Big developer buys choice office building that’s being renovated
SAN JOSE >> Developer Jay Paul, whose major Silicon Valley tenants include Facebook, Amazon and Google, has expanded its San Jose footprint by grabbing an office building located at a key downtown intersection.
Acting through an affiliate called SJ North 1st, Jay Paul on Aug. 13 bought a historic building at North First and West Santa Clara streets, according to Santa Clara County property records. The 120,000-square-foot building once was a long-time JCPenney department store in the retail heyday of downtown San Jose, but closed in 1973 amid an exodus of merchants to the city’s suburban malls.
This deal means realty developer Jay Paul has suddenly become a big-time player in downtown San Jose, spending just under $330 million in cash in two major acquisitions of prominent commercial properties over a stretch of only three weeks.
“Jay Paul’s burgeoning investment in downtown ratchets the slope of San Jose’s trajectory another degree upward,” San Jose Mayor Sam Liccardo said Wednesday. “It’s reaffirming to see that Jay recognizes downtown’s potential as Silicon Valley’s city center.”
In the most recent deal, the Jay Paul en-
tity paid $46 million for the old JCPenney building. On July 23, the developer paid $283.5 million for Cityview Plaza, a 580,000-squarefoot complex of offices, retailers and restaurants that occupies a full city block bounded by West San Fernando Street, South Almaden Boulevard, Park Avenue and South Market Street.
“Jay Paul is a whole new level of developer for downtown San Jose,” said Scott Knies, executive director of the San Jose Downtown Association. “They have a vision for imagining big projects, and Cityview and this block are both big projects.”
The latest purchase by Jay Paul is a building that is undergoing a far-ranging renovation masterminded
by realty firm Lift Partners. Lift paid $17.6 million for the building in 2016 and has obtained $39.3 million in financing to bankroll the renovation. It wasn’t clear what effect, if any, the purchase would have on the building’s facelift. Neither development firm responded to requests for a comment.
“This is what downtown San Jose needs,” said Bob Staedler, principal executive with San Jose-based Silicon Valley Synergy, a land-use and planning consultancy. “San Jose is getting developers who will create large portfolios, improve the buildings and get tenants in the buildings.”
In an effort headed by Mayor Liccardo, San Jose officials hope to lure a variety of technology companies to the city’s increasingly vibrant urban core.
Adobe Systems is already in downtown San
Jose and wants to expand its headquarters campus of three office towers by adding a fourth high-rise. Google is pushing forward with plans for a transitoriented community of office buildings, restaurants, shops, housing and park lands near the Diridon train station. Oracle has a large presence in an office tower at the south end of downtown. Amazon occupies two floors in an office tower near the corner of East Santa Clara and North Second streets. A host of small tech firms have moved to downtown or expanded there in recent years.
Jay Paul’s recent San Jose investments could help to usher more tech companies — potentially major household names — into the city’s downtown, if its experience in attracting tenants in nearby Sunnyvale is anything to go by.
Facebook in March leased 1 million square feet from Jay Paul in the developer’s Moffett Towers 2 office complex in Sunnyvale — the largest leasing deal in the Bay Area so far in 2018.
Other big tech companies that are Jay Paul tenants in Sunnyvale: Amazon’s Lab 126 occupies multiple Jay Paul-developed buildings, and Google leases large office buildings from the developer.
“When you look at the price paid for this building (in San Jose), and the extraordinary tenant list that Jay Paul has, you have to believe that one of these will be the tenant,” said Mark Ritchie, president of Ritchie Commercial, a real estate brokerage. “These kinds of moves are the sorts of investments that developers were not making in downtown San Jose just a few years ago.”