Dermody Properties is working on expanding its northern California portfolio, most recently picking up the longtime Pantronix headquarters in Fremont less than a month after it locked in a San Jose warehouse deal.
The advanced manufacturing building at 2710 Lakeview Court in Fremont's Innovation District sits in the midst of Tesla's current factory footprint in the city - about two miles from the electric car manufacturer's primary assembly facility and directly across Interstate 880 from another Tesla warehouse.
Stanley Wang, president of Pantronix, has owned the property since 1998, according to property records. He moved the semiconductor company into the building around that time, past Business Journal reporting shows.
Public documents list Wang and his wife, Franny, as the seller of the 81,704-square-foot manufacturing building.
Reno-based Dermody, an industrial real estate investment company, announced Friday that it had purchased the advanced manufacturing building, which sits on nearly five acres, for $10.25 million. The transaction, which closed in late May, works out to about $125 per square foot, or more than $2 million per acre.
For now, Pantronix will continue to lease the property that the company has called home for nearly two decades, said George Condon, west regional partner for Dermody in an interview Monday evening.
In the meantime, he added, Dermody is "softly marketing" the property.
"Its [Pantronix's] goal to is relocate to a new facility in the Bay Area, but they haven't identified that facility yet, so it was a sale and lease back," he said. "That gave them some flexibility on when they could actually leave the building."
Calls and an email to Pantronix representatives and spokespeople on Monday went unreturned, and Christina Briggs, the deputy director of economic development for the city of Fremont said she hadn't yet heard from the company that it was planning a move or seeking new space.
Most likely, the property will be filled again with an advanced manufacturing company, Condon said, but for now the building is slated to continue being Pantronix's to create device packaging and electronics for other equipment manufacturers.
JLL represented both the buyer and seller in the deal, but did not respond to request for comment Friday afternoon or Monday.
However, in a press release last week, the group noted that the property sits in the midst of a hot market for manufacturers.
"This acquisition for Dermody provides them a high-profile building in the heart of Silicon Valley and the advanced manufacturing capital," Eddie Shuai, senior vice president at JLL, said in the statement. "Top innovative tech companies will continue to look at Fremont to locate their advanced manufacturing operations."
And indeed, across Silicon Valley, vacancy rates for industrial, warehouse and manufacturing space are tight, according to JLL. As of the second quarter, the vacancy rate for industrial space in the region was 4.1 percent and the average total asking rents per square feet was nearly $135 per square foot annually, the company reported earlier this month.
In Fremont, the vacancy rate is even tighter, sitting below 2 percent, according to several brokerage firms, including Kidder Mathews and Newmark Knight Frank.
Shuai and Steven Chon, both senior vice presidents at JLL, represented both parties in the transaction.
Dermody looks to grow
Dermody plans to continue growing its portfolio in northern California, calling the Bay Area "a key market," according to Condon.
"Right now we are actively looking for land for our next Central Valley project and then we're always looking two or three or four more buildings to buy in the Bay Area," Condon said. "We like the [Interstate] 880 corridor and we like Silicon Valley."
The company is wrapping up a warehouse in Lathrop, Calif., which is fully leased, though Condon couldn't disclose the tenant. Dermody also owns an industrial property in Hayward.
Earlier this month, the Silicon Valley Business Journal reported that the company also snapped up one of the only Class A industrial buildings in south San Jose at 6212 Hellyer Ave for $16.75 million. That newly built 111,043-square-foot property, part of the Silicon Valley Industrial Park once owned by Panattoni Development Co., is currently completely empty.
JLL is also marketing the San Jose site for one or two new tenants.
Meanwhile, Dermody is also planning "substantial improvements" to the Fremont facility, once Pantronix has moved to its new location, Condon said. The group plans to start by replacing the roof, upgrading the heating, ventilation and air conditioning and renovating the inside of the building, according to the release.
Manufacturing in the Bay Area: A mixed bag
But if Condon is correct that Pantronix plans to stay in the Bay Area, that would be good news at a time when other big technology companies in the Valley have announced layoffs as they prepare to move their manufacturing operations out of state.
Last month, the Business Journal reported that global electronics distributor Avnet Inc. was set to lay off 94 employees to close two of its three Silicon Valley facilities to relocate those jobs in Chandler, Ariz. A couple months prior, Redwood City-based e-commerce company Zazzle Inc. said it would shut down two plants in San Jose, laying off 117 employees, to move its manufacturing operations to Reno, Nev.
Even so, Fremont's industrial and manufacturing market seems to be strong, attracting and retaining giants like Tesla, Western Digital, Seagate, and Delta Products, to name a few of the companies that occupy the city's nearly 11.3 million square feet of industrial and warehouse space, according to a tally by real estate firm, Newmark Knight Frank.
Likewise, investors are keeping a close eye on the area, Briggs said.
"With the branding of the Innovation District down there really taking hold, we do see a lot of investor interest in commercial buildings," she said "We see a lot of those front-end inquiries."
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