Venture capitalist buys San Jose building, plans rehabwith hopes of luring tech firms
SAN JOSE » A prominent downtown San Jose office building perchednext to St. James Park has been bought in a deal that is expected to trigger a top-to-bottom renovation of the nine-story structure so it could entice technology companies or other businesses.
The buyer of the 152 N. Third St. property in San Jose is a group led by Gary Dillabough, a venture capitalist and realty entrepreneur who is heading up some of downtown San Jose’s most intriguing development efforts. Chief among those are a renovation of the iconic Bank of Italy tower and the ambitiousMuseum Place project, along withmultiple other real estate ventures in the city’s urban core.
“Gary Dillabough is the new land baron of downtown San Jose,” said Bob Staedler, principal executive with Silicon Valley Synergy, a landuse and planning consultancy.
The price for 152 N. Third works out to $268 a square foot, based on a $40 million recorded price for the 149,000- square-foot building, according to Santa Clara County property records. Colliers International, a commercial realty firm, arranged the purchase.
“This building comes with a beautiful location on St. James Square with great views of the downtown,” said Nick Goddard, a vice president with Colliers and a broker who handled the purchase by the buyers, who county records show are operating as 152 North Third Street Owner.
Built in 1985, the building will be gradually renovated inside so it can be more attractive to a midsized tech company seeking a downtown urbanized setting.
The acquisition is one of several that Dillabough has completed in a section of downtown San Jose that has been long neglected.
While San Pedro Square, the hotel and convention center district, and the emerging arts district have become neighborhoods that burst with nightlife, dining and entertainment, the sections of downtown east of Market Street and north of Santa Clara Street have slumbered for decades.
“This building purchase is exciting because it’s part of an effort to drive more downtown activity eastward from where it historically has been,” Goddard said.
Investment ventures led by Dillabough are actively upgrading buildings such as the Bank of Italy office tower and the nearby Bank of the West building, both historic high rises at the corner of Santa Clara and South First streets. Dillabough has also bought adjacent properties on East Santa Clara Street between First and Second streets, as well as a South Second Street parking lot ripe for future development that’s behind the Bank of Italy building.
Separately, different owners are undertaking renovations of the Towers @ Second, a twin-tower office complex at East Santa Clara and North Second streets whose tenants include Amazon’s Lab 126, and an office building at North First and West Santa Clara streets.
“There are now five large office buildings with a total of one million square feet in various stages of redevelopment in this part of downtown San Jose,” Goddard said.
The activity on the east side of downtown helps expand the active scope of the city’s urban core because these sites are a full mile away from the Dird on transit station on the west side of the city center, ac- cording to Goddard.
Near Diridon Station, Google plans a transitoriented village of offices, retail, restaurants, residences, open spaces and amenities.
Adobe Systems plans to dramatically expand its three-tower downtown San Jose headquarters campus by constructing an adjacent high rise on West San Fernando Street next to State Route 87.
At the 152 N. Third St. building that’s just been bought by Dillabough’s group, renovations will be undertaken over an extended period of time when full floors become available. The building has a high occupancy level.
“It’s going to be a nice asset,” Staedler said. “It could appeal to a tech company.”