Downtown San Jose’s Bank of Italy development venture expands
Realty investment group purchases a large parking lot next to historic office tower
SANJOSE » The realty investment group leading a far-reaching upgrade of the Bank of Italy building in downtown San Jose has purchased a big surface parking lot next to the historic office tower.
The site could benefit the property entrepreneurs in multiple ways. For now, it’s a cash-creating parking lot that fronts on South Second Street, just south of East Santa Clara Street. In the future, it could be developed. And the lot also could provide parking dedicated to tenants in the Bank of Italy offices.
Fountain Alley Owner paid $25.7 million in cash on March 28 for the parking lot, based on tax payments made to the city of San Jose that were disclosed in Santa Clara County property records. The group that bought the parking lot is affiliated with venture capitalist and real estate entrepreneur Gary Dillabough, according to a source with direct knowledge of the transaction.
“We are hoping that by having more ownership on the street, we can begin tomake significant improvements on that block,” Dillabough said in an interview in February with this news organization.
The centerpiece of the Dillabough-led efforts is the acquisition of the Bank of Italy building, a 14- story tower built 90 years ago. Through multiple transactions over the final three months of 2017, the new owners, which include Dillabough and WeWork, paid a combined $33.8million for the tower, an adjacent parking lot and a building that contains Lido’s nightclub.
In February, a Dillabough group paid $6million for an adjacent building at 30 E. Santa Clara St. Soon after that purchase, Dillabough told this news organization that he was seeking to under-
take multiple investments in a quest to upgrade this neglected section of downtown San Jose.
Including the most recent purchase of the surface parking lot, Dillabough and his investment partners have paid a combined $65.5 million for the properties.
This investment activity arrives amid ongoing efforts by Mountain View- based Google and San Josebased Adobe Systems to undertake large developments in the city’s downtown.
“The property assembly that Dillabough has pulled off is brilliant,” said Mark Ritchie, president of Ritchie Commercial, a San Jose-based realty firm.
The Bank of Italy investors already have submitted proposals for some exterior and interior improvements on the office tower. These upgrade include the addition of solar panels, according to an application on file with San Jose city planners.
Dillabough has said that part of his strategy — rooted in his venture capital expertise and interaction with numerous tech startups — is to use an array of technologies to make older office buildings greener and more energy- efficient.
Downtown San Jose has experienced a renaissance in some of its sections, such as the San Pedro Square area and the areas of South First and South Second streets that are known as the SoFA district.
But property experts be- lieve considerable work is needed to improve East Santa Clara Street in the area of First and Second streets, which is where the Bank of Italy building is located.
“These investors are creating a unified ownership on this block,” Ritchie said. “The combination of the Bank of Italy building with the adjacent properties is creating a real solution to the issues facing this area.”