In another sign of a healthy industrial market across the Bay Area, FedEx has leased a newly redeveloped facility in San Jose totaling nearly 180,000 square feet, according to a statement by the company provided to The Registry. The property, located at 1605 Industrial Avenue sits next to highway 880 and is just minutes from Mineta San Jose International Airport.
“FedEx Ground has entered into a lease agreement on a new distribution center located on Industrial Avenue that will be 180,000 square feet when it is operational in 2022,” said Allie Addoms, external senior communications specialist with FedEx Ground. “The new facility will employ a mix of full and part-time team members.”
The company’s growth, which results from changing buying habits and online shopping has put pressure on expanded logistics operations. “We continue to experience significant package volume due to e-commerce growth and are optimizing the capacity of our network to meet growing demand for our services,” added Addoms. “The site was chosen because of its ease of access to major highways, proximity to customers’ distribution centers and a strong local community workforce for recruiting employees.”
The property is owned by Irvine-based LBA Realty, and it was recently redeveloped by the Southern California company. The building sits on a 10.96-acres across two parcels and will be completed in 2022, according to reports from the city and the brokerage community. According to documents filed with the city of San Jose, the property also provides an office area of approximately 10,000 square feet, and the site is bounded by heavy industrial uses to the east and south, I-880 to the west and combined industrial/commercial uses to the north.
While the final pricing on the lease has not been released, the property was marketed at $1.25 per square foot, or around $225,000 per month.
The industrial market across Silicon Valley continues to be very healthy. According to a 2nd Quarter 2021 Silicon Valley Industrial Market Report from Kidder Mathews, asking lease rates for warehouses ticked up 4.55 percent year-over-year to $1.15/square foot NNN. Non-warehouse industrial asking lease rates rose 12.9 percent YOY to $1.58/square foot NNN.
Gross absorption for warehouses nearly tripled YOY from 399,483 square feet in 2Q20 to 1.47 million square feet for 2Q21. Gross absorption for non-warehouse property types remained flat YOY from 390,751 square feet in 2Q20 to 391,126 square feet in 2Q21, the report stated.
Sales activity for all industrial property types skyrocketed when compared to the start of the pandemic, stated Kidder Mathews. Sales volume for warehouses more than doubled YOY from 153,036 square feet in 2Q20 to 323,749 square feet in 2Q21. Sales volume for non-warehouse property types more than tripled YOY from 100,741 square feet in 2Q20 to 320,122 square feet in 2Q21.