Heading West: Project Plans Submitted for 1.3MM SQFT of Office in San Jose

Dutchints Development, Garden City Casino, Harry’s Hofbrau, Pestana Properties
Rendering Courtesy of the City of San Jose

By Meghan Hall

San Jose’s development boom has been widespread, but the city’s highest density redevelopment projects have largely been located in the downtown core or North San Jose, which is emerging as a popular tech corridor for those looking to escape the sky-high rents of San Francisco or Sunnyvale. However, large-scale office development is now heading further west, where Los Altos, Calif.-based Dutchints Development has proposed a sizeable mixed-use project that once complete, could include 1.2 million square feet of commercial office space and a 180-key hotel.

“I think [what attracted us] to this site was the sheer size and opportunity to develop something here for an underutilized area of San Jose,” explained Dutchints Development’s Managing Director Vahe Tashijan. “…San Jose is very pro-growth at this moment.”

According to city documents, Dutchints Development submitted a pre-application detailing its conceptual plans for the project in January. The property includes 10.34 acres at 360, 398 and 400 Saratoga Ave. in West San Jose, which is currently developed with the now closed Garden City Casino and Harry’s Hofbrau, a popular dining establishment that originally opened its doors in 1977.

The properties is currently owned by San Jose-based Pestana Properties, according to public property documents. Dutchints Development has signed a 75-year ground lease to develop the site.

The office square footage would be spread over three buildings rising about eleven stories in height. Office Building A will include about 471,785 square feet of rentable square footage; Office Buildings B and C will include 489,620 square feet and 368,200 square feet, respectively. The hotel will total just under 66,00 square feet and will also include 6,580 square feet of exterior terrace area.

 A free standing, eight-level parking garage would also be constructed to accommodate future employees and hotel guests. WRNS Studio is the architect for the project.

The project proposal is currently under review by city officials, but according to Tashijan, initial reactions from the City were largely positive.

“We feel pretty good; we met with the City, and they liked our conceptual plans a lot.”

Historically, Dutchints Development’s projects began with a focus on single-family, before moving to high-end, high-density multifamily. Currently, the firm is working on a 230,000 square foot, 196-unit apartment complex off of El Camino Real in Los Altos, as well as The Icon. Located in San Jose, The Icon will include more than 250 residential units as well as 7,500 square feet of retail space.

The decision to go with office as opposed to multifamily, stated Tashijan, was a matter of financing.

“Multifamily in this market is not penciling too well due to land values and construction costs rising,” he said. “We thought office and hotel would work best for our pro-forma.” 

West San Jose has not yet emerged as the office and tech hub that Downtown San Jose or North San Jose have become in recent years. While downtown and North San Jose have just over 11 million and 13 million square feet of office inventory, the West Valley has just under 6.3 million square feet of office space, of which 2.72 million square feet of that is considered Class A. However, due to more limited space, asking rents in the West Valley remain healthy and on par with downtown and North San Jose at $4.07 per square foot. Downtown’s office stock, on average, rents for $3.91 per square foot, while North San Jose can garner average asking rents of $3.99 per square foot.

Dutchints hopes that a project of this size will attract one of the region’s major tech tenants. 

“We are trying to go as big as possible,” added Tashijan, who also stated that the property’s high visibility, campus-like feel and amenities and just sheer size will be draws for growing firms in the region. “We think there is a huge opportunity for some of these tenants to move closer to San Jose, out of the more expensive markets like Mountain View and Menlo Park and Palo Alto…”

Dutchints Development hopes to have a tenant lined up in the next six months in order to pursue a built-to-suit option. If the project does secure a major tenant, Tashijan believes that Dutchints will construct the entire project in a single phase. If the developer breaks ground on a speculative basis, the hotel and one of the office buildings will be constructed first. Dutchints hopes to break ground in 18 months.

West Coast Commercial Real Estate News