Seven Reasons to Be Excited About San Jose
The largest city in Silicon Valley is taking off more than ever before. San Jose deputy director of the office of economic development Nanci Klein tells us why. (People don't have to ask, "Do you know the way to San Jose?" anymore because they're all there.)
1) Downtown is Booming
Nanci (in front of a pic of One South Market's recent topping off) tells us she's ecstatic that downtown's vacancy rates have dropped in the last year from over 23% to 13%. That's partly thanks to two new leases from Intacct and Xactly at Legacy Partners' Riverpark Tower 2, which has sat empty since its completion in 2009. Now she's talking to developers about adding new office product to downtown, citing Boston Properties' site entitled for 900k SF. She says other downtown sites could go the office or housing routes—or perhaps both, since the general zoning plan of downtown's core promotes flexibility.
2) The Giant Mystery Tenant
The mystery behind the 2M SF tenant headed to Peery Arrillaga's North San Jose project, rendered above, continues (so far it's been the best-kept Bay Area secret since Kim and Kanye's engagement at AT&T Park). The rumor mill has pegged Google, Apple, Amazon, and Stanford, to name a few. Nanci's been told that her office should have the developer's building plans in their hands by the end of September (sans tenant name) for the city's largest-ever construction project. She says her office still doesn't know who it is (San Jose Mayor Chuck Reed is one of the few who does).
3) The Mayor's Big Final Push
At Bisnow's Future of Silicon Valley event in June, Chuck mentioned a much-needed regional economic initiative to make it easier for new entrants and developers to understand how the tech hub works. He's rushing to get deals done, projects approved, and tenants in buildings before his term is up in a few months. Nanci confirms there are "some things in the works" to lock down new tenants. Business Assistance Programs for downtown and North San Jose with an expiration date of December will be discussed and considered for change, but she declined to share more specifics.
4) Housing is Hot
The 90 tech companies in the downtown area show the city there's demand for a large and diverse set of housing options at different price points, Nanci says. Companies are also pro housing because it attracts the types of employees who want to be located near transit and cool and fun places to hang out, eat, and drink. Sares Regis' The Pierce project (above) got underway this spring and will have 232 luxury units and 4,300 SF of retail. Occupancy is slated for summer 2016.
5) The Patent Office is En Route
A 40k SF patent office is coming to San Jose's City Hall, which means no more frequent entrepreneur trips to Alexandria's US Patent and Trademark office to reserve ideas. The locale couldn't make more sense, Nanci says, considering the huge concentration of patents created by San Jose-based brains. Nanci says she's getting a lot of excited calls about the new office, expected to open next year (work has already commenced). The office will likely attract a slew of IP lawyers and new startups wanting to be in close proximity.
6) Leasing is Strong
We just learned Ellis Properties has found a 286k SF tenant to lease the entire building formerly occupied by Atmel's HQ at 2325 Orchard, vacated in 2012; sources tell us it's A10 Networks. (Ellis didn't respond to a request for comment.) We checked in with CBRE's Christian Marent, who's helping market Bixby's newly redone THE Campus in San Jose (above). Verizon leased two buildings a few months ago and now the last and third 91k SF building is garnering strong attention. CBRE is talking with a couple of groups, he says.
7) New Construction Is on the Rise
While renovation has been the big headline in San Jose, Nanci is happily seeing the movement to new construction. Staff is interested in facilitating development of the Fountain Alley parking lot downtown, and she understands it will likely be a housing proposal (although there hasn't been a final submittal yet). She also loves to check in on Samsung's website that shows a video of a model of the completed 1.1M SF project rising in San Jose (above). And Boston Properties just did permit submittals for a three-phase, ground-up office/R&D project on North First. The first phase will be spec, she reports.