Developers Say San Jose's Land Sale To Google Could Set Future Course For The City
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The morning before the San Jose City Council was set to vote on selling land to Google, panelists at Bisnow's Silicon Valley event voiced their hopes for the city with the promise of a large employer moving in and how the city could benefit from it.
Early Wednesday morning, city council approved selling several parcels near Diridon Station for more than $100M to Google in a move that advances the tech giant's efforts to create a transit village that could eventually reach 8M SF and bring 20,000 jobs to town. The meeting, which had started Tuesday, stretched for more than 10 hours and resulted in the arrest of some protesters, the Mercury News reports.
The company's plans have already spawned a "Google effect" of investment from developers targeting properties around the planned transit village. Downtown San Jose property sales exceeded $1.4B in the 12 months that ended in September — three times the previous 12 months.
Google could play a prime role in the boom in downtown San Jose that is already underway, speakers said at Bisnow's Silicon Valley Construction & Development Forecast in San Jose Tuesday morning. The event covered construction challenges, rising costs, new development, financing, tech and trends.
"I think it has the potential to be a great deal," Jay Paul Co. Director of Acquisitions and Capital Markets Kristin Molano said of the city's land sale to Google.
She mentioned how Google's move to purchase land in Playa Vista had been the boost that submarket needed to take off in the Los Angeles area.
She anticipates some of the same in San Jose.
Jay Paul Co. recently purchased two properties in downtown San Jose, including its $284M buy of the mixed-use Cityview Plaza, which was the largest purchase in Silicon Valley this year until last week when Google's $1B Mountain View property buy beat that record.
Molano said the 584K SF Cityview Plaza, which includes office and retail, is a long-term investment and the company is exploring options on the site both short-term and long-term.
"It's a city that we've tried to invest in for awhile," she said. "But it took some time to find the right deals."
She said she is excited about the growth potential in the city, which is the 10th-largest in the U.S.
"Whether it's Google or some other very prominent tenant, I think that will help anchor San Jose," he said.
For years, San Jose has been a civic and financial district downtown that mostly shut down at night, but there has been movement toward bringing in more housing and creating more of a mixed-use environment that Google's efforts and the city's transit hub would advance further.
"Here comes an opportunity now that is going to set the course of downtown for the next 50 years," Hunter said.
Hunter Storm's mixed-use, transit-oriented Coleman Highline project, which has already signed Roku and 8x8 to leases, could benefit from having one major tenant move into downtown, he said. The project, which will have 1.5M SF of office, hotel, 65K SF of retail and 1,600 apartments, is a five-minute train ride away from Diridon Station near the airport, and has other advantages that could make it stand out as an attractive location for companies that want to be nearby.
"We call it the 'Google shadow,'" he said. "Sometimes people don't like to be in other people's shadow, but they like to be standing right next to it."
There are concerns about what one large company could mean for the city, as evidenced by the protests during Tuesday's council meeting. Those against Google's move to create its transit village worry about a spike in housing prices that could drive out current tenants, the elbowing out of other companies and traffic congestion, among other things.
Molano said the devil is in the details, and Google will need to thoughtfully address everything from its effect on housing to how it could work with the local workforce and businesses that may be displaced to help drive creative solutions.