Blue Tent goes for $47 million
San Jose says it did not overpay for high-profile property
SAN JOSE >> The city of San Jose’s purchase of the highprofile Blue Tent property downtown wasn’t a “Blue Light Special,” but municipal officials maintain the deal also wasn’t an overpayment.
The property at 435 S. Market St. — officially known as the Convention Center South Hall and a site that prominently features a huge blue tent — was bought earlier this year by the city in an effort to bolster the long-term viability of the McEnery San Jose Convention Center. The city’s $47 million bid was well above the $31 million offer submitted by Santa Clara County.
“The convention center is landlocked by other properties and expansion is difficult,” said Nanci Klein, San Jose’s deputy director of economic development.
San Jose officials have had their eye for some time on this site to accommodate greatly expanded activities related to conventions and visitors.
“Future expansion of the San Jose Convention Center and development of a hotel” are among the primary uses the city envisions for the site, according to a memo prepared by Richard Keit, managing director with a government organization known as the Successor Agency to the San Jose Redevelopment Agency.
Municipal officials believe the city is losing out on business because of the size of the convention center and that those losses would grow unless the complex can expand.
“Already there are conventions that are larger than what the city can now accommodate,” Klein said. “We also had a note from Santa Clara County that it was considering a bid of as much as $40 million. Those are some of the things that went into consideration of the prices.”
The city of San Jose once owned the property through its now-defunct redevelopment agency. But amid a state budget crisis, redevelopment agen-
cies throughout California were stripped of their funds and ability to generate revenue. The city agencies were forced to transfer numerous parcels to government entities that became the successors to the old agencies.
San Jose bought the property in August. Both the city and Santa Clara County put in bids that soared far above what two private parties wanted to pay, according to the memo.
A bidder identified only as Mr. Shingal bid $11 million, and an entity identified as E2 Holdings bid $9 million, the memo shows.
Since San Jose is one
of several public agencies that make up the government successor entity that sold the property, the city received $4.3 million from the deal — which effectively reduced the amount that San Jose paid.
What’s more, city officials believe that the $245 a square foot that the municipality paid for the site was in line with other deals in downtown San Jose lately.
Mountain View-based Google, which has pro- posed a transit-oriented community of office buildings, shops, restaurants, residences and open spaces where 15,000 to 20,000 of the search giant’s employees could work, is paying around $237 a square foot for an array of public and private properties in the area of the planned development.
Plus, some property deals in downtown San Jose’s increasingly busy South First Arts, or SoFA, district have been completed for $200 to $300 a square foot, and a parking lot in the area changed hands for about $400 a square foot in recent months.
“We have had comparable sale prices downtown that are much higher than what we paid,” Klein said.