Kaiser grabs empty parcel in San Jose for possible expansion
Kaiser has bought a big chunk of San Jose land, paving the way for a possible expansion by the health care titan in a deal that also jolts prior plans for an office project on the choice site.
The land is located at 1601 Technology Drive, a short distance from the interchange of State Route 87 and Skyport Drive.
Kaiser Foundation Health Plan paid $43.5 million for the vacant site, according to documents filed on Nov. 21 with the Santa Clara County Recorder's Office. Hudson Pacific Properties, acting through an affiliate, sold the land.
The just-bought land is next to a parcel that accommodates an existing Kaiser Permanente medical office building.
“The land purchased in North San Jose is adjacent to our Skyport Medical Offices and will allow for an expansion of services at a yet-to-be-determined date,” Kaiser Permanente said in comments sent to this news organization. “The current Skyport Medical Offices is 153,000 square feet.”
The transaction also serves as a reminder that economic conditions have deteriorated for office properties in the Bay Area and Silicon Valley during a time of rising vacancy rates.
In 2018, at the height of the prior tech boom, Hudson Pacific proposed a ninestory office building totaling 350,000 square feet.
A steady stream of tech company expansions before the outbreak of the coronavirus made speculative office projects in the Bay Area appear to be a good bet.
The arrival of the pandemic in 2020, however, doomed numerous plans for office projects.
The virus outbreak prompted state and local government agencies to impose wide-ranging business shutdowns that chased employees away from their workplaces.
Yet even after the effects of the coronavirus faded and the government lockdowns ended, employees returned to their workplaces at an uneven pace.
Plus, tech companies unleashed job cuts and shrank their building space footprints, causing office vacancies to hop higher.
The rising vacancies also made new office projects a risky bet and prompted real estate firms to forsake development endeavors.
The development of medical facilities, in contrast, became a more attractive proposition because health care firms are still pursuing sites for expansion.
“Kaiser Permanente is continuously looking for opportunities to better meet the needs of our members, and support the communities we serve,” Kaiser stated. “Evaluating potential acquisition opportunities and acquiring real estate is part of our normal, day-to-day business operations.”