Key Takeaways
- • Morgan Stanley Real Estate Investing acquired a 189,000 SF research and development facility in Milpitas, California for $84.1M in an all-cash transaction, securing long-term cash flow from a credit-quality tenant in Silicon Valley's semiconductor hub.
- • KLA Corp., a global semiconductor inspection and metrology systems supplier, is the sole occupant with a lease extended through 2037, recently making substantial capital improvements including upgraded power capacity to 6,000 amps and expanded data center infrastructure.
- • The property at 601 McCarthy Boulevard sits in Silicon Valley's Golden Triangle—the region bounded by Highway 101, State Route 237, and Interstate 880—where industrial vacancy is declining and investor interest has surged in recent months.
- • KLA leased the facility in 2023 to expand operations near its global headquarters at 3 Technology Drive in Milpitas, underscoring the property's strategic importance to the company's semiconductor manufacturing and R&D operations.
- • The two-story building was renovated in 2017 and sits on 9.7 acres, positioning it as a critical asset supporting the semiconductor industry's growth trajectory in the region.
Summary
A Morgan Stanley-managed real estate fund completed an $84.1 million all-cash acquisition of a 189,000-square-foot research and development facility located at 601 McCarthy Boulevard in Milpitas, California. The transaction underscores institutional investor appetite for institutional-grade industrial real estate in Silicon Valley's core semiconductor manufacturing and technology hub, where inventory constraints and operational demand from major industry players continue to drive valuations and lease extensions.
KLA Corp., a publicly traded designer and manufacturer of advanced inspection tools, metrology systems, and data analytics platforms used in semiconductor manufacturing, serves as the sole tenant under a lease agreement extended through 2037. The company's commitment to the facility reflects its strategic importance within KLA's operational footprint, particularly given the property's proximity to the company's global headquarters at 3 Technology Drive in Milpitas. KLA originally leased the facility in 2023 to expand its presence and has since invested significantly in capital improvements, including upgrading electrical power capacity to 6,000 amps and expanding data center infrastructure capabilities to support advanced manufacturing operations.
The 9.7-acre property, which underwent renovation in 2017, is positioned within Silicon Valley's Golden Triangle—the densely developed region bounded by Highway 101, State Route 237, and Interstate 880 that has consolidated semiconductor manufacturing, advanced research and development, and technology operations. According to JLL Senior Director of Capital Markets Daniel Renz, who represented the seller, the transaction reflected "a compelling opportunity for investors seeking long-term, credit-quality cash flow in the heart of Silicon Valley's semiconductor hub." Industry conditions continue to tighten, with industrial leasing activity across the region increasing while vacancy rates compress, driving sustained interest in stabilized, mission-critical facilities anchored by investment-grade tenants.
The deal highlights the structural demand for specialized industrial real estate supporting semiconductor and advanced manufacturing operations in Northern California, where geopolitical factors, supply chain diversification, and domestic semiconductor capacity expansion have reinforced long-term leasing fundamentals for institutional capital.
KLA Corp., a publicly traded designer and manufacturer of advanced inspection tools, metrology systems, and data analytics platforms used in semiconductor manufacturing, serves as the sole tenant under a lease agreement extended through 2037. The company's commitment to the facility reflects its strategic importance within KLA's operational footprint, particularly given the property's proximity to the company's global headquarters at 3 Technology Drive in Milpitas. KLA originally leased the facility in 2023 to expand its presence and has since invested significantly in capital improvements, including upgrading electrical power capacity to 6,000 amps and expanding data center infrastructure capabilities to support advanced manufacturing operations.
The 9.7-acre property, which underwent renovation in 2017, is positioned within Silicon Valley's Golden Triangle—the densely developed region bounded by Highway 101, State Route 237, and Interstate 880 that has consolidated semiconductor manufacturing, advanced research and development, and technology operations. According to JLL Senior Director of Capital Markets Daniel Renz, who represented the seller, the transaction reflected "a compelling opportunity for investors seeking long-term, credit-quality cash flow in the heart of Silicon Valley's semiconductor hub." Industry conditions continue to tighten, with industrial leasing activity across the region increasing while vacancy rates compress, driving sustained interest in stabilized, mission-critical facilities anchored by investment-grade tenants.
The deal highlights the structural demand for specialized industrial real estate supporting semiconductor and advanced manufacturing operations in Northern California, where geopolitical factors, supply chain diversification, and domestic semiconductor capacity expansion have reinforced long-term leasing fundamentals for institutional capital.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.