A few months after filing plans for a two-building project in South San Jose, Hines has pitched another large warehouse next door, increasing its bet on an area that has experienced a wave of interest from industrial developers.
The Houston-based company filed plans on Aug. 18 to construct a single-story, 210,000-square-foot structure on a pair of adjacent, vacant parcels at 644 and 675 Piercy Road that combined total 16 acres. Hines, which seeks to merge the two lots as part of its proposal, acquired the one at 644 Piercy Road for $19.9 million in June. A family trust owns the other, title service records show.
The project is adjacent to 29 vacant acres at 550 Piercy Road that Hines acquired last year and seeks to develop into a two-building, 423,000-square-foot industrial complex. With the latest submittal, its South San Jose development pipeline totals 633,000 square feet of rentable warehouse and ancillary office space. For context, San Jose’s largest industrial project under review totals 714,000 square feet in four warehouses pitched for the city’s north side.
Hines declined a request for comment.
The company’s new South San Jose plans are another sign that the area is primed to better compete with Silicon Valley’s larger, more established industrial submarkets in the future. City planners are currently reviewing six projects representing nearly 1.3 million square feet of warehouse and manufacturing space, according to CBRE research. That’s more than five times the amount of industrial space completed in the submarket over the past five years, CBRE data show.
The area is getting a 303,000-square-foot warehouse at 5853 Rue Ferrari that will be available for occupancy in the first quarter of next year. The project from Duke Realty broke ground earlier this year and is the only industrial development under construction in South San Jose, according to CBRE research. It’s fully available for lease, according to online marketing materials.
The surge of industrial development in South San Jose is a byproduct of a tight market throughout the Bay Area. It’s one if not the only place in Silicon Valley that still has vacant land zoned for industrial development. Such land is in short supply or unavailable in larger submarkets such as Santa Clara, Fremont and Newark in the East Bay. The latter region is so undersupplied that even if companies leased all its vacant industrial buildings, the East Bay would still need about 13.5 million square feet of additional space to meet tenant demand, according to JLL data published in March.
Hines plans to start building its larger South San Jose project next June and the smaller one next October, assuming the developer receives all required approvals, according to plans on file with the city. Construction would wrap up in March 2024 and July 2024, respectively. Hines didn’t disclose development cost estimates in its proposals.