POSTED ON SEPTEMBER 22, 2013 BY PUBLISHER IN COMMERCIAL, FEATURED, HOT LOT, RESIDENTIAL
The sprawl of the South Bay is getting a multi-story makeover of offices and housing.
THIS ARTICLE WAS PUBLISHED IN THE ‘Q’ – THE REGISTRY’S PRINT PUBLICATION – IN AUGUST 2013
By Matthew Berger
As some Silicon Valley tenants move into San Francisco and others expand along the Caltrain lines that bring commuters from the city, some tech companies are defying the return-to-the-city trend by heading to the South Bay.
Along San Jose’s North First Street and Santa Clara’s Great America Parkway, new landmarks are starting to compete with the roller coasters of the Great America amusement park. State Highway 237, the valley’s most important east-west roadway, has blossomed with mid- and high-rise office and campus development occupied by some of the most high-profile technology companies.
More than a decade ago San Jose adopted a plan to concentrate 16 million square feet of development capacity in 600 acres on roughly two miles of North First Street.Samsung Semiconductor Inc., the massive South Korean electronics company, which has been in San Jose since 1986, is leading the way. Its current U.S. headquarters at North First Street and Tasman Drive is low, sprawling and dated. Starting in July a new building campus will take shape: 680,000 square feet in two, 10-story towers. Completion is planned for 2015.
“There is a long-term vision that Samsung is going to be part of, is going to be one of the first steps,” said Jonathan Ward, a partner at NBBJ Architecture and lead designer.
More than a decade ago San Jose city officials adopted a plan to guide redevelopment of nearly 5,000 acres in the northern, primarily industrial part of their city, which was losing competitiveness. The plan concentrates 16 million square feet of development capacity for new research and office space in 600 acres on roughly two miles of North First Street between Brokaw Road and the Montague Expressway.
The city wants buildings from six to 10 stories (most are one story today) built to roughly four times the current land-use intensity. The plans aim to exploit an underused light-rail system that runs from North San Jose to downtown and South San Jose.
North San Jose’s flagship corporate resident Cisco Systems Inc., with approximately 13,600 employees, also is modernizing its North San Jose global corporate headquarters. In line with current workplace trends, Cisco is shrinking its square footage per worker. It has sold more than 80 acres of entitled land in North San Jose to developers since last year and is jettisoning an eight-building campus with 811,000 square feet. It is building three parking garages in North San Jose to accommodate the change.
More broadly, it is creating a “global site strategy,” Chris Henderson, who oversees Cisco’s 21 million-square-foot global portfolio, told a standing-room-only crowd at the May meeting of the Northern California chapter of CoreNet, the corporate facilities professional organization. Like other companies including Microsoft Corp., Cisco is outsourcing more and more of the tactical execution and daily maintenance of its facilities to free its real estate team to focus on much bigger issues: “We are actually driving where Cisco goes and where Cisco centers are globally,” Henderson said.
Southern California giant The Irvine Co. also has emerged as a dominant player, buying and building offices and apartments on a large scale across North San Jose, Santa Clara and Sunnyvale. It is seeking to re-create the mixed-use master-planned community that has brought it much success down south. It finished the 2,760-unit North Park Apartment Village in North San Jose in 2007, a block south of the Samsung campus. Its Crescent Village Apartment Homes, which opened last year about four blocks from Samsung, will include 1,750 apartment units when completed this fall. Both complexes are four stories.
In northern Santa Clara—about a three-mile drive from its San Jose apartments, Irvine plans new offices on 32 acres near U.S. 101 and Great America Parkway, land it acquired in August of last year and has dubbed the Santa Clara Technology Campus. Two miles north, at the other end of Great America Parkway, Irvine completed the first phase of the 911,000-square-foot Santa Clara Gateway office campus in May. It included three five-story buildings and 447,000 square feet of office space leased to three tech companies including Dell Inc. and Global Foundries Inc. The second phase is to be complete in early 2014.
While not office or tech-related, the new $1.2 billion 49ers stadium will ensure that Santa Clara is a focus of attention. Already, across the street from the stadium, a 250-acre public golf course owned by the city of Santa Clara is being eyed for redevelopment. The Related Cos. and the city have has signed an exclusive negotiating agreement. Bill Witte, president of Related California, said the development would be a “town-center concept” with retail, entertainment, some residential and offices.
Proximity to the stadium makes the prospect more attractive, but Witte said the project would work anyway: “This area is booming,” he said. Santa Clara is the “heart of Silicon Valley and there is an enormous profusion of businesses and jobs in this area, [but] there’s a notable lack of retail and entertainment options and a jobs-housing imbalance.”
A new BART station in nearby Milpitas began construction last summer and brings another strong transportation link.
Others also have big plans for North San Jose. Ellis Partners LLC is seeking permits to develop 666,000 square feet in a trio of six-story buildings at the high-visibility U.S. 101 and state Highway 87 interchange. The company wants to create the 101 Tech campus with 1 million square feet including an existing, low-rise headquarters building. Next door, Los Angeles-based Lowe Enterprises and an affiliate of Five Mile Capital Partners are pursuing a 1.8 million square-foot multi-tenant “creative” campus in a pedestrian-oriented development with bike paths, trails and green spaces.
Just north of Highway 237, in Alviso, two new six-story office buildings are slated to go up next to two already built at America Center. Just to the east, more than a million square feet of office space are proposed on 57 acres that Trammell Crow purchased from Cisco in April. South Bay Development Co. is pursuing a 150-room hotel and 610,000 square feet of offices also on land acquired from Cisco that fronts Highway 237. A handful of developers also have acquired buildings with millions of square feet throughout the submarket where they are stripping the structures to their bones and re-dressing them in fine threads.
In total, the city of San Jose hopes for 26.7 million square feet of new research and development office and laboratory space in North San Jose by 2030, 83,000 new jobs, 2.7 million square feet of retail space, 32,000 new homes and 1,000 new hotel rooms.
Photography by Laura Kudritzki