2210-2260 martin avenue
2210-2260 MARTIN AVENUE SANTA CLARA, CALIFORNIA
91,740 SQUARE FEET | 100% LEASED | E
X
E
C
U
T
I
MISSION CRITICAL FACILITY V
E
S U
M
M A
R Y
EXECUTIVE SUMMARY Cushman & Wakefield, Inc. as exclusive advisor, is pleased to present the exceptional opportunity to acquire the fee simple interest in 2210-2260 Martin Avenue (the “Property”), a three building, 91,740 square foot office/R&D/manufacturing project located in Santa Clara, CA. The Property is 100% leased to Fujifilm Dimatix (“Fujifilm”), a wholly owned subsidiary of Fujifilm Holdings Corporation. Fujifilm has been a tenant in the project for more than 15 years and recently signed a lease extension through March 16, 2026. The tenant has invested significant capital into the Property headlined by a $20 million investment to create an approximately 30,000 square foot state-of-the-art clean room and manufacturing facility at 2030 Martin Avenue along with approximately $10 million in additional upgrades over several years. The Property is situated in an in-fill Santa Clara location near the intersection of San Tomas Expressway and Walsh Avenue. The Property enjoys direct access to Highway 101 and Central Expressway, and is in close proximity to Mineta San Jose Airport. Several brand new nearby developments have enhanced the local amenity base. The completion of these developments will continue to reinforce the submarket’s position as one of the most sought-after corporate locations in Silicon Valley.
2
2210 - 2260 MARTIN AVENUE
EXECUTIVE SUMMARY
3
INVESTMENT HIGHLIGHTS ‣ Strong immediate cash flow from NNN lease with scheduled rent escalations ‣ Fujifilm Dimatix Mission Critical Facility ‣ Investment Grade Credit from Parent - rated “AA-” by S&P
OFFERING SUMMARY
‣ Tenant has a 15 year history in the project with ±8.5 years remaining term
2210 - 2220 Martin Avenue Building Addresses
‣ High renewal probability with ±$30 million invested by Tenant ‣ Future upside through marking in-place lease to market / building re-measurement at expiration, adaptive re-use, or redevelopment ‣ Desirable location with proximity to major corporate users, major highways, and new commercial development
2230 - 2238 Martin Avenue 2250 - 2260 Martin Avenue Santa Clara, CA 95050
Number of Buildings Total Building Area (as currently leased)
Three 91,740 SF
BOMA Measured Area
94,101 SF
# of Stories
One
Site Area
6.48 acres (two parcels)
Current FAR
0.325
Max Potential FAR
1.00 (±282,000 sf), City of Santa Clara General Plan
% Leased
100%
Remaining Lease Term*
8 years, 6 months
*As of a October 1, 2017 estimated sale date
4
2210 - 2260 MARTIN AVENUE
CENTRA
L EXPRE
SSWAY
2250-2260
R
XP
E AS
MARTIN AVENUE
AY W S ES
OM T N
36,660 SQ FT
SA
2230-2238 MARTIN AVENUE 33,480 SQ FT
2210-2220 MARTIN AVENUE 21,600 SQ FT
UE
N VE A N
TI
R MA
EXECUTIVE SUMMARY
5
STRONG LONG-TERM CASH FLOW The project is fully-leased on a triple net basis providing stable income with fixed increases over the next 8+ years. The tenant directly contracts for most of the services provided to the project, minimizing ownership obligations.
FUJIFILM DIMATIX MISSION CRITICAL LOCATION The Property serves as a mission critical facility for Fujifilm Dimatix and is home to product development and manufacturing. Fujifilm Dimatix is the world's leading provider of inkjet printheads for commercial and industrial printing. The company invests heavily in research and development, maintaining one of the most capable inkjet R&D groups in the world.
INVESTMENT GRADE CREDIT FROM PARENT Fujifilm Dimatix is a wholly owned subsidiary of Fujifilm Holdings Corporation (TYO: 4901). The multi-national photography and imaging company is headquartered in Tokyo, Japan and employs approximately 80,000 people worldwide. The company is considered investment grade with an AA- rating by Standard and Poor’s. The parent company directly invested $1.5 million in the Property to build out the product show room in 2210 Martin Avenue.
