Federal Realty Expanding Santana Row’s Office Offerings

By Sharon Simonson

Federal Realty Investment Trust is reconceiving the configuration of its wildly popular Santana Row development in San Jose to emphasize greater office use.

Santana RowThe Maryland-based real estate investment trust is pursuing plans to build 690,000 square feet of offices on three sites, including two existing surface parking lots within the 42-acre redevelopment’s existing footprint and a third site it is acquiring.

Federal already owns an 80,000-square-foot office and retail building at Santana Row, which was designed by Studios Architecture and is leased to multiple tenants. That building faces Stevens Creek Boulevard and is at the opposite end of the development from the offices being proposed.

A year ago, the REIT said it hoped to build a six-story office building that would face Winchester Boulevard at Olsen Avenue overlooking the famous Winchester Mystery House. The proposed 220,000-square-foot building was designed by San Francisco’s WRNS architects and was proposed for development upon lease.

Now the REIT is contemplating a second office building with 250,000 square feet atop additional retail space on a second surface parking lot also fronting Olsen Avenue and a third office building with another 220,000 square feet on a site that it is acquiring. That site fronts Tisch Way and Dudley Avenue and is now home to an aging apartment complex.

In a statement about its plans, a spokesperson for the REIT said: “The hope is that tech companies will decide they need a new campus, and these office spaces can be built to their specifications. Leasing is working on selling that concept now.”

The new development would include a central square bracketed by retailers and restaurants. The thrust is to capitalize on technology companies’ rising preference for urban locations, which their young workers prefer. Conceivably the companies’ workers could live in one of the development’s more than 600 apartments and condominiums and walk to work, shop and eat both at Santana Row and Westfield’s Valley Fair mall across the street.

Santana Row’s evolution since its pre-dot-com boom conception is neither surprising nor unanticipated, said Joseph Horwedel, San Jose’s director of planning, building and code enforcement. Besides the 212-room Hotel Valencia, the development has nearly 650,000 square feet of retail space, occupied by approximately 100 shops and restaurants. From the beginning, the city understood that the huge redevelopment would have to evolve in response to market demands. “What Federal did was build the environment for this new community and now they are putting in the employment, but it’s now at a much higher-value location because it has all of the amenities,” Horwedel said.

Federal Realty’s interest in adding office space also is consistent with what he is hearing from commercial property brokers and owners with holdings along this segment of Stevens Creek Boulevard, the planning director said.

With the 3.4 million square foot Apple Inc. corporate campus development and the electronics company’s growth, other companies are being pushed out of Cupertino, Apple’s hometown. “They are looking for a [new] location that is more than an office park,” he said. Stevens Creek Boulevard intersects U.S. Highway 280 immediately south of the new Apple campus and travels in a straight line roughly two miles to the huge retail agglomeration of Santana Row and Valley Fair. That corridor now seems ripe for redevelopment with an emphasis on offices and retail, he said. The intersection of Stevens Creek Boulevard and Saratoga Avenue is one hot spot.

The city is already meeting with property owners and funding a planning study of the Stevens Creek segment “because the market wants to be there,” he said. The plan is for Stevens Creek to be serviced by rapid transit bus in the next five years, as well, which would support additional development density.

He also anticipates redevelopment of the Century Theatres location on Winchester Boulevard, also across from Santana Row, he said. The approximately 10-acre site is sparcely developed and includes oceans of surface parking around multiple theater buildings, including two of Century’s signature domes. The city would support the property’s redevelopment with offices and retail at the same densities as Santana Row, Horwedel said.

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