SAN JOSE, CA—Some 960,000 square feet of speculative development is on track to be completed in 2015 here in Silicon Valley. A top-10 list of spec development projects in the region (shown below), provided by Newmark Cornish & Carey, shows a sign of market balance, and projects like 500 Santana Row—the 233,000-square-foot class-A office property under construction at the iconic mixed-use retail village—illustrate the diverse range of product, versus prior expansion periods focused on suburban campuses. That is according to the firm's Randy Gabrielson.
Gabrielson says that robust, jobs-based demand in the marketplace will need the spec elbow room. “With today's historically low 9% class A vacancy rate and dozens of growth companies actively seeking space, the office market is poised for continued positive net absorption in 2015 with asking rates expected to stabilize or continue to increase.”
Office space from spec development is giving companies a range of options from higher-density settings to traditional garden style campuses, Gabrielson adds, from West Silicon Valley to Cupertino, Mountain View and Sunnyvale. “The move toward higher density development is not only driven by the lack of land but by demographic and workplace trends as employees seek out more urban environments with shops, cafes, and entertainment options.”
According to Jan Sweetnam, Federal Realty's Western Region COO, “Companies are competing to hire the best and the brightest, and today's worker wants to be in a walkable, high-amenity urban environment. Santana Row is the instant-campus solution, now that we're adding a six-story office building with nearly 40,000-square-foot floorplates. Everything's here, in walking distance.”
With its location directly off Interstate 280 and proximity to residential neighborhoods and office parks from Mountain View to San Jose, Gabrielson says that “500 Santana Row enjoys an enviable reverse-commute compared to the increasingly congested Highway 101 corridor.”
Santana Row currently has 70 shops, 20 restaurants, a CineArts theatre and the Hotel Valencia which also has corporate meeting space, and a 30,000 square-foot premium fitness club. Over 800 residential units also offer walk-to-work convenience, and a new Santana Row shuttle will provide direct access from Caltrain and VTA at the Diridon Station.
According to Newmark Cornish & Carey research, the five largest Silicon Valley spec projects are: Moffett Gateway, 597,000-square-foot property underway in Sunnyvale; Coleman Highline, 357,000 square feet in San Jose; The Office @ Main, 274,000 square feet in Cupertino; 500 Santana Row's 233,000 square feet in San Jose, and Stadium Techcenter, 226,000 square feet in Santa Clara.
Full list of 10 is below:
Source: Newmark Cornish & Carey
Moffett Gateway | Jay Paul | Sunnyvale | 597,848 |
Coleman Highline | Hunter/Storm LLC | San Jose | Phase I • 357,106 |
The Offices @ Main St | Sand Hill Properties | Cupertino | 274,288 |
500 Santana Row/The Offices at Santana Row | Federal Realty | San Jose | 233,000 |
Stadium Techcenter | Spearstreet Capital | Santa Clara | 226,500 |
Legacy on 101 | Legacy Partners | San Jose | Phase I • 225,000 |
433 Mathilda Avenue | Herman Christensen | Sunnyvale | 213,117 |
600 National Avenue | Lamb | Mountain View | 145,906 |
3303 Scott Blvd | Toeniskoetter Development | Santa Clara | 82,000 |
479 North Pastoria Ave | Peery Arrillaga | Sunnyvale | 52,394 |
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