TENANT COMMITMENT TO PROJECT Fujifilm first occupied 2210-2220 Martin Avenue in 2002 and expanded into the entire three building project by 2009. The company recently solidified its commitment to Property by executing an early lease extension through March 16, 2026. Additionally, the company has invested significant capital in the project including approximately $20 million on its clean room manufacturing area in 2230 Martin Avenue. Fujifilm runs this facility 24 hours a day / 365 days a year and it would take years to replicate its technological capabilities at another location. The tenant has further invested approximately $10 million in upgrades to the office areas, development of an on-site product showroom, and infrastructure upgrades.
6
2210 - 2260 MARTIN AVENUE
SIGNIFICANT CAPITAL INVESTED The current ownership recently upgraded the building facades, creating modern, high-image lobby entrances. In addition, Fujifilm has continually invested its own capital in building upgrades and renovations over the years.
PLENTIFUL LOW COST POWER All of the buildings have an upgraded power supply including 12 Kilovolts provided to the manufacturing building (2230 Martin Avenue). Electricity service is provided by Santa Clara’s municipally-owned utility, Silicon Valley Power. Businesses and residents of Santa Clara that are served by Silicon Valley Power enjoy electrical cost savings of approximately 35% over the areas of Silicon Valley that are served by PG&E.
EXECUTIVE SUMMARY
7
UPSIDE OPTIONALITY ‣
Mark-to-Market of In-Place Rent: The current contractual rent is ±20% below market. Whether through a renewal or new lease, an owner has the ability to substantially increase NOI down the road. The average asking rental rate for R&D space in Santa Clara has increased at an average annual rate of 7.4% since the previous cycle peak in 2008; a sign of measured growth even through the market downturn in 2009/2010.
‣
Building Re-Measurement: The buildings were recently re - measured at 94,101 square feet (BOMA 2010 standard) providing the opportunity to grow the leased square footage by more than 2,300 square feet.
‣
Data Center Re-Use: The Property’s combination of heavy in-place power and low electricity rates ideally position it to be re-purposed as valuable data center space. Such attributes have led Santa Clara to be the most sought-after location in the Bay Area for data center uses.
‣
Future Redevelopment: The City of Santa Clara’s General Plan allows for the development of low density office/R&D. This zoning designation allows for up to a 1.0 FAR which translates to 282,000 square feet of building space.
‣
Multiple Exit Scenario: The three buildings reside on two separate legal parcels allowing the potential to sell single or multiple buildings to owner-users or investors.
SANTA CLARA AVERAGE ASKING RENT TREND $5.25 $4.75 $4.25
$5.00 Current average asking rents are still well below the levels reached during the dotcom boom
$3.75 $3.25 $2.75
rag
ual e ann
ave 7.4%
$2.25
ase
incre
$2.25
$1.45
$1.75 $1.25 $0.75 $0.25
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
8
2210 - 2260 MARTIN AVENUE
TRANSFORMING NEIGHBORHOOD Several exciting office, retail and residential projects are planned or underway
within
minutes
of
the
Property. The completion of these projects is already creating a new “Center of Gravity” for Santa Clara, having a distinct positive impact on the Property.
EXCELLENT ACCESS TO TRANSPORTATION The
Property
enjoys
convenient
access to the region’s comprehensive freeway network. Highway 101 is less than one mile north of the Property and provides nearby connections to Interstate 880 and State Route 237. Central Expressway, an alternative north-south thoroughfare that cuts through the center of Silicon Valley, is just two blocks away. The Santa Clara and Lawrence Caltrain are each approximately two miles from the Property. Additionally, the Mineta San
Jose
International
Airport
is
approximately five miles southeast of the Property.
EXECUTIVE SUMMARY
9
SURROUNDING CORPORATE USERS AND DEVELOPMENT SITES
SAN FRANCISCO BAY
237
RESIDENTIAL DEVELOPMENT OFFICE DEVELOPMENT
101
OFFICE DEVELOPMENT
OFFICE/R&D DEVELOPMENT
MIXED USE DEVELOPMENT
CE
NT
2250-2260 MARTIN AVENUE
10
2210 - 2260 MARTIN AVENUE
WAY
XPRESS
MAS E SAN TO
RA
LE
XPR
ESS
WA Y
MARKET HIGHLIGHTS With a high concentration of revolutionary technology companies and an unparalleled stream of venture capital investment, Silicon Valley is renowned as the world’s center of technology. As one of the Bay Area’s key economic drivers, the region’s technology sector flourishes from immediate access to one of the most educated workforces in the nation.
