Decision looms for start of big downtown tech campus
‘Next couple of months’ will bring decision on timing for San Jose office complex
A real estate venture is readying a decision about when — or whether — to launch construction of a huge tech campus proposed for downtown San Jose, executives said.
Boston Properties said that it’s in the final stages of deciding the development plans for the company’s ambitious and potentially eye-catching office complex that could sprout in downtown San Jose near the Diridon train station.
The Platform 16 campus, to be located at 440 W. Julian St. in San Jose, is being jointly developed by Boston Properties and Canada Pension Plan Investment Board.
The two organizations are nearing a decision about the timing for the project’s construction, Boston Properties executives told Wall Street analysts.
“We will likely, with our partners, have a decision in the next couple of months as to whether we want to move forward with that project,” Douglas Linde, president of Boston Properties, said during a conference call with the analysts.
Numerous issues must be weighed, including the reality that the project won’t be ready to be offered to tenants for a few years.
“Platform 16 is not going to deliver until 2025,” Linde said.
Perhaps the biggest challenges are skyrocketing costs for construction materials and mechanical components for buildings, Boston executives said during the conference call.
“Our total base building construction costs have increased by just over 13% relative to the pricing we had 24 months ago,”
Linde said.
Worsening matters: Regardless of the expense, developers aren’t able to locate building materials and supplies as swiftly as was the case previously.
“The lead time to obtain base building materials after construction drawings are approved has risen from 20 weeks to 40 weeks, as an example, for base building mechanical systems,” Linde said.
That new reality, in turn, has caused decision-making to become less certain.
“You have to make decisions much earlier in a construction schedule or risk delays,” Linde said. “We are doing that.”
Platform 16 is a proposed development with a striking look, featuring 16 terraces in a project that would be perched near the banks of the Guadalupe River and a short distance from Google’s Downtown West neighborhood. Once complete, the development would total 1.1 million square feet and consist of three office buildings and a garage on a site bounded by Autumn Parkway, West Julian Street, North Autumn Street and a railroad line.
As the decision approaches, it has become clear to Boston Properties that the Silicon Valley market, in particular, has resumed being a hotbed of leasing activity and tenant demand for prime office spaces.
“The Class A Silicon Valley leasing market had a particularly strong 2021 with very healthy absorption” of office space, Linde said.
And it appears that demand for office space in Silicon Valley remains at elevated levels as 2022 gets underway. Technology behemoths are fueling the