The Fleming Business Park in Milpitas is the largest industrial park in Silicon Valley with over 1.2 million square feet of space. This week, Colliers and CBRE announced a 75,547 square foot lease at 1171 Montague Expressway to SMTC Manufacturing, which brings the entire Fleming Business Park at 100 percent occupancy.
This transaction in many ways represents the state of the industrial market in Silicon Valley – low vacancy, increased leasing rates, and landlords finding little problem leasing their properties. The owner of this property, WP Investments, worked with Colliers and CBRE on secure a long-term lease for this advanced manufacturing operation, according to a statement from the two firms. Colliers was represented in the transaction by Greig Lagomarsino, who worked with CBRE’s Rob Shannon on the deal. Steve Chon of JLL helped SMTC with the lease.
The industrial market has largely remained unaffected by COVID induced slowdowns, according to a recent, Q4 of 2021 Silicon Valley Industrial Market Report by Kidder Mathews. Direct vacancy rates for warehouses are lower than pre-pandemic values, bringing non-warehouse direct vacancy rates to 2.3 percent across Silicon Valley. Low vacancy rates for all industrial product types combined with little new supply currently under construction drive asking lease rates upward.
Asking lease rates for warehouses rose 11.8 percent year-over-year to $1.23 per square foot NNN. Non-warehouse asking lease rates climbed 13 percent year-over-year to $1.65 per square foot NNN, Kidder Mathews’ report stated. For 2021, direct net absorption was 2.87 million square feet for warehouses and 836,511 square feet for non-warehouse property types.
The Milpitas industrial market is comprised of approximately 2.8 million square feet, while the total warehouse market in the city is at 5.9 million square feet. As of the end of 2021, Milpitas had the highest total vacancy across Silicon Valley for both industrial and warehouse space at 6.73 percent and 6.7 percent, respectively.