Buying spree inSJ— $1.43B
Mayor: ‘Investors are telling the world what we already knew: San Jose is poised to become America’s next great city’
SAN JOSE >> In a head-spinning burst of activity, downtown San Jose property sales have rocketed past $1 billion in 12 months.
Tech titans Google and Adobe Systems, an array of developers, up-and-coming realty entrepreneurs, along with overseas investors from as far away as Asia, have unleashed a buying binge in downtown San Jose that totaled $1.43 billion during the 12 months that ended in September, according to Santa Clara County public records and this news organization’s analysis of the transactions.
“Investors are telling the world what we already knew: San Jose is poised to become America’s next great city,” San Jose Mayor Sam Liccardo said in an interview Monday.
The buying activity in downtown San Jose over the recent 12 months is nearly three times as much as the $484 million buyers spent on downtown properties over the prior one-year period that ended in September 2017.
“It’s phenomenal to see all of the activity downtown,” said Geri Wong, a senior managing director with Newmark Knight Frank, a commercial realty firm. “We’re seeing tremendous
interest in downtown San Jose.”
Google’s proposal for a transit-oriented community of office buildings, residences, restaurants, shops and open spaces where 15,000 to 20,000 of the search giant’s employees could work near the Diridon train station has bolstered confidence in the area.
Adding to the enthusiasm: Adobe Systems’ plan to add a fourth tower to its three-building downtown San Jose headquarters in an expansion that is expected to nearly double the cloud services giant’s employment in the central business district. Adobe said in February it had about 3,500 employees in downtown San Jose, and in August the company estimated that its future fourth tower could accommodate 3,000 employees.
What’s more, the Diridon Station on the western edges of downtown, already a stop for Amtrak, the Capitol Corridor train, Caltrain, the ACE Train,
light rail and buses, is approved as a BART station and could even become a stop for California’s highspeed rail network.
The biggest property purchase over the 12-month period was the July acquisition for $283.5 million of the Cityview Plaza office, retail and restaurant complex a short distance from The Tech Museum of Innovation. Jay Paul, a veteran Bay Area developer, has taken some preliminary steps toward replacing the complex with a modern campus.
Additional major deals that topped $100 million: The acquisition of the Fairmont Hotel for $221.7 million; the acquisition of Riverpark Tower 2 for $164.7 million; the sale of the two office towers at 75 E. Santa Clara and 4 N. Second streets for $127.7 million; as well as separate deals to buy Riverpark Towers 1 for $118.3 million and an office building at 160 W. Santa Clara St. for $101.5 million.
Rounding out the 10 largest deals of the last year: The purchase by Adobe Systems of parcels on West San Fernando Street for $68 million; the
acquisition of the choice Valley Title office building and adjacent parking lot for $64 million by a group led by realty entrepreneur Gary Dillabough; Paul’s acquisition of an office building at North First and West Santa Clara streets for $46 million; and the purchase of an office building at 152 N. Third St. for $40 million.
A big shift also has occurred over the two years in the mix of buyers. During the 12 months that ended in September 2017, an alliance of Google and Trammell Crow accounted
for $144.8 million, or nearly 30 percent of the dollar value of the transactions, while other private sector investors bought properties for a total of $339.5 million, county files show.
During the most recent 12 months that ended on Sept. 30 of this year, buyers other than Google dramatically stepped up their purchases, plunking down $1.34 billion, while Google and its realty ally paid $89.4 million, or 6.3 percent of the total.
“This is finally downtown San Jose’s moment,”
Scott Knies, president of the San Jose Downtown Association, said during a recent presentation. “We have an extraordinary
chance to create a city within a city.”