Murphy Crossing MurphyCrossing is an office/R&D campus located at 1001-1033 McCarthyBlvd. and 915-933 Murphy Ranch Rd.

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MILPITAS, CA—Nearly 100% of scalable projects in Sunnyvale andMountain View have been sold to users or encumbered by long-termleases, says Chris Moritz, senior managing director with NewmarkKnight Frank. In response, he says potential tenants are now forcedto look for options with space to grow in neighboring markets,placing Murphy Crossing in one of the most in-demand locations.

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This type of tenant activity in Milpitas is also affectinginvestor demand. Namely, a loan of $84.5 million was recentlysecured for the acquisition of the five-building office/researchand development campus located at 1001-1033 McCarthy Blvd. and915-933 Murphy Ranch Rd. The $130 million acquisition involved ajoint venture between Soma Capital Partners and Timbercreek AssetManagement.

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Newmark Knight Frank, as the exclusive advisor to Soma CapitalPartners, secured the loan. NKF capital markets also representedthe seller, Embarcadero Capital Partners and True North ManagementGroup.

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Ramsey Daya, NKF's head of debt and structured finance forNorthern California, and Moritz represented SOMA Capital in itsfinancing efforts. The loan was placed with Deutsche Bank.

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"Even with the combination of unprecedented liquidity in thedebt markets and the continued strong fundamentals in the SiliconValley, lenders remain focused on the strength and experience ofborrowers," Moritz tells GlobeSt.com. "The partnership of SomaCapital and Timbercreek Asset Management provides an exceptionalcombination of local operating expertise and institutionalpedigree."

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Murphy Crossing is in the 237 Corridor with proximity to techfirms Google, Microsoft and Oracle. The campus provides tenantswith access to public transit options (BART and the VTA lightrail), as well as Highway 237 and Interstate 880.

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"The North San Jose and West Milpitas submarkets have seensignificant growth in tenant demand. These factors, along with theMurphy Crossing campus offering best-in-class office space,resulted in a competitive lending process," says Daya.

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The class-A campus spans 368,524 square feet on more than 20.5acres featuring an on-site cafeteria, outdoor basketball andvolleyball courts, bike storage and electric vehicle charging.

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After another strong year, Silicon Valley's office market slowedsomewhat in the last quarter of 2019, according to a report by NKF.The market posted a net absorption of negative 350,574 square feet,its first negative absorption number since the third quarter of2017. Although the overall availability rate rose very slightly by0.2 percentage points to 9.24%, it was still 0.78 percentage pointslower than the availability rate at the same time last year.

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New class-A availabilities with higher asking rates coming tothe market, specifically in Santa Clara and Sunnyvale, bumped upthe average class-A asking rate by $0.31 per square foot to $4.92per square foot. This also pushed the overall asking rate to arecord-high $4.54 per square foot, says the NKF report.

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Lisa Brown

Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.