Dwindling Silicon Valley industrial inventory causing tenants to consider eastern markets
The conversion of industrial buildings to new uses across the Silicon Valley and neighboring Mid-Peninsula has tightened an already space-constrained market.
August 28, 2019
- The conversion of industrial buildings to new uses across the Silicon Valley and neighboring Mid-Peninsula has tightened an already space-constrained market. Since 2000, almost 8.9 million square feet of industrial spaces have been demolished, with most of the activity concentrated in San Jose (44.9 percent) and Sunnyvale (27.1 percent).
- Over 50.8 percent of the demolished buildings have been replaced with single-family and multi-family residential. In Milpitas, almost 75.0 percent of former industrial space was converted to residential and 65.6 percent in Sunnyvale. Fremont and Newark are the only markets to add new industrial product on former industrial sites.
- Since 2000, Mountain View and Sunnyvale have experienced the largest loss of industrial inventory, much of which has been replaced with new offices, especially around Moffitt Field. Mountain View lost the most the inventory, down 38.6 percent, and Sunnyvale’s industrial inventory has shrunk by 33.7 percent. With the loss of inventory in the Silicon Valley and Mid-Peninsula, tenants have considered eastern markets. Since 2008, over 5.5 million square feet of Silicon Valley tenants have either relocated or expanded eastward into markets such as the East Bay and Central Valley.
Source: JLL Research