SAN JOSE—As major tech companies continue to shape the Silicon Valley office landscape, politicians, business leaders and real estate professionals around the country are somewhat obsessed with the Amazon HQ2 RFP process. It seems unlikely that Amazon will select Silicon Valley where the competition for the planned workforce of 50,000 employees and housing is too costly.
If Amazon did opt for Silicon Valley, it might want to approach Google about a location as it is the top property owner in the Valley. While Google's home base is Mountain View, it has a rapidly expanding footprint in Sunnyvale and may be heading to downtown San Jose thereafter.
Under the guise of CBRE Global Investors, Google has made more than 52 South Bay property purchases totaling $820 million during the last three years in Sunnyvale as well as additional direct acquisitions, according to Savills Studley. Many of the purchases were concentrated between Mathilda Avenue, West Caribbean Drive and Highway 237.
“While Amazon conducts a nationwide search for its much-vaunted HQ2, Google is keeping it close to home. News of major property acquisitions in Sunnyvale and details on its plans in downtown San Jose underscore its deepening commitment to the Valley,” said Joe Brady, Savills Studley senior managing director.
Google promises to play a big role in the transformation of downtown San Jose and this commitment is casting San Jose in a new light. Tech companies are now drawn to the area due to a strong talent pool and proximity to mass transit and other amenities. Savills Studley client Cohesity is moving to a 40,000-square-foot office at Riverpark Tower, joining Zoom Video and Okta, two other rapidly expanding tech firms that have relocated to downtown.
The Valley's trio of major employers–Google, Apple and Facebook–affords it many advantages. There are few other regions in the country where top employers are taking such an active role in resolving a key problem that faces many metro areas–a shortage of affordable housing. The companies are developing both short-term solutions such as Google's purchase of 300 pre-fabricated residential units to house employees and longer-term strategies in the form of zoning changes to allow extensive housing development.
This summer, Google unveiled plans for a mixed-use community with up to 8 million square feet of office, retail and residences on a 240-acre site that includes land around the Diridon CalTrain station. According to a recent report, Google and Trammell Crow have paid an average premium of 37% to buy property around the station.
Other San Jose tech-centric housing properties are equally valuable. For example, The Reserve, a 636-unit luxury multifamily community at 897 S. Winchester Blvd. is underway, GlobeSt.com learns. The project is adjacent to Interstate 280, which provides access to the nearby world headquarters of Apple, eBay, Google, Netflix and other major employers. The Reserve is also located within walking distance to the Santana Row mixed-use dining, entertainment and retail destination.
Due for completion in 2020, The Reserve will comprise a mix of one-, two- and two-bedroom loft-style units averaging 869 square feet as well as more than 8,000 square feet of street-level retail. The buildings will be situated above two levels of subterranean parking, and will include a pool, rooftop lounge, fitness center, business center and other amenities. The property will include environmentally conscious aspects including electric car-charging stations.
Holliday Fenoglio Fowler LP worked on behalf of Greystar to secure the $201 million construction loan through Otéra Capital. The debt placement team included senior managing director Charles Halladay and senior director Jordan Angel.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
