https://news.theregistrysf.com/redco-development-acquires-13-acre-former-ups-facility-for-42mm-in-sunnyvale-plans-275000-sqft-industrial-rd-building/
The acquisition at 1245 Hammerwood Avenue, located on Tasman Drive near Highway 237 and Lawrence Expressway, would deliver Silicon Valley’s first new ground-up Class A industrial building in Sunnyvale, Mountain View, Palo Alto, or Menlo Park in three decades
Redco Development has acquired a 13-acre site at 1245 Hammerwood Ave. in Sunnyvale, the former UPS distribution facility, with plans to demolish the existing building and construct a new 265,000-square-foot Class A speculative industrial R&D building. If completed, the project would represent the first new ground-up Class A industrial delivery in Sunnyvale, Mountain View, Palo Alto, or Menlo Park in approximately 30 years. The acquisition price was $42 million, according to an industry source.
The existing industrial facility on the site was built in 1968 and totals approximately 171,000 square feet. The UPS Customer Center at the location is now listed as permanently closed on business review platforms. The site fronts Tasman Drive and benefits from access to Highway 237, Lawrence Expressway, and surrounding arterials.
“We really do think it’s one of one,” said Chris Freise, Managing Partner & Co-Founder at Redco Development. “If you’re building spec in the East Bay submarkets — the Fremonts and the Newarks and the Milpitas — there’s other people building over there. There’s nothing like this. There’s only this.”
The developer plans to build the project on a speculative basis, without a tenant secured at the outset. CBRE’s Chip Sutherland, one of Silicon Valley’s top-producing industrial brokers, has been retained to market and lease the building. No architect or general contractor has been announced.
The deal is being closely watched as an early indicator of developer confidence in Silicon Valley’s core western industrial submarkets at a time when most new speculative industrial construction has concentrated in the East Bay and South San Jose. The site’s central location and Tasman Drive frontage position it to attract advanced manufacturing, R&D, and AI-related tenants.
The transaction arrives against the backdrop of a Silicon Valley industrial market that is absorbing new supply while maintaining relatively tight fundamentals. Industrial vacancy across Silicon Valley rose to 5.4 percent at the end of Q4 2025, up from 4.7 percent the prior quarter, largely driven by 799,233 square feet of construction completions, according to Colliers’ Q4 2025 Silicon Valley industrial market report. Despite the uptick, annual net absorption for 2025 finished positive at 586,740 square feet, according to the same report.
Asking rents for industrial product have remained elevated. Colliers reported that asking industrial rents rose to $1.65 per square foot per month NNN in Q4 2025, buoyed in part by the delivery of new, higher-quality product commanding premium pricing. Cushman & Wakefield’s Q4 2025 data placed the broader Silicon Valley industrial vacancy rate at 6.5 percent, representing approximately 7.9 million square feet of available space, with vacancy rising 90 basis points quarter-over-quarter and 170 basis points year-over-year.
The development pipeline remains active but selective. Two industrial projects broke ground in Q4 2025 totaling 364,100 square feet, bringing the Silicon Valley development pipeline to 1.6 million square feet, as developers anticipated demand from AI infrastructure and advanced manufacturing tenants, according to Colliers. Most new projects under construction across Northern California more broadly are being built on a build-to-suit basis, with spec development concentrated in fewer, higher-conviction locations.
The Sunnyvale submarket in particular has historically been among the tightest in Silicon Valley for industrial product, with demand supported by proximity to major technology campuses and a strong base of semiconductor, advanced manufacturing, and data infrastructure users. The absence of a new Class A industrial delivery in the broader western Silicon Valley corridor for three decades underscores how constrained the market has been — and how significant the Hammerwood Avenue project could be in addressing unmet demand from occupiers seeking modern, purpose-built facilities in a supply-starved geography.