LBA switches to 208K sf advanced manufacturing plant on North San Jose site

Indicates it’s ditching previously approved plan calling for hotel, 100K sf of commercial

LBA's Phil Belling with rendering of the proposed advanced manufacturing building (Hoaghospitalfoundation, Ware Malcomb)
LBA's Phil Belling with a rendering of the proposed advanced manufacturing building (Hoaghospitalfoundation, Ware Malcomb)

LBA Realty filed new plans to bring more than 200,000 square feet of advanced manufacturing space to North San Jose, a project pitched for the same site where it received city approval to build a new hotel and 100,000 square feet of commercial property.

Irvine, California-based LBA wants to build the 208,000-square-foot project at the southwest corner of West Trimble Road and Orchard Parkway, according to plans it filed with San Jose on April 28. It would cover about half of the 10.4-acre project site, where LBA got the city’s OK in 2020 to build an up-to-244-room hotel, about 75,000 square feet of office and research space, and 25,000 square feet of shops and restaurants.

Photos of the site in the firm’s latest proposal show that it hasn’t broken ground on any of those uses, whose planning approvals expired in February 2021, according to San Jose’s online permit center. An LBA spokesperson said in a statement to The Real Deal that the firm is looking forward to delivering advanced manufacturing space to support research and development and assembly for future generations of technologies in San Jose. It didn’t offer further comment.

LBA’s new plans mark a pivot toward advanced manufacturing, a subset of the industrial sector in which goods are produced through so-called innovative technologies such as autonomous robots and 3-D printing. The 50-foot-tall project would replace undeveloped land and surface parking that LBA owns, and consists of 188,000 square feet of manufacturing and assembly space, 20,000 square feet of offices, 36-foot clear heights and 17 loading docks. The developer intends to “substantially complete” it by the first quarter of next year, its plans said, an ambitious timeline for one of its size.

Through its latest plan for North San Jose, LBA follows Overton Moore and Bridge Industrial in pitching new advanced manufacturing and warehouse developments where office, research or other uses now stand or were once planned. Overton Moore acquired a 110,000-square-foot business park there in 2020 and wants to redevelop it into a 126,700-square-foot industrial complex. Bridge, meantime, is eyeing four new warehouses that combine total almost 720,000 square feet and would replace a trio of office and research properties.

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While local hotel occupancy numbers have plummeted during the pandemic, the industrial property sector has been booming. And the latest numbers on North San Jose’s sector indicate that another advanced manufacturing project there would have no shortage of suitors. The area’s industrial vacancy rate was 2.1 percent at the end of last quarter, and average asking rents for manufacturing space were $1.37 a square foot a month, the fourth-lowest out of 14 Silicon Valley submarkets, according to Cushman & Wakefield data.

The project generally falls within the parameters of its underlying land’s zoning guidelines, but the city will need to finish reviewing LBA’s proposal before determining its consistency under those standards, San Jose planner Jonathan Fox told The Real Deal on Friday. The firm is seeking a 47-percent parking reduction for the development, which provides 280 vehicle stalls as opposed to the 525 required for one of its size.

The planned building marks the latest change to LBA’s so-called NorthTown plan, which it envisioned three years ago as a mixed-use development offering 1.3 million square feet of offices, hotel rooms and room for shops and restaurants. Yet the firm has completed only a piece of that vision thus far — a 120,000-square-foot manufacturing and research building that’s available for lease, according to LBA’s website. It sold a 21-acre chunk of the NorthTown site to Microsoft for $78 million last year, land that was part of a separate proposal for a 10-building office, research and industrial complex before it withdrew it prior to the deal.

LBA hasn’t refiled a plan to build a 125,000-square-foot office and research building at NorthTown after initially proposing it in June 2020, according to San Jose’s online permit center. The project, deemed inactive by the city’s planning department, is next door to where the firm now wants to build the advanced manufacturing plant.

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