Prologis Plans to Double Size of San Jose Warehouse

Prologis is moving forward with plans to demolish a 141K SF industrial building in north San Jose and replace it with a warehouse with almost double the footprint.

The 14-acre property at 2256 Junction Avenue is owned by Duke Realty, which was acquired by Prologis last year for $26B. Duke originally planned to build a distribution center for Amazon, prior to Amazon’s reduction in its logistics network footprint in 2H 2022.

Prologis has disclosed that it will replace the San Jose warehouse, which was built in 1976, with a new 312K SF industrial building, according to a report in the Silicon Valley Business Journal.

According to the report, the plans call for a LEED-certified facility with a solar panel array on the rooftop and EV charging stations.

Prologis did not mention Amazon, the largest tenant of its portfolio, in its announcement of the San Jose warehouse expansion.

In addition to reducing its overextended logistics network by 30M SF, Amazon has reconfigured the entire network from a national to a regional hub system that is being directed AI-driven inventory management.

In a letter to shareholders earlier this year, Amazon CEO, Andy Jassy announced a coast-to-coast reorganization of the e-commerce giant’s national fulfillment network into eight “interconnected” regional hubs. The tech giant also said it has deployed new AI-driven algorithms to predict what customers in the regional hubs will need and to guide inventory placement systems.

During the pandemic, Amazon doubled the size of its logistics network to more than 400M SF and built a last-mile delivery system that, according to the company, now rivals UPS in its reach.

During H2 2022, as Amazon begin a cost-cutting campaign that saw it delay, close or cancel 99 logistics facilities, the company began an initiative to redesign the network around a less-costly “regionalized” model, Jassy said.

The tech giant adjusted its inventory placement strategy-as well as placement and logistics software, processes and physical operations-to create eight interconnected regions in smaller geographic areas.

In June, Prologis agreed to buy a portfolio of almost 14M SF of industrial space from Blackstone Group for $3.1B. The portfolio included 70 properties across the US, spread across markets including Dallas, South Florida and NYC.

In August, Prologis acquired a 246K SF industrial and research building in Fremont for $86.6M.