TOP PERFORMING REGION Since 2011, the Silicon Valley R&D market has recorded more than 10 million square feet of positive net absorption, resulting in a vacancy rate of 10.2%. Accordingly, asking rents more than doubled over the same period to the current average of $2.09 per square foot per month triple net (NNN). Tenant demand remains robust as indicated in the 8.2 million square feet of active office and R&D requirements, an uptick from 7.0 million square feet reported at the end of 2016.
SILICON VALLEY MARKET HIGHLIGHTS
167.7 MILLION SQUARE FEET
10.2% VACANCY
$2.09
371,658 SF
AVG. ASKING RENT Q1 NET ABSORPTION
STRONG R&D FUNDAMENTALS Santa Clara is one of the largest submarkets in Silicon Valley and home to some of the most prominent tech companies in the region including Nvidia, Palo Alto Networks, Intel, AMD, ServiceNow, Huawei, NEC and Qualcomm. Over the past decade, approximately 1.8 million square feet of obsolete R&D product has been removed from Santa Clara’s inventory to make way for a combination of Class A office and highdensity residential, placing further pressure on the available supply of single-story inventory, particularly properties with manufacturing infrastructure and heavy power.
EXECUTIVE SUMMARY
11
2210-2260 MARTIN AVENUE SANTA CLARA, CALIFORNIA
INVESTMENT CONTACTS ERIC FOX
TUCKER BEIM
Lic. #01209035
Lic. #01384216
ph | 408.615.3469
ph | 650.320.0206
[email protected]
[email protected]
STEVE HERMANN
ADAM LASOFF
Lic. #01352679
Lic. #01891096
ph | 415.677.0465
ph | 415.773.3536
[email protected]
adam.lasoff @cushwake.com
DEBT & EQUITY ADVISORY TERRY DALY Lic. #01330089 ph | 415.677.0468 [email protected]
91,740 SQUARE FEET | 100% LEASED | E
X
E
C
U
T
I
MISSION CRITICAL FACILITY V
E
S U
M
M A
R Y
EXECUTIVE SUMMARY Cushman & Wakefield, Inc. as exclusive advisor, is pleased to present the exceptional opportunity to acquire the fee simple interest in 2210-2260 Martin Avenue (the “Property”), a three building, 91,740 square foot office/R&D/manufacturing project located in Santa Clara, CA. The Property is 100% leased to Fujifilm Dimatix (“Fujifilm”), a wholly owned subsidiary of Fujifilm Holdings Corporation. Fujifilm has been a tenant in the project for more than 15 years and recently signed a lease extension through March 16, 2026. The tenant has invested significant capital into the Property headlined by a $20 million investment to create an approximately 30,000 square foot state-of-the-art clean room and manufacturing facility at 2030 Martin Avenue along with approximately $10 million in additional upgrades over several years. The Property is situated in an in-fill Santa Clara location near the intersection of San Tomas Expressway and Walsh Avenue. The Property enjoys direct access to Highway 101 and Central Expressway, and is in close proximity to Mineta San Jose Airport. Several brand new nearby developments have enhanced the local amenity base. The completion of these developments will continue to reinforce the submarket’s position as one of the most sought-after corporate locations in Silicon Valley.
