Bay Area Urban Industrial -- [Part 1]
Abstract: Over the next few months, you and I (Yes, beloved reader this means active participation!) will explore the "Master Plan" of the industrial real estate market in San Jose. This expose is a multi-part series of thought discussion and analysis focused on the past, present and future of industrial commerce within Silicon Valley.
Is Urban Industrial Property a dying asset?
After cruising south on 10th street, I engaged in a thought discussion regarding the classic economics fundamantal of supply and demand. Is the value of San Jose industrial real estate ramping down due to low user demand & high supply OR elevating due to a lower supply & higher demand by developers?
Initially, the first thought in seeing vacant, industrial incubator condos and for-sale signs posted on building corners triggers the "what can you expect in a recessive economy" response. Starting with an analysis using BSB's industrial assets, findings indicate that most of our urban industrial holdings are being re-zoned for higher and better uses including projects on Auzerais, the Smith&Mckay Building downtown, and the 4th & St. John property, which, when caught up in the tide of verticle expansion in San Jose's central core, makes sense.
Think about the stigma that used to be attached to industrial commerce... Who wants "noisy, dirty, heavy epuipment industrial product" banging and bustling in Downtown San Jose? This included machine shops, printing press buildings, etc.
Yet, these rare and unique assets I define as "Urban Industrial," are on the road to extinction right before our eyes.
In my next article, I'll discuss the current market of local industrial tenants and how their specific industrial products have changed over the years. There has been a slow move over the last few decades of these heavy users moving out of the urban regions, and out of the United States altogether.