from San Jose, Calif., and some 43 miles from San Francisco. Corporate neighbors in the area include Tesla, FedEx, DHL, Amazon and Siemens, among others.
Madison Capital, which owns and manages $3.2 billion in assets, has four more commercial properties in the Bay Area, including the historical Ford Point building, now a 517,000-squre-foot R&D industrial facility in Richmond, Calif. The company, alongside Meadow Partners, paid $103.7 million for the asset last year.
Bay Area R&D demand takes hit
Despite economic uncertainty, asking prices remained flat in Silicon Valley in the first quarter of 2023, according to Kidder Mathews’ latest report on the R&D market. However, layoffs in the tech sector have contributed to a decrease in tenant demand and an increase in market vacancy, from 7.9 percent in the fourth quarter of 2022 to 8.7 percent the next quarter.
The Kidder Mathews report shows that, despite a decrease in transaction volume in sectors such as biotech, hardware and medical devices, there still are specific facilities that are sought after, including properties that feature clean rooms, heavy power and other specialized laboratory improvements.