By Meghan Hall
The rise of online shopping and expedited delivery have dramatically altered demand for urban logistics real estate, with the warehouse and industrial sectors becoming increasingly critical for rapidly growing firms in some of the nation’s rightest commercial real estate markets. Noticing an increased demand for industrial and warehouse space as opposed to the long-touted importance office and residential, Bridge Development Partners sit at the heart of this disruption in the Bay Area. At the beginning of the year, Bridge Development Partners broke ground on Bridge Point Silicon Valley: a 34-acre 722,040 square foot industrial complex slated for delivery at the end of this year.
“The Bay Area industrial market is experiencing tremendous demand from technology, e-commerce and logistics users as a result of the demand they’re seeing from consumers for same-and-next-day delivery, explained Greg Woolway, vice president of acquisitions at Bridge Development Partners. “The need for last-mile distribution centers — particularly from the kind of major technology players present in the Bay Area — is only growing. Projects like Bridge Point Silicon Valley are in a unique position to provide best-in-class warehouse space in close proximity to these leading companies.”
Bridge Development Partners has jumped straight into the Bay Area commercial real estate market: Bridge Point Silicon Valley the developer’s first—and largest—project in the region. The decision to pursue such a project made sense with the strong, local fundamentals at hand.
“Bridge Development Partners firmly believes in the long-term prospects of the Bay Area and we continue to actively look for similar opportunities throughout the region,” Woolway added.
Bridge Development originally acquired the property from Hudson Pacific Partners during the third quarter of 2019. The acquisition was half of a two-part transaction, in which a partnership of PCCP and Embarcadero Capital Partners acquired three office and R&D buildings totaling 472,000 square feet for $150 million. Bridge Development acquired the acreage next to the complex, located at 205 N. McCarthy Boulevard, for $78.1 million.
According to Woolway, Bridge Development was attracted to the site because of its ideal location. Milpitas is located in close proximity to not just Silicon Valley, but San Francisco and the wider East Bay. Major thoroughfares, including Route 237 and Interstates 880 and 680 are also nearby. In November, The Registry reported that Amazon planned to take 343,000 square feet of space at the nearby McCarthy Creekside Industrial Center, following on the heels of Apple’s decision to take 314,000 square feet in Phase I of the complex. In April of 2018, SF Motors agreed to take all of 607 North McCarthy Boulevard, which totals 136,000 square feet. In August of last year, One Workplace leased 82,000 square feet of space at 1025 Montague Expressway.
“Its location is key – we’re very excited about this project because Milpitas and the South Bay form a crucial intersection for the entire Bay Area,” said Woolway. “Its proximity to the major operations of tech and e-commerce giants, as well as its access to commercial hubs like San Jose, Oakland and San Francisco, make it a gem for the regional industrial market and an ideal choice for Bridge’s first acquisition here.”
Upon completion, the campus will be the largest industrial development delivered in the South Bay and Silicon Valley in 2020 and will be one of the largest active developments in Northern California. The two buildings that are part of the development will total 388,000 square feet and 334,000 square feet, respectively.
The complex will be modern in its design, a far cry from the traditional, cement-heavy industrial centers of days past. Wood features, an abundance of glass, modern color palette and glazing in an effort to provide both an efficient and beautiful complex.
Woolway continued, “The design of Bridge Point Silicon Valley will also go beyond a typical warehouse, with wood features, lots of glass and glazing – creating an industrial facility that is not only ideal for capability and efficiency, but also a place our tenants’ employees will be proud to work in.”
Increasingly, online retailers are looking for warehouses closer to major urban and population centers, as opposed to industrial assets that have been, historically, located in suburban or more rural locations. According to an end-of-year industrial report issued by JLL, the Bay Area’s Silicon Valley industrial market ended 2019 on a high note, thanks in part to a number of high-profile leases and tenant confidence in the market. In 2020, the brokerage firm expects markets, specifically Milpitas, to become a new center of gravity for the industrial market. Milpitas alone has more than 1.2 million square feet of proposed buildings expected to break ground in the next year.
These trends are ones that Bridge Development has been acutely aware of and is tracking closely as it pursues numerous development opportunities in the Bay Area and California. Currently, the firm has 17 projects totaling more than 12.5 million square feet in the pipeline, all of which are in either the Bay Area, Los Angeles County or Inland Empire. And, so far, Bridge Point Silicon Valley has received plenty of interest from tenants looking for space.
“Bridge is already seeing a lot of interest in this project,” said Woolway. “We believe this property is perfect for accommodating the needs of the unique blend of users found in Milpitas and Silicon Valley, ranging from Fortune 100 to traditional logistics companies.”