From Mercury News:
http://www.mercurynews.com/2017/05/0...a-tech-campus/
SAN JOSE — Trammell Crow and other real estate investors have begun to gobble up large and small parcels in downtown San Jose — spending more than $70 million — in areas that could create one or more mega-campuses for tech giants or other big corporate players.
Property buyers have collected parcels primarily along Autumn and Montgomery streets south of the SAP Center, according to this newspaper’s review of the transactions, which occurred in December, January, February, March and April. In addition, property owners say they have given one of the buyers multiple options to purchase even more nearby parcels.
sjm-REALDEALS-0504-web2One or more mega-campuses in any of three areas where the purchases have occurred — a proposed Trammell Crow office and housing project, an area where properties are being assembled to the west, or a site for a possible baseball stadium — would be nothing short of a game changer for downtown San Jose if any are built.
“It will be as big as anything that’s ever happened in downtown San Jose,” said Mark Ritchie, president of San Jose-based Ritchie Commercial Real Estate. “It would be like the Uber deal in downtown Oakland, but on steroids. It would be like the Mission Bay area in San Francisco that used to be old rail yards and now is an unbelievable metropolis.”
All told, investors have spent about $72.5 million collecting an eclectic group of several properties.
Interest in downtown San Jose real estate near the Diridon Station is well established, said Nanci Klein, an official with the San Jose Economic Development Department.
“It’s a fantastic area, and it will be an area rich in amenities,” Klein said.
The acquisitions include an iconic but small office building, a single-family home, small businesses and an old telephone company building.
Trammell Crow was mum about the purpose of its recent property purchases, but Ritchie — a veteran commercial real estate observer — said that Mountain View-based search giant Google seems like a good candidate for a tech campus in the area.
“Google makes sense as a company that would move into these properties, including the Trammell Crow project,” Ritchie said. “It’s a smart move to be looking at this part of downtown San Jose.”
That area already has considerable transit access and stands to gain even more, with two BART stations planned in the vicinity.
Google, which in recent years has been actively expanding its operations in Mountain View, Sunnyvale and north San Jose, didn’t respond to multiple requests for a comment about the situation in downtown San Jose.
The property purchases are occurring in an area that borders three well-known downtown San Jose sites: SAP Center, the site once proposed as a baseball stadium for the Oakland A’s, and a mammoth office and housing project proposed by a joint venture led by realty developer Trammel Crow.
Trammell Crow’s proposal includes a centerpiece consisting of 1 million square feet of offices that could become a big campus for a tech firm. The project would rise on 8.3 acres bought in September 2015 by the Trammel Crow venture for $58.5 million. Trammell Crow also has proposed construction of 325 apartment units.
“The market interest fully validates the strength of that location for transit-oriented development,” Don Little, senior vice president of the Trammell Crow Co., said Wednesday. “The market interest could not be stronger. We fully expect a big movement of tech companies into downtown San Jose.”
Trammell Crow’s interest appears to extend well beyond its existing proposal. The developer has begun to broaden its beachhead in downtown San Jose, Santa Clara County property records show.
A partnership controlled by Trammell Crow has spent $17.5 million buying properties, mostly along Autumn and Santa Clara streets. An office building at 450 W. Santa Clara St., a short distance from SAP Center, was the most expensive of the Trammell Crow purchases, in an $11 million transaction during early April. The Trammell Crow affiliate, TC Agoge Associates, paid cash for the acquisitions.
“It’s premature for us to be commenting about our business plans,” Little said, referring to the Trammell Crow affiliate’s property purchases.
A mystery buyer, Rhyolite Enterprises, completed the largest of the property purchases. That $55 million all-cash deal was completed a few days before Christmas by Ryholite. County records show Rhyolite Enterprises has connections to the same Irvine-based law firm that’s sometimes used by Google for its property deals. The law firm didn’t return a phone call requesting a comment.
What’s more, Trammell Crow is poised to add to its shopping spree for properties in the area.
Peggy Schlosser and her daughter, Sue Dee Shenk, whose family owns parcels in the area, both said Trammell Crow has struck a deal with them to buy more of the family’s properties on South Autumn Street.
“They want to move west,” Schlosser said of Trammell Crow’s plans.
Schlosser and Shenk recalled that Trammell Crow began discussing property transactions around last September or October.
“This sounds exciting,” Shenk said. “We hope it can be developed and that it includes affordable housing.”
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