Office complex will join Santana Row
First of three big office buildings scheduled to break ground this month
SAN JOSE » A big new office building is slated to begin construction this month across the street from San Jose’s Santana Row, in a commercial real estate market and Silicon Valley economy that the project’s developers describe as still in growth mode.
Federal Realty Investment Trust, the principal owner and developer of the iconic mixed-use Santana Row complex, is preparing to break ground on an office building totaling 360,000 square feet in the Santana West complex that fronts on Winchester Boulevard.
The new development comes at a time when Federal Realty executives, as they said on a conference call with analysts a few weeks ago, believe the time is ripe for a new office building at Santana Row, even one that they intend to construct without having a tenant to lease the space.
“There’s still significant job growth in Silicon Valley and the bulk of that job growth is from tech tenants,” Jeff Berkes, president West Coast for Federal Realty, said during the conference call. “Most tech tenants are office-using jobs. So, there’s a lot of demand. And right now quite frankly there isn’t a lot of supply.”
For that reason, Federal Realty intends to build the new Santana West eightstory office building on a speculative basis. Newmark Knight Frank, a commercial real estate firm, will scout for one or more tenants for the building.
“The decision to move forward speculatively was not made lightly,” Don Wood, chief executive officer with Federal Realty, said during the conference call. “But it’s pretty clear that the full amenities at the Santana Row community were instrumental in our previous success, attracting office users here.”
Santana Row is deemed to be a destination center with a vibrant mix of shops, restaurants, entertainment, residences, a hotel, and multiple office buildings.
The center scored a big-time tenant win during 2018, when it signed a large lease with San Francisco-based Splunk, an upand- coming tech company whose software seeks out, collects and analyzes an array of data.
In 2018, Splunk leased 301,000 square feet at an under- construction San Jose office building, 700 Santana Row. That is a short walk from its current San Jose location at 500 Santana Row, a 235,000-square-foot building.
Once construction officially begins on July 30, the developers intend to have the first building ready for tenants by 2021. As many as three big office buildings could sprout on the 12-acre site near the corner of Winchester and Olsen Drive.
“We’re very excited about getting going on One Santana West,” Berkes said. “It’s going to be a really cool building.”