By Jon Peterson
Nearly six years after submitting plans to develop its Warm Springs Station project in Fremont, Mountain View-based The Sobrato Organization is still waiting for the market conditions to improve before breaking ground. The Silicon Valley stalwart developer and property investor will not be starting its roughly 685,000-square-foot office and manufacturing development project without some leasing activity, according to industry sources. At least not before one of the projected five buildings in the development is pre-leased.
In some ways, this project is the epitome of the market conditions across Silicon Valley. Many development firms do not feel comfortable starting speculative projects as technology and other major tenants remain uncertain about what their future office space requirements will be. As a result, they have taken a pause in committing to new development projects for the time being.
Sobrato declined to comment when contacted for this story. The property owner is working with Colliers in the leasing efforts on this development. The team marketing the site includes Dave Sandlin and Craig Fordyce, both executive vice presidents, who work out of the firm’s San Jose office.
The Master Plan iteration that was submitted in 2017, when The Registry covered this development initially, outlines a project consisting of five buildings totaling 685,000 square feet of which about 570,000 square feet would be devoted to offices and the remaining 110,000 square feet for hi-tech manufacturing uses. Leased floor plates can be divided into 142,150 square foot sections.
The five buildings, divided into three zones to be delivered in three construction phases, partially surround a large parking structure that’s also equipped with amenity spaces such as a fitness center. Zone 1 consists of two office buildings with the most visible frontage along Warm Springs Boulevard, while Zone 2 offers another two buildings geared for office use along Reliance and Corporate Way. Zone 3 contains a single-story industrial or R&D building that may reach 44 feet in height.
A robust open space framework connects the development to the surrounding area via community gateways that provide access to bike, pedestrian and transit routes. The public open space segment features art installations and terraced landscaping. Private open space areas are equipped with outdoor seating for meetings and dining, exterior kitchens and other spaces that foster interaction.
The development is planning to add a 14,984-square-foot state-of-the-art fitness center and cafeteria incorporated into the parking structure, according to the project’s website.
Warm Springs Station is located on a parcel that covers 21.5 acres of land. It is bounded by Warm Springs Boulevard, Corporate Way, Reliance Way and Research Avenue. The planned project is part of the Innovation District within the City of Fremont.
Signs of improvement have been reported across the region. The third quarter of 2022 Market Report by Colliers saw Silicon Valley remaining resilient through the quarter of rising interest rates and recording its fifth consecutive quarter of expansion across all products. The vacancy rate, even though it dropped to 6.3 percent across Silicon Valley, is likely to climb in the near future as roughly 9 million square feet of additional space under construction today hits the market, according to the report. This will likely be met with other macroeconomic headwinds, including continued uncertainty surrounding the impact of increased interest rates and very limited lending as well as a possible increase in sublease space as current leases expire across the broader region and tenants reassess their future needs.
Images courtesy of The Sobrato Organization