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Commercial
San Francisco

BD leases San Jose building as part of relocation

Medical supply company rents space after selling three buildings in North San Jose last year

A photo illustration of BD's Tom Polen and 86 Montecito Vista Drive (BD, Millie and Severson)
A photo illustration of BD's Tom Polen and 86 Montecito Vista Drive (BD, Millie and Severson)

Becton, Dickinson and Company has leased an 80,000-square-foot industrial building in San Jose less than six months after taking three times that amount of space in neighboring Milpitas.

The New Jersey-based medical supply manufacturer signed a full-building lease with EverWest Real Estate Investors for the 80,260-square-foot structure at 86 Montecito Vista Drive in central San Jose. The single-story building was completed last year and sits on 4.5 acres. It has 32-foot clear heights, 10 loading and drive-in doors, and 129 parking spaces, according to online marketing materials.

JLL, which represented both sides of the deal, disclosed it in the commercial brokerage’s September Northern California industrial newsletter, which didn’t reveal the lease’s financial terms. Representatives for BD didn’t respond to requests for comment.

JLL’s Joel Yungen confirmed that the lease’s description in the newsletter is accurate before declining further comment. Yungen and JLL brokers Greg Matter and Jason Cranston represented landlord EverWest in the deal.

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The Montecito Vista Drive lease shows that BD intends to maintain a presence in San Jose as the company shifts its employees and operations out of three buildings on the city’s north side. BD sold those properties, which combined total 381,000 square feet of office, research and manufacturing space, to Bridge Industrial in August 2021 for $134 million. Bridge seeks to demolish them and construct a four-building, nearly 715,000-square-foot warehouse complex in their place.

While Bridge’s plans remain under city review, BD has taken steps to relocate its employees and operations out of those buildings. BD Biosciences, one of the company’s business units, signed a 240,000-square-foot lease at an office and research campus in Milpitas earlier this year.

BD’s deal for the Montecito Vista Drive building is tied to its relocation needs, according to people with knowledge of the company’s plans. It’s unclear whether the company plans to lease any additional space in Silicon Valley as part of its move out of North San Jose.

The deal takes one of the few large new industrial buildings off San Jose’s market at a time when Silicon Valley’s warehouse, distribution and manufacturing sectors face unmet demand. JLL recorded 8.2 million square feet of industrial demand at the end of the second quarter, about 2.6 times the available space. While developers have proposed adding 5 million square feet to Silicon Valley’s inventory — enough to close the supply-demand gap — many of those projects won’t break ground for another year or two, JLL said in its second-quarter report.

In San Jose, the only large industrial project under construction seems to be Prologis’ 303,000-square-foot development at 5853 Rue Ferrari. That project, which Duke Realty proposed before Prologis acquired the company, is slated for completion in June, according to listing broker CBRE’s website.

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Tags
Industrial Real EstateJLLLife ScienceSan Jose