Downtown San Jose tower fetches record price

East Coast investors have bought a downtown San Jose office building for more than $80 million, a record price per square foot that some observers say demonstrates the influence a proposed Google village is already having on the city’s urban core.

The 303 Almaden building, at West San Carlos Street and Almaden Boulevard, has been bought by a unit of Boston-based AEW Capital Management for roughly $80.2 million, according to Santa Clara County property records. The purchase was completed Thursday.

“This is part of the Google bounce that is happening in downtown San Jose right now,” said Bob Staedler, a principal executive with San Jose-based Silicon Valley Synergy, a development consultant.

The 157,000-square-foot, 11-story office building was bought by an AEW affiliate called CPT 303 Almaden for $509 a square foot. That is believed to be a record price for downtown San Jose. The price tops the prior pinnacle of $420 a square foot, set in December 2015, when the office tower at 50 W. San Fernando St. changed hands.

“This price is a bell ringer,” said Mark Ritchie, president of San Jose-based Ritchie Commercial, a realty brokerage.

Also in downtown San Jose, Mountain View-based Google is eyeing development of a massive, transit-oriented project that some have dubbed Google Village. It would create 6 million to 8 million square feet of offices near Diridon

Station and the SAP Center. Since word emerged about Google’s areas of interest on the western edges of the city’s core district, invest- ment activity and development plans have sprouted in downtown.

In early May, this news organization reported that investment groups or a realty firm linked to Google had been quietly buying numerous properties near the train station and the SAP entertainment complex. Those purchases began in late December 2016 and continued throughout the first half of 2017.

Then in early June, Imwalle Properties revealed it had fashioned deals to buy the Camera 12 site and planned to redevelop and revive the property, whose anchor theaters had closed in September 2016.

A few days later, on June 6, San Jose’s mayor and other city leaders announced that the municipality intended to begin negotiations with Google to sell 16 government-owned properties to the tech titan.

Also in early June, Blackstone Group bought the 236-room Hyatt Place hotel in a $65 million deal.

Then, a South Koreabased company paid $64 million on June 15 for the iconic Westin San Jose hotel — commonly known as the Sainte Claire hotel.

On June 24, TMG Partners and Valley Oak Partners unveiled a proposal to build a million-square-foot campus a short distance from Diridon Station and the proposed Google village.

“All of a sudden, everyone is noticing downtown San Jose,” Ritchie said. “You layer the Google effect on top of that, what’s going on is astounding.”

In the East Bay, property values jumped in downtown Oakland after ridehailing startup Uber Technologies disclosed plans to move into the old Sears building there. The Google effect could be far greater in San Jose.

“Oakland had its Uber effect, but what Uber is planning in Oakland is about one-tenth the size of what Google plans in San Jose,” Ritchie said.