In The News July 24, 2019

Choice downtown San Jose site is being readied for new office tower

Source: San Jose Mercury News

Choice downtown San Jose site is being readied for new office tower

Jay Paul starts to clear away 200 Park Avenue site in downtown San Jose where high rise is planned

SAN JOSE — An increasingly busy developer is wasting no time preparing a choice downtown San Jose site for construction of a 20-story office tower that’s expected to become a striking addition to the skyline of the Bay Area’s largest city.

Jay Paul Co. has begun to demolish a key property at the corner of South Almaden Boulevard and Park Ave., often known as 200 Park Ave., to clear the way for what would be an 840,000-square-foot office high rise where as many as 4,200 to 5,600 people, or more, could work.

The tower could offer a prime location for one major tech company or multiple smaller tech firms  seeking to create a significant new presence in downtown San Jose. Newmark Knight Frank commercial real estate agents Phil Mahoney, Michael Saign, and Julia Szabo have begun to scout for tenants for the project.

“We are going as fast as we can to build this,” said Mahoney, an executive vice chairman with the San Jose office of Newmark Knight Frank, a commercial real estate firm. “There is no upside to waiting on these kinds of projects.”

The most recent estimates indicate that construction of the tower will begin sometime in early 2020.

“There have been some rumors that we have signed a tenant already, but no leases have been signed,” Mahoney said. “Preliminary demand has been really good.”

The new high rise is described as having “outdoor sky terraces” in a “central urban location” in the heart of downtown, according to a new Newmark Knight Frank and Jay Paul Co. marketing brochure.

The property, which for decades featured a small, outmoded office building, has been largely reduced to rubble and debris in recent days.

In June, Jay Paul Co., acting through an affiliate, paid $100 million for the parcels at the southeast corner of Park and Almaden, according to Santa Clara County property records. The developer paid $50 million for the 200 Park Ave. site and $50 million for an adjacent parcel at 282 S. Almaden Blvd., county documents show. The deals for the new acquisitions were arranged by two commercial real estate firms Newmark Knight Frank and CBRE.

Both parcels are across the street from Cityview Plaza, which the Jay Paul firm bought in 2018 for $283.5 million. CityView Plaza is expected, at some point, to be bulldozed to pave the way for a tech mega-campus of 3.4 million square feet where 17,000 to 23,000 people could work.

The purchases mean that Jay Paul now owns and is poised to develop two huge sites for office development on both sides of Park Avenue.

“We have some very exciting ideas for these properties,” Matt Lituchy, chief investment officer for Jay Paul, said in an interview with this news organization in June.

Within weeks of the property purchases, construction crews from general contractor Level 10 began to clear the Park Avenue site, which sits at a key intersection.

“We are really going to change the skyline of San Jose,” Lituchy said in June.

The push ahead to develop the site comes at a time when downtown San Jose is experiencing considerable investment interest, as well as tenant expansions.

Google is planning a transit-oriented village where 25,000 people could work near the Diridon train station, and Adobe has begun construction of a new office tower to expand its downtown headquarters campus.

“Downtown San Jose is seeing a lot of organic growth, with interest from companies that are already located there, and from companies outside of the area,” Mahoney said. “Downtown San Jose is seen as a great location for companies that want to retain and recruit employees.”

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