2
2210 - 2260 MARTIN AVENUE
EXECUTIVE SUMMARY
3
INVESTMENT HIGHLIGHTS ‣ Strong immediate cash flow from NNN lease with scheduled rent escalations ‣ Fujifilm Dimatix Mission Critical Facility ‣ Investment Grade Credit from Parent - rated “AA-” by S&P
OFFERING SUMMARY
‣ Tenant has a 15 year history in the project with ±8.5 years remaining term
2210 - 2220 Martin Avenue Building Addresses
‣ High renewal probability with ±$30 million invested by Tenant ‣ Future upside through marking in-place lease to market / building re-measurement at expiration, adaptive re-use, or redevelopment ‣ Desirable location with proximity to major corporate users, major highways, and new commercial development
2230 - 2238 Martin Avenue 2250 - 2260 Martin Avenue Santa Clara, CA 95050
Number of Buildings Total Building Area (as currently leased)
Three 91,740 SF
BOMA Measured Area
94,101 SF
# of Stories
One
Site Area
6.48 acres (two parcels)
Current FAR
0.325
Max Potential FAR
1.00 (±282,000 sf), City of Santa Clara General Plan
% Leased
100%
Remaining Lease Term*
8 years, 6 months
*As of a October 1, 2017 estimated sale date
4
2210 - 2260 MARTIN AVENUE
CENTRA
L EXPRE
SSWAY
2250-2260
R
XP
E AS
MARTIN AVENUE
AY W S ES
OM T N
36,660 SQ FT
SA
2230-2238 MARTIN AVENUE 33,480 SQ FT
2210-2220 MARTIN AVENUE 21,600 SQ FT
UE
N VE A N
TI
R MA
EXECUTIVE SUMMARY
5
STRONG LONG-TERM CASH FLOW The project is fully-leased on a triple net basis providing stable income with fixed increases over the next 8+ years. The tenant directly contracts for most of the services provided to the project, minimizing ownership obligations.
FUJIFILM DIMATIX MISSION CRITICAL LOCATION The Property serves as a mission critical facility for Fujifilm Dimatix and is home to product development and manufacturing. Fujifilm Dimatix is the world's leading provider of inkjet printheads for commercial and industrial printing. The company invests heavily in research and development, maintaining one of the most capable inkjet R&D groups in the world.
INVESTMENT GRADE CREDIT FROM PARENT Fujifilm Dimatix is a wholly owned subsidiary of Fujifilm Holdings Corporation (TYO: 4901). The multi-national photography and imaging company is headquartered in Tokyo, Japan and employs approximately 80,000 people worldwide. The company is considered investment grade with an AA- rating by Standard and Poor’s. The parent company directly invested $1.5 million in the Property to build out the product show room in 2210 Martin Avenue.
TENANT COMMITMENT TO PROJECT Fujifilm first occupied 2210-2220 Martin Avenue in 2002 and expanded into the entire three building project by 2009. The company recently solidified its commitment to Property by executing an early lease extension through March 16, 2026. Additionally, the company has invested significant capital in the project including approximately $20 million on its clean room manufacturing area in 2230 Martin Avenue. Fujifilm runs this facility 24 hours a day / 365 days a year and it would take years to replicate its technological capabilities at another location. The tenant has further invested approximately $10 million in upgrades to the office areas, development of an on-site product showroom, and infrastructure upgrades.
6
2210 - 2260 MARTIN AVENUE
SIGNIFICANT CAPITAL INVESTED The current ownership recently upgraded the building facades, creating modern, high-image lobby entrances. In addition, Fujifilm has continually invested its own capital in building upgrades and renovations over the years.
PLENTIFUL LOW COST POWER All of the buildings have an upgraded power supply including 12 Kilovolts provided to the manufacturing building (2230 Martin Avenue). Electricity service is provided by Santa Clara’s municipally-owned utility, Silicon Valley Power. Businesses and residents of Santa Clara that are served by Silicon Valley Power enjoy electrical cost savings of approximately 35% over the areas of Silicon Valley that are served by PG&E.
EXECUTIVE SUMMARY
7
UPSIDE OPTIONALITY ‣
Mark-to-Market of In-Place Rent: The current contractual rent is ±20% below market. Whether through a renewal or new lease, an owner has the ability to substantially increase NOI down the road. The average asking rental rate for R&D space in Santa Clara has increased at an average annual rate of 7.4% since the previous cycle peak in 2008; a sign of measured growth even through the market downturn in 2009/2010.
‣
Building Re-Measurement: The buildings were recently re - measured at 94,101 square feet (BOMA 2010 standard) providing the opportunity to grow the leased square footage by more than 2,300 square feet.
‣
Data Center Re-Use: The Property’s combination of heavy in-place power and low electricity rates ideally position it to be re-purposed as valuable data center space. Such attributes have led Santa Clara to be the most sought-after location in the Bay Area for data center uses.
