Santana Row: Hipster Alert

Santana Row San Jose The Registry real estate

Santana Row and Valley Fair are becoming a South Bay center of gravity.


By Mary Ann Azevedo

[dropcap]S[/dropcap]an Jose leaders have been vocal about making their city less of a suburban bedroom community by adding jobs and attracting a younger, hipper population. They are on a mission to create dozens of “urban villages” throughout the city where residents can both work and live. What may surprise those who know San Jose civic history is that the city isn’t pinning all its hopes on downtown.

Under the city’s new general plan, San Jose has designated 70 “urban villages” citywide. One is at Winchester and Stevens Creek boulevards, home to the 42-acre Santana Row redevelopment and Westfield Valley Fair mall, one of the most-selling malls in the country. The vision is to create “active, walkable, bicycle-friendly, transit-oriented, mixed-use urban settings.”

[quote]“People who work in office buildings and run those businesses and hire people are learning they need more than a cube, parking space and desk. They need an environment.” Jeff Berkes, Federal Realty Investment Trust[/quote]

Eleven years ago, when Santana Row opened, many feared the tandem centers would become a retail juggernaut that would kill renewal downtown, a scant three miles east. San Jose has expended some $2 billion in public funds in the last several decades to keep downtown alive.

Meanwhile, more than 1,500 people now live at Santana Row, and the figure is growing. As employers struggle to recruit and keep the best young talent, the neighborhood has become a draw. “Valley Fair and Santana Row have proven to be the shopping hub for Silicon Valley, the South Bay, parts of the East Bay and up the Peninsula,” said Jeff Berkes, West Coast president for Federal Realty Investment Trust, Santana’s developer.

Federal is buying properties adjacent to its 42-acre site for more development, and its aggregate investment is approaching $1 billion. It is pursuing plans to build 690,000 square feet of offices on three sites—including two surface parking lots within its 42-acre footprint and a third it is acquiring that must be re-zoned. Federal already owns an 80,000-square-foot office and retail building at Santana Row, and in total has nearly 105,000 square feet of office space; 85 percent is leased.

“Most companies aren’t going to build their own Googleplex, so we’ve built that for them,” Berkes said. “People who work in office buildings and run those businesses and hire people are learning they need more than a cube, parking space and desk. They need an environment.”

Westfield Corp. Inc. is expanding too with a 1.5 million-square-foot development plan—a parking garage and 640,000 square feet of shop space—originally approved in 2007. Matt Ehrie, district vice president and general manager of Westfield Valley Fair, noted via e-mail that the shopping mall added 12 new retailers over the past year, including Burberry, David Yurman, TAG Heuer and Miu Miu and has 14 more new stores in development. Westfield also is planning a new dining terrace that is slated to begin construction later this year, Ehrie said.

The Winchester family of Winchester Mystery House fame said in April it was bringing an 11.6-acre site on the west side of Santana Row to market for the first time in more than 40 years. The family is offering a redevelopment opportunity under a 50-year ground lease. The land is currently entitled for 500,000 square feet of offices and shops. The Winchester property could accommodate more than a million square feet for the right user, said Silicon Valley’s S. Gregory Davies, a partner with Cassidy Turley Commercial Real Estate Services who is representing the family.

Historically, tech companies wanted to locate in suburban business-park environments with low-rise buildings where they could have a campus. “For 30 years, there was no way to attract a high-tech company to a vertical environment,” Davies said. “It’s almost swapped from product of least choice to product of choice. The entire Stevens Creek corridor is going to take off as a result of the success of the retail centers in that area.”

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Photography by Laura Kudritzki


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