Big developer buys choice downtown San Jose office building that’s being renovated

SAN JOSE — Jay Paul, a development stalwart whose major Silicon Valley tenants include Facebook, Amazon and Google, has greatly widened its San Jose footprint by grabbing an office building that’s perched at a key downtown intersection.

Acting through an affiliate called SJ North 1st, Jay Paul on Aug. 13 bought a building at North First and West Santa Clara streets, according to Santa Clara County property records. The 120,000-square-foot building once was a long-time JCPenney department store in the retail heyday of downtown San Jose, but closed in 1973 amid an exodus of merchants to the city’s suburban malls.

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This deal means realty developer Jay Paul has suddenly become a big-time player in downtown San Jose, spending just under $330 million in cash in two major acquisitions of prominent commercial properties over a stretch of only three weeks.

In the most recent deal, the Jay Paul entity paid $46 million for the old JCPenney building at the northwest corner of the First and Santa Clara streets intersection. On July 23, the developer paid $283.5 million for Cityview Plaza, a 580,000-square-foot complex of offices, retailers and restaurants that occupies a full city block bounded by  bounded by West San Fernando Street, South Almaden Boulevard, Park Avenue and South Market Street.

“Jay Paul is a whole new level of developer for downtown San Jose,” said Scott Knies, executive director of the San Jose Downtown Association. “They have a vision for imagining big projects, and Cityview and this block are both big projects.”

The latest purchase by Jay Paul is a building that is undergoing a far-ranging renovation masterminded by realty firm Lift Partners. Neither development firm responded to requests for a comment. It wasn’t clear what effect, if any, the purchase would have on the building’s facelift.

“This is what downtown San Jose needs,” said Bob Staedler, principal executive with San Jose-based Silicon Valley Synergy, a land use and planning consultancy. “This builds momentum on top of momentum. San Jose is getting developers who will create large portfolios, improve the buildings, and get tenants in the buildings.”

San Jose officials, in a quest headed by Mayor Sam Liccardo, hope to lure a widening array of technology companies to the city’s increasingly vibrant urban core.

Adobe Systems is already in downtown San Jose and wants to expand its headquarters campus of three office towers by adding a fourth high-rise. Google is pushing forward with plans for a transit-oriented community of office buildings, restaurants, shops, residences and parklands near the Diridon train station. Oracle has a large presence in an office tower at the south end of the downtown. Amazon occupies two floors in an office tower near the corner of East Santa Clara and North Second streets. A host of small tech firms have moved to, or have expanded in, the downtown in recent years.

Jay Paul’s intensified investments in the city’s urban heart clears additional pathways for more tech companies — potentially major household names — to jump into downtown San Jose.

Facebook in March leased 1 million square feet from Jay Paul in the developer’s Moffett Towers 2 office complex in Sunnyvale — the largest leasing transaction in the Bay Area so far in 2018.

Other big tech companies that are Jay Paul tenants: Amazon’s Lab 126 occupies multiple Jay Paul-developed buildings in Sunnyvale, and Google leases multiple large office buildings from the developer in Sunnyvale.

“When you look at the price paid for this building, and the extraordinary tenant list that Jay Paul has, you have to believe that one of these will be the tenant,” said Mark Ritchie, president of Ritchie Commercial, a real estate brokerage. “These kinds of moves are the sorts of investments that developers were not making in downtown San Jose just a few years ago.”

Source: FS – All – Real Estate News 1
Big developer buys choice downtown San Jose office building that’s being renovated