A joint venture of two of the largest names in the commercial real estate industry is showing its commitment to Silicon Valley's industrial market with plans to break ground on a development that will span 500,000 square feet.
Trammell Crow Co. and parent company CBRE have started work on the Cochrane Technology Park, a speculative complex in Morgan Hill, California, targeting the rising demand for flexible work and warehouse space. The project, which will span five buildings across 30 acres, is to be constructed in a single phase and is slated for completion by early 2024.
Trammell Crow acquired the Morgan Hill site, at the corner of Highway 101 and Cochrane Road, in 2018.
No tenants have yet been signed to the development, the largest speculative industrial project in Silicon Valley's construction pipeline, underscoring developers' willingness to bet on the region's ongoing expansion and widening gap between what tenants are looking for versus what is actually available.
CBRE has begun marketing the property, which Trammell Crow Principal Will Parker said "will meet the persistent demand for advanced manufacturing space in the Silicon Valley industrial market — a demand that continues to outpace supply, even in the current economic backdrop."
The groundbreaking comes a few months after one of Trammell Crow and CBRE's earlier Morgan Hill ventures was sold to global real estate manager Invesco for nearly $120 million. The deal for the Butterfield Five Tech Park, located a few blocks away from the Cochrane Road project, was one of a flurry of industrial deals that have closed across the Bay Area as demand for warehouse and logistics space continues to build upon the momentum gained since the onset of the pandemic.
Industrial rents in the Morgan Hill area have climbed by roughly 9% over the past year, according to CoStar data, a figure expected to keep climbing given a relatively empty development pipeline. That has collided with a declining vacancy rate across the San Jose area, which encompasses Morgan Hill, dipping to an average of less than 6% since this time last year.
In the first quarter of the year, the most recent data available, about 1.5% of Morgan Hill's 2.5 million square feet of industrial space was available, according to data from brokerage Colliers.