Research campus could make way for industrial redevelopment in Sunnyvale

Lane Partners wants to redevelop a six-building research campus it owns in Sunnyvale into a 515,000-square-foot industrial complex, a pivot that would enable the firm to tap into Silicon Valley’s undersupplied market for manufacturing and warehouse space.

The Menlo Park-based developer submitted formal plans with the city this week to demolish and redevelop the 26-acre site at 1230-1280 East Arques Avenue on Sunnyvale’s eastern edge. The submission comes almost six months after Lane filed preliminary plans for the 313,000-square-foot campus formerly occupied by computer equipment company Fujitsu for more than 40 years. Fujitsu was in the process of phasing out of the campus and moving to a building less than half its size next door when Lane acquired it in October 2020 for $104 million.

The firm’s Andrew Haydel, listed as Lane’s contact person on its application, didn’t follow up on a request for comment.

The campus was configured to suit Fujitsu’s needs and can’t accommodate multiple tenants, making it “no longer economically viable given 21st-century market requirements,” architect HPA Inc. wrote in the application. Lane seeks to replace it with three single-story structures ranging from 162,000 to 178,000 square feet, according to the firm’s plans. Because the buildings are designed to accommodate manufacturing, research and development, commercial storage and warehouse uses, the site’s history as a research campus may live on, albeit in the form of concrete, tilt-up industrial buildings.

Lane is betting that demand for industrial space in Silicon Valley will continue to outpace supply, even as Amazon, one of the region’s most active warehouse renters, cuts back on spending for such properties. Commercial brokerage JLL reported potential tenants were looking for 8 million square feet of industrial space in Silicon Valley at the end of last quarter, compared with only 3 million square feet of available inventory. It’s the only market in Northern California that hasn’t experienced a lull in demand, according to JLL.

The region’s R&D real estate sector is also hot, as monthly average asking rents hit an all-time high of $2.80 a square foot last quarter. To meet Sunnyvale’s development standards for manufacturing and R&D office uses, Lane’s project must be certified LEED Gold by the U.S. Green Building Council and be all-electric. HPA wrote in the application that the project meets both standards, which aren’t required if it’s used for warehouse purposes.

Separately, Lane is requesting that the city adjust the minimum parking ratio for industrial uses, which would allow manufacturing and R&D businesses to occupy the project. Its proposal calls for 618 new surface parking spaces, eight below the required minimum.

Because the project includes permitted uses under Sunnyvale’s zoning code, the city doesn’t require any public hearings for it, spokesperson Jennifer Garnett wrote in an email. Lane’s proposal will instead be processed at the staff level, Garnett said. Neither the firm nor HPA disclosed a construction timetable in their submission to the city, which mentioned that the developer hasn’t identified a tenant at this time.

Read more

San Francisco

5G radio startup expanding HQ with move to Sunnyvale