San Jose office tower awaits approval amid tech slump
15-story high-rise planned near Diridon station
An eye-catching office tower proposed for a prime site in downtown San Jose near the footprint of Google's future transit village awaits final city approval even as the tech industry slump haunts the region.
The 15-story office highrise would sprout on the edges of a new neighborhood that Google has been eyeing near the SAP Center and Diridon train station.
The tower development site is located at 250 Stockton Avenue between Julian Street and West Santa Clara Street, city planning documents show.
Imwalle Properties proposed the office high-rise and has been steering the project through the city approval process. The city has scheduled a planning director's hearing for next week that could produce a final approval for the development.
Tech layoffs and uncertainty around whether many employees will return to their workspaces after going remote during the coronavirus pandemic have raised questions about how much office space is needed in the Bay Area for the next year or two.
Donald Imwalle, a principal executive with Imwalle Properties, is well aware that city approval of the tower is just one of the major hurdles the project must clear before construction can begin. He offered a candid assessment of the development timeline.
“With the way the economy is now, this building won't be coming out of the ground any time soon,” Imwalle said.
The project envisions an office tower that would total 910,000 square feet. The development would demolish an existing commercial building on the site that totals 94,000 square feet.
The building is also very close to a busy Whole Foods supermarket, along with its proximity to the Google village site, SAP Center and Diridon Station.
Google, however, recently revealed that it has launched a reassessment of the timeline for when it would begin and complete the first phase of the new transit-oriented neighborhood.
The now-uncertain timeline for the search giant's transit village could have a ripple effect on the prospects for downtown San Jose to return from the economic depths to which the city's urban core plunged due to the coronavirus.
Downtown San Jose faces a grueling convalescence as it attempts to recuperate from the economic ailments unleashed by the coronavirus and the simultaneous government-ordered business shutdowns to combat the spread of the deadly virus.
San Jose officials have told Joint Venture Silicon Valley that sales tax revenue, specifically in the downtown district of the Bay Area's largest city, is only at about 35% of what the revenue was prior to the pandemic, according to Russell Hancock, president of the think tank.
The rise of remote work — and the exit of employees from their regular offices — has eroded the respective economic bases of the downtown districts in San Jose, Oakland and San Francisco, according to a report that's part of the newly released 2023 Silicon Valley Index.
Numerous office workers simply are no longer present in many offices that are located in downtown areas.
“We are seeing the effects on our downtowns,” Hancock said during a recent presentation to discuss the index. “The downtowns are where we are seeing a crisis.”
Still, plenty of hopeful signs have begun to sprout even in the currently forbidding economic landscape in the Bay Area that could bode well for the prospects for the 250 Stockton Avenue site.
“Every day it looks like there are more cars driving on the road,” Imwalle said. “As more people return to the office, that can help our project.”
Plus, Imwalle believes the present bout of tech layoffs don't change the narrative of Silicon Valley as an economic powerhouse.
“As bad as the tech layoffs are, the fundamentals of Silicon Valley are still there,” Imwalle said. “There is a need for more AI (artificial intelligence) and other technologies this area creates. Don't bet against Silicon Valley.”