By Meghan Hall
The story behind Assembly at North First in San Jose has been followed closely by the local commercial real estate industry for a number of reasons: its location, its size and its almost unheard of development potential in a regional market that seems to be screaming for more office space. Phase I of the redevelopment of the 27-acre property — known formerly as the LAM Research Campus — was completed in October 2018. Now, ProspectHill Group, SKS Partners and Invesco Real Estate are ready to reveal their plans for Phase II of the project, which could add up to one million square feet of office and research and development space to the campus that, once completed, could act as an economic magnet for North San Jose.
“I think the challenge was to design and build something that was appealing to tech office customers in a location that previously had not always been considered,” explained Gambhir Kaushek, partner at ProspectHill Group. “And clearly in the time that we have bought the project, many household names and technology firms have taken space in the area. So that was the challenge: to design and create a campus with amenities in an area that was early on in its acceptance.”
According to Kaushek, the development team was initially attracted to the property, located at the intersection of North First and Headquarters Drive, for a variety of reasons. Not only did ProspectHill, SKS and Invesco feel North San Jose was full of largely un-tapped potential, but the property itself offered a rare repositioning opportunity in Silicon Valley.
“One [reason], and the most fundamental, is the walkability to a live, work and play experience in a suburban market,” said Kaushek. “We are literally right on North First Street across the street from an open-air shopping center, a Hyatt and Marriott Hotel, over 2,000 Class A Apartment units and a community soccer park. And to have all three of those expressions literally across the street really attracted us.”
@First, the 10-acre retail center across the street, has more than 84,000 square feet of restaurant, shops and retail such as Panera Bread, Chipotle, Union Bank and CVS.
ProspectHill Group, SKS and Invesco acquired the property in the summer of 2016 for $82 million, ushering in a new era of development in North San Jose. According to previous reporting done by The Registry, the total redevelopment cost of the project will be in excess of $200 million.
All seven buildings part of the campus were constructed in the 1980s and 1990s; Phase I included the renovation of four buildings, two of which were combined into a single, 100,000 square foot structure. Altogether, Phase I revamped about 300,000 square feet of office space, complete with a signature lobby entry and proprietary porches with indoor and outdoor space. The campus also includes amenities such as an indoor-outdoor fitness center with locker rooms and showers, and The Grove, a full-acre outdoor living and working space with wood-fired pizza ovens, seating areas and games.
Designed by Gensler, Phase I began with the buildings along North First Street, so that future occupants could quickly establish a notable presence there.
“Our belief is that developing those buildings along North First Street was the strongest way to begin the identity of the project,” said Kaushek.
Kaushek continued, “[North First Street] may be the most important, defining avenue in North San Jose, giving companies the opportunity to put their brand, their corporate logo right on the street.”
And, as the project team worked to renovate the existing buildings that were a part of Phase I, numerous other companies began moving into the neighborhood. North First Street has become an increasingly pivotal corridor for commercial and tech-oriented businesses. Cisco is located just blocks away from Assembly at North First on W. Tasman Drive, and in December of last year, Google purchased three of those buildings for $123 million. The buildings total more than 550,000 square feet and could accommodate nearly 3,000 employees.
Samsung’s North American headquarters is also just off of North First Street, as is F5 Networks, a cloud-based app security company. Rambus signed a lease for 90,000 square feet in July of 2019, and A10 Networks followed suit by signing a 116,000 square foot sublease on Orchard Parkway in August. Around the same time, Micron Technology formally opened a brand-new nearly 550,000 square foot North San Jose campus.
This flurry of commercial activity in North San Jose was just picking up when ProspectHill Group, SKS and Invesco started working on Assembly at North First, and it is momentum that Kaushek believes will not just help with the leasing of Phase I, but the subsequent leasing of Phase II. Over the last few months a variety of tenants and global companies have toured the property. No lease for Phase I has been signed yet, according to Kaushek.
“We’re still touring now. We had a number of interesting companies come through last year, [but] we were unable to close those transactions,” he said. “The tour activity is solid, and we are optimistic about 2020.”
While the development of Phase II will ultimately depend on Phase I leasing plans, those who do choose to call Assembly at North First Home will have a huge opportunity for growth in their midst: As it stands now, entitlements have been secured to develop an additional one million square feet of office and research and development space.
“I think there are many great companies, both local companies that are growing aggressively as well as other companies coming into our market, that are making bigger and bigger commitments to Silicon Valley and are realizing that North San Jose is a significant place to consider home…,” stated Kaushek. “…Where else can you find a 27-acre, contiguous, level, almost square site within which to grow your business?”
If the development team chooses to maximize square footage and build out to the full extent of the square footage in its entitlements, the three buildings that are part of Phase II will range in size from 198,000 square feet to 290,000 square feet of office space and include plenty of parking. The buildings’ design will continue the modern, tech-oriented feel that is a part of Phase I. Clear heights of more than 17 feet, glass walls, wood accents and a saw-tooth roof are just a few of the elements incorporated into the complex’s design.
“It is a design that fuses the agrarian and industrial histories of the Valley in a modern, lifestyle, context,” said Kaushek.
Those behind Assembly at North First’s repositioning are confident that Phase II’s designs will also help separate the campus from others coming to market as companies continue to evaluate where to land.
Kaushek himself was also optimistic. “I think these designs for Phase II drive home the tremendous campus opportunity that remains.”