Morgan Stanley Real Estate Investing Acquires Silicon Valley R&D Building for $84.1M in All-Cash Deal
A fund managed by Morgan Stanley Real Estate Investing has acquired 601 McCarthy Boulevard, a 189,481-square-foot research-and-development building in Milpitas, California, for $84.1 million, JLL announced Sept. 29, 2026. The all-cash transaction equates to approximately $444 per square foot.
JLL Capital Markets represented the seller in the transaction.
Property and Lease Details
Built in 1998 and renovated in 2017, 601 McCarthy is a two-story building situated on a 9.7-acre site with 620 parking spaces. The property carries 6,000 amps of power and features large floor plates suited to R&D and data-center operations.
The building is 100% leased to KLA Corporation (Nasdaq: KLAC), a semiconductor process control and inspection equipment manufacturer rated A- by S&P. KLA uses the facility as a critical R&D and data-center hub, located within walking distance of the company's Milpitas global headquarters. The company has made additional capital investments in the property, including a data-center expansion and power infrastructure upgrades. KLA's lease runs through April 2037, leaving 10.7 years of remaining term at the time of closing.
The property sits near the intersection of State Route 237 and Interstate 880, in the Milpitas at North San Jose area that JLL describes as Silicon Valley's "Golden Triangle." The surrounding corridor includes headquarters and major operations of Cisco, Western Digital, Micron, Applied Materials and SanDisk.
JLL Team and Transaction Commentary
JLL's Capital Markets Investment Sales and Advisory team representing the seller was led by Daniel Renz, Adam Lasoff, Will Connors, Michael Manas, Jack Kovalik and John O'Neal.
"This transaction represented a compelling opportunity for investors seeking long-term, credit-quality cash flow in the heart of Silicon Valley's semiconductor hub," Renz said. "KLA's recent lease extension through 2037 and substantial capital investment into 601 McCarthy underscore the property's strategic importance to their operations and the critical role Milpitas plays in supporting the semiconductor industry's growth."
"The all-cash acquisition reflects strong investor demand for stabilized, single-tenant assets leased to investment-grade technology companies," Lasoff added.
Market Context
The transaction closed against a mixed backdrop for Silicon Valley R&D properties. Vacancy across the broader market has remained elevated, with figures ranging from roughly 11.7% to 13.8% depending on the survey and time period, while average asking rents have generally held in the range of $2.61 to $2.86 per square foot per month on a triple-net basis. Net absorption has been uneven, with some periods recording negative figures across the region.
Within that environment, 601 McCarthy's pricing reflects a distinction that has emerged between assets carrying near-term leasing risk and those offering long-duration, investment-grade income. The property's combination of KLA's credit profile, a lease extending more than a decade, mission-critical infrastructure and a location embedded in the semiconductor supply chain supported institutional demand even as broader R&D fundamentals remain challenged.
Morgan Stanley Real Estate Investing's all-cash structure places the emphasis on contractual income and the residual value of a specialized asset. KLA's capital investments in the building — particularly the data-center expansion and electrical upgrades — increase the operational complexity of any future relocation, further anchoring the tenant to the site.
About JLL
JLL (NYSE: JLL) is a global commercial real estate services and investment management company with annual revenue of $26.1 billion and operations in over 80 countries. JLL Capital Markets operates with more than 3,000 specialists in offices across nearly 50 countries, providing investment sales and advisory, debt advisory, equity and fund placement, net lease and related services. Jones Lang LaSalle Americas, Inc. is a real estate broker licensed with the California Department of Real Estate, license No. 01223413.