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CIP Buys Industrial Asset in Fremont for $30MM

February 6, 2019

As seen in The Registry, Bay Area Real Estate 


By Jon Peterson

Newport Beach, Calif.- based CIP Real Estate has acquired the five-building 148,926 square foot Fremont Business Center in Fremont for $30.15 million, or just over $202 per square foot, according to sources familiar with the sale of the property. This asset is considered to be an R&D property.

The seller of the property was Lincoln Property Company. It had owned the asset for its separate account with the Oregon Public Employees Retirement Fund. This information was confirmed in an email by the Oregon Investment Council, which makes investment recommendations for the pension fund.

The property is located at several addresses anchored at the corner of Warm Spring Blvd. & Hammond Ave. in Fremont, Calif.

Lincoln had hired CBRE to be the listing agent on the sale. Its capital markets experts in the sale were Darla Longo, vice chairman, and Rebecca Perlmutter, senior vice president. CBRE declined to comment when contacted for this story.

“We believe that this property is in a very strong industrial market where it’s difficult to find asset to buy. Our price point was attractive as it comes in at below replacement cost, and we will have the opportunity to increase the rental income in the future,” says Eric Smyth, a principal with CIP Real Estate.

Industry expects have predicted that replacement cost for similar types of buildings in the Fremont are around $380 per square foot.

The Fremont Business Center has existing rents in the property that are 21 percent below market rates. The R&D market in Fremont has been going through a rental rate growth spike. Over the past two years, rental rate growth in the market has been 11.7 percent. The vacancy in the Newark/Fremont region has tightened up to a historical low of 5.3 percent.

The sale of the property did produce a five percent cap rate. This figure would be based on the property producing a one-year net operating income of $1.5 million.

The Fremont Business Center was 81 percent occupied when the property was put up for sale. Some of the main tenants in the property include inTest Corporation, Hewlett Packard Enterprise and Actelis Networks. The leasing efforts for the empty space going forward will be led by the San Jose office of Colliers International. This will include Craig Fordyce and Michael Rosendin, both executive vice presidents.