South San Jose industrial warehouse projects on hot streak

A Houston-based developer is planning three massive warehouses across nearly 45 acres of land in South San Jose — adding to swath of industrial buildings already in that area.

Hines Interests Limited Partnership is seeking approval for a 234,000-square-foot industrial building on nearly 16 acres of vacant land at 644-675 Piercy Road, near the corner of Piercy Road and Hellyer Avenue. The project will be considered at a Planning Director’s hearing on Wednesday morning, the only public approval needed for the development to move forward.

Hines, a privately held firm operating in 30 countries, manages about $94.6 billion in real estate assets, according to its website.

The real estate firm has more plans in the pipeline for the immediate area. In a separate project from the 644 Piercy proposal, Hines is eyeing two more warehouses totaling 422,670 square feet on nearly 29 acres of contiguous land to the north, at 550 Piercy Road.

The projects are planned for the southeastern corner of the city’s Edenvale district, just south of Silver Creek. The area is dotted with industrial buildings occupied by a variety of firms doing research and development, high-tech manufacturing, assembly and testing.

The area also includes some medical device and pharmaceutical industry tenants, as well as large-format churches and some housing developments.

It’s unclear if the investment firm has a tenant in mind for any of the warehouses. A representative from Hines wasn’t immediately available to comment.

The city has long encouraged industrial development in the area. As of late, flexible warehouse space represents a more stable investment sector than the pricey and volatile housing construction market. It also has remained strong in the wake of the pandemic, compared to the steeply declining office space market.

“Amidst global economic uncertainty, San Jose continues to see strong demand for industrial space,” Mayor Matt Mahan told San José Spotlight. “With nearly 1 in 5 San Jose workers engaged in manufacturing and our industrial vacancy rates south of 3%, San Jose is demonstrating what ‘Made in America’ looks like in the 21st-century.”

District 2 Councilmember Sergio Jimenez, who represents the area on the San Jose City Council, said he supports the projects.

“I think it’s obviously a good situation when you have the level of investment some of these investors are pouring into the city,” Jimenez told San José Spotlight.

While the buildings could be rented for a variety of uses, he said the projects make sense as investors recognize the importance of being close to a massive market in the South Bay.

Jimenez said the area’s freeway proximity makes it a good location for nearly any industry. He said some nearby residents living in the Basking Ridge development area, which backs up to Tennant Avenue, have raised concerns about truck traffic and noise because of the area’s numerous warehouses.

City staff reports for the 644-675 Piercy project note that plans for the warehouse include allowing car traffic only on Tennant, while freight trucks will use Hellyer Avenue for entering and exiting, to reduce impacts to the neighborhood.

Other investment groups are planning warehouses a bit farther north on Piercy.

Xebec, a Dallas-based real estate development and investment firm, recently gained approval for a 134,589-square-foot warehouse on six acres at 469 Piercy Road. Directly east of the 469 Piercy lot is a 14-acre piece of land at 455 Piercy being eyed for a roughly 121,000-square-foot warehouse project by Southern California self-storage developer InSite Property Group.

Contact Joseph Geha at [email protected] or @josephgeha16 on X, formerly known as Twitter.