‣
Future Redevelopment: The City of Santa Clara’s General Plan allows for the development of low density office/R&D. This zoning designation allows for up to a 1.0 FAR which translates to 282,000 square feet of building space.
‣
Multiple Exit Scenario: The three buildings reside on two separate legal parcels allowing the potential to sell single or multiple buildings to owner-users or investors.
SANTA CLARA AVERAGE ASKING RENT TREND $5.25 $4.75 $4.25
$5.00 Current average asking rents are still well below the levels reached during the dotcom boom
$3.75 $3.25 $2.75
rag
ual e ann
ave 7.4%
$2.25
ase
incre
$2.25
$1.45
$1.75 $1.25 $0.75 $0.25
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
8
2210 - 2260 MARTIN AVENUE
TRANSFORMING NEIGHBORHOOD Several exciting office, retail and residential projects are planned or underway
within
minutes
of
the
Property. The completion of these projects is already creating a new “Center of Gravity” for Santa Clara, having a distinct positive impact on the Property.
EXCELLENT ACCESS TO TRANSPORTATION The
Property
enjoys
convenient
access to the region’s comprehensive freeway network. Highway 101 is less than one mile north of the Property and provides nearby connections to Interstate 880 and State Route 237. Central Expressway, an alternative north-south thoroughfare that cuts through the center of Silicon Valley, is just two blocks away. The Santa Clara and Lawrence Caltrain are each approximately two miles from the Property. Additionally, the Mineta San
Jose
International
Airport
is
approximately five miles southeast of the Property.
EXECUTIVE SUMMARY
9
SURROUNDING CORPORATE USERS AND DEVELOPMENT SITES
SAN FRANCISCO BAY
237
RESIDENTIAL DEVELOPMENT OFFICE DEVELOPMENT
101
OFFICE DEVELOPMENT
OFFICE/R&D DEVELOPMENT
MIXED USE DEVELOPMENT
CE
NT
2250-2260 MARTIN AVENUE
10
2210 - 2260 MARTIN AVENUE
WAY
XPRESS
MAS E SAN TO
RA
LE
XPR
ESS
WA Y
MARKET HIGHLIGHTS With a high concentration of revolutionary technology companies and an unparalleled stream of venture capital investment, Silicon Valley is renowned as the world’s center of technology. As one of the Bay Area’s key economic drivers, the region’s technology sector flourishes from immediate access to one of the most educated workforces in the nation.
TOP PERFORMING REGION Since 2011, the Silicon Valley R&D market has recorded more than 10 million square feet of positive net absorption, resulting in a vacancy rate of 10.2%. Accordingly, asking rents more than doubled over the same period to the current average of $2.09 per square foot per month triple net (NNN). Tenant demand remains robust as indicated in the 8.2 million square feet of active office and R&D requirements, an uptick from 7.0 million square feet reported at the end of 2016.
SILICON VALLEY MARKET HIGHLIGHTS
167.7 MILLION SQUARE FEET
10.2% VACANCY
$2.09
371,658 SF
AVG. ASKING RENT Q1 NET ABSORPTION
STRONG R&D FUNDAMENTALS Santa Clara is one of the largest submarkets in Silicon Valley and home to some of the most prominent tech companies in the region including Nvidia, Palo Alto Networks, Intel, AMD, ServiceNow, Huawei, NEC and Qualcomm. Over the past decade, approximately 1.8 million square feet of obsolete R&D product has been removed from Santa Clara’s inventory to make way for a combination of Class A office and highdensity residential, placing further pressure on the available supply of single-story inventory, particularly properties with manufacturing infrastructure and heavy power.
EXECUTIVE SUMMARY
11
2210-2260 MARTIN AVENUE SANTA CLARA, CALIFORNIA
INVESTMENT CONTACTS ERIC FOX
TUCKER BEIM
Lic. #01209035
Lic. #01384216
ph | 408.615.3469
ph | 650.320.0206
[email protected]
[email protected]
STEVE HERMANN
ADAM LASOFF
Lic. #01352679
Lic. #01891096
ph | 415.677.0465
ph | 415.773.3536
[email protected]
adam.lasoff @cushwake.com
DEBT & EQUITY ADVISORY TERRY DALY Lic. #01330089 ph | 415.677.0468 [email protected]
