By Jon Peterson
San Francisco-based Prologis believes that there is a definite need for new Class A industrial warehouse space that is not being met in Fremont, and the company hopes to change this with its groundbreaking of the 623,000 square foot Prologis Silicon Valley Logistics Park.
“Our feeling is that there is very little if any new Class A industrial distribution product that exists in the Fremont market today. We think that our new project should be able to take advantage of that demand and be able to lease our project up in a timely fashion,” says Scott Lamson, president of the Northwest region for Prologis.
He declined to comment on the development cost of the project. Prologis will be investing in this project with its own capital. The land for the development, located at 41128 Boyce Road, was previously the home of a chemical plant, which had already been demolished.
Silicon Valley Logistics Park will be a spec project with two buildings. One is for 354,000 square feet and the second building is 269,000 square feet. The company is expecting a relatively speedy completion and availability for the new space. “We are expecting that our project will be completed by December of this year,” said Lamson.
Prologis is expecting two types of tenants that will be interested in the project: technology companies and e-commerce tenants. The office component of the project is projected to be in the range of 5 percent to 10 percent of the entire development. The companies taking space in the project will be able to move their products for same-day delivery in the San Francisco Bay Area given the projects location near Interstate Highways 880 and 680, which connects the Port of Oakland with San Jose and Silicon Valley.
The industrial development REIT is certainly no stranger to the Fremont Industrial market. “We have been in this market for a long time. I think it’s been something like 30 to 35 years. So we know and feel good about this market going forward,” said Lamson. The publicly traded company owns just under four million square feet in the market now and around 18 million square feet of space in the greater San Francisco Bay Area.
The industrial warehouse market in Fremont remains very tight. According to sources that track this market, there is a current vacancy factor of around 2 percent for warehouse distribution industrial space in Fremont. One of the reasons for this is the lack of new product that has been added to the market in recent years.