Downtown San Jose building purchase expands quest for revitalization
Investment group buys property next to Bank of Italy tower
SAN JOSE » Realty investors who are working on a wide-ranging upgrade of the iconic Bank of Italy office tower in downtown San Jose have bought an adjacent building amid a push to improve the area around First and Santa Clara streets.
CFP 30 East Santa Clara Street, a group led by venture capitalist and real estate investor Gary Dillabough, paid $6 million on Feb. 2 for a 30,000-squarefoot building at 30 E. Santa Clara St., according to Santa Clara County property records.
“It’s right next to the Bank of Italy building,” said Dillabough, who is a managing partner for two investment firms, Alameda-based Navitas Capital and Menlo Park-based Westly Group. “We are hoping that by having more ownership on the street, we can begin to make significant improvements on that block.”
The building’s awning describes it as the Fountain Alley Office Building. It has ground-floor retailers, including City Fish, Curry Pundits and Red Rose Restaurant.
The purchases in recent months by Dillabough and his partners of buildings near First and Santa Clara streets, along with a separate developer’s upgrade of a big building across the street, could potentially lead tomajor improvements in a long-neglected section of downtown San Jose.
“This is a beautiful old historic district with a lot of foot traffic, but historically it has been somewhat blighted,” said Nick Goddard, a vice president with the Colliers International commercial realty brokerage. “It’s been difficult to get tenants to move east of Market Street.” Goddard helped to arrange the purchases by the Dillabough
groups of both the Bank of Italy and the Fountain Alley building.
In the Bank of Italy building, Dil labough’s group plans a major overhaul of the interior of the office tower, which has a spire topped by an iconic cupola.
Through several transactions in December and October, two investment groups that are working together paid $ 33.8 million for the historic 90- year- old office tower, along with an adjacent parking lot and a building that contains Lido’s nightclub. County documents show that New York Citybased WeWork, a provider of shared work spaces, has obtained an ownership interest in the Bank of Italy building.
Similarly, a major upgrade is planned for the smaller adjacent Fountain Alley Office Building.
“Santa Clara Street is getting tougher and a little scrappier and is not a comfortable place,” Dillabough said. “We are hoping that by having more ownership on the street, by having a bunch of good landlords who will spend time with the mayor’s office, that things can improve. It’s all aimed at making Santa Clara Street and Fountain Alley more attractive.”
Downtown San Jose has gained more night life, dining and entertainment choices in multiple locations such as San Pedro Square and South First Street. It is adding residential towers and is poised to add tens of thousands of office workers due to emerging developments proposed by Google, Adobe Systems, Trammell Crow, TMG Partners and Valley Oak Partners. The efforts along and near Santa Clara Street appear to be a key addition to these ventures.
“It’s extremely encouraging to see this level of renovation,” said Mark Ritchie, president of San Jose- based Ritchie Commercial, a realty firm. Ritchie, who helped put together the Bank of Italy building deal, added, “This kind of investment at First and Santa Clara is spectacular and long overdue.”