BKM Capital Partners Acquires Junction Business Park in San Jose
$31M Deal Strengthens Presence in Silicon Valley’s Golden Triangle
SAN JOSE, CA, January 8, 2024 – BKM Capital Partners, a vertically integrated institutional fund manager, has acquired Junction Business Park in Silicon Valley’s sought-after Golden Triangle market. The multi-tenant light industrial property, comprised of 119,101 square feet in two San Jose, CA buildings, were sold for $31 million, or $260 per square foot.
Built in 1978, the asset is situated at 1911-1943 Hartog Dr. & 1914-1968 Junction Ave. in the heart of the Silicon Valley’s logistics market. It houses 16 units ranging in size from 6,156 to 12,672 square feet, with office space accounting for just 30% of its net rentable area. The property features 16 grade-level and 14 dock-high loading doors, 16-foot clear heights and an above-average parking ratio.
“Although San Jose has seen significant industrial development in recent years, the availability of smaller, high-quality light industrial assets remains at a minimum,” said Brett Turner, Senior Managing Director of Acquisitions and Dispositions at BKM. “Our certainty of close and solid financing helped us purchase the property at a significant discount to replacement cost. We’re confident that once we complete our upgrades and leasing plans, Junction Business Park will be a highly sought-after location for the market’s top light industrial tenants.”
As part of its value-add strategy, BKM is implementing a $1-million capital improvement plan to improve the asset’s efficiency and appeal, bringing it up to class A standards. Plans call for upgrades to HVAC systems and parking lots, as well as improved landscaping, signage and paint scheme.
BKM has also budgeted $873,000 in tenant improvements to elevate unit interiors to its brand standards to attract San Jose’s premium industrial users. The property is currently 100% leased to 13 tenants, and the firm intends to take advantage of a 2.5-year WALT to correct an 18% market rent deficiency over its four-year hold period.
“With this latest transaction, BKM now owns over 900,000 square feet in five properties throughout Northern California,” stated Brian Malliet, BKM’s Chief Executive Officer. “Like with all of our acquisitions, Junction Business Park aligns perfectly our proven investment strategy—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.”
Junction Business Park is located adjacent to San Jose International Airport, the Port of Oakland, US-101 and I-880, providing access to both international and domestic markets, including parts of the Bay Area and the larger Northern California region. The broader South Bay market has benefited from substantial economic activity, driven by a 20% increase in the labor force over the past decade and an increasingly educated population that feeds the local high-power technology and life science industries that are often supported by ancillary industrial-using tenants.
The sale was brokered by Cushman & Wakefield’s National Industrial Advisory Group, including Jeff Chiate, Rick Ellison, James Carpenter, Will Strong, Scott Prosser, Steve Hermann, Jack Depuy, Mike Adey, Brad Brandenburg, and Matt Leupold. Stockbridge Capital Group is the seller.