Key San Jose Site Up for Grabs for First Time in Four Decades

By Sharon Simonson

An 11.6-acre site on the west side of San Jose’s popping Santana Row shopping center is being brought to market for the first time in more than 40 years.

Santana RowThe Winchester family, which also owns the Winchester Mystery House next door, is offering the site unpriced as a redevelopment opportunity under a 50-year ground lease.

Three of the signature, mushroom-capped movie houses owned and operated by Century Theatres throughout Silicon Valley and a sea of surface parking currently occupy the site. The property is zoned for immediate development of 500,000 square feet of offices and retail space but could accommodate more than a million square feet for the right user, said veteran Silicon Valley real estate broker S. Gregory Davies, a partner with Cassidy Turley Commercial Real Estate Services.

Davies and Todd Oliver, a partner in the company’s Terranomics retail division, are the listing brokers.

The current height allowance is 120 feet, or about nine building stories, but that limit, too, is open to discussion.

“Obviously, it’s a hot location,” said San Jose Councilmember Pierluigi Oliverio, whose district includes Santana Row and Valley Fair.

The site is one of only a few large central San Jose urban-infill locations available for redevelopment, he said, and he is eager to see it redeveloped at a much higher density than its current use—and perhaps at a density that is even higher than currently stipulated.

“I’m generally in favor of intense development in San Jose. I am looking for more revenue generation for the city. When you have the right parcel, it makes sense to allow more density,” the councilmember said.

Westfield Valley Fair, a super-regional mall that clocks in-line store sales of some $1,000 a foot, and Santana Row, a much newer redevelopment, have blossomed in the last decade into one of the most important shopping, restaurant and living destinations in the South Bay.

Federal Realty Investment Trust, the Santana Row developer, recently said it hoped to build nearly 700,000 square feet of office space in three buildings at its redevelopment. Two of the office buildings would be on existing surface parking lots within the 42-acre footprint of the project. A third building would be situated on a site the real estate investment trust acquired.

Leasing agents representing Federal are targeting technology companies looking for a new corporate campus in the hip setting. The strategy appears aimed at helping tech companies find locations that enhance employee recruitment, a key goal for many today.

Santana Row is Federal Realty’s largest single development representing in excess of $619 million in investment, according to the company’s most recent financial statements. The center has not quite 650,000 square feet of inline shopping and restaurant space plus a hundreds of apartments and condominiums and a full-service hotel.

The shopping centers and their environs are the centerpiece of a city-designated “urban village” where the city of San Jose wants new development of all types to be concentrated. The notion is to create higher-density development nodes across the city where employment, housing, parks and other amenities are clustered, so people can travel on foot or bike within them to accomplish everyday tasks and take advantage of strong transit connections to link to other destinations.

“Not only is it a great property for a corporate user, it is also one of the few sites on which a city in the valley is interested in encouraging mixed use,” Davies said. “This is one of the only remaining high-density infill sites in the West Valley and is the only site superbly located across the street from Santana Row and around the corner from the Westfield Mall.”

West Coast Commercial Real Estate News