By Meghan Hall
Downtown San Jose has less than nine million square feet of office space, and, until the end of this development cycle, few office projects had been proposed to round out the city’s downtown core. However, The Sobrato Organization Wednesday has submitted formal plans for its Market Towers project, which will bring 584,658 square feet of Class A office and retail to San Jose’s downtown core.
“I think [the project] is really unique in its design, and it will redefine the skyline in downtown San Jose,” said Chase Lyman, vice president of leasing and acquisitions for Sobrato. “This will be the premier building downtown, and it is a product that downtown San Jose just hasn’t seen before.”
Designed by Miami-based Arquitectonica and located at 282 S. Market St., the development will be a single office structure broken down into four modern towers that wrap around one another. Two sky gardens totaling 23,144 square feet of space will be located on the 17th and 19th floors of the development. Project plans also include 16,372 square feet of retail and six floors, or 683 vehicle spaces, of parking.
“One of the big selling points is the two sky gardens,” said Lyman. “They are these massive decks that can be private for a tenant, and they overlook the mountains and downtown in all different directions.”
Additionally, Lyman stated, the building is designed to accommodate expansive and flexible floorplates as well as floor-to-floor heights of up to 16 feet. While Sobrato’s goal is to attract different types of tenants, Lyman admitted the development would also be suitable for San Jose’s growing technology companies.
“I think we check all of the different boxes that a tech user would be looking for: large, efficient floor plates, really good day lighting, private secured outdoor space, obviously the location,” explained Lyman. “The buildings are designed to be flexible so we can appeal to a wide variety of tenants.”
The building has already garnered interest from tenants, and Sobrato is currently gauging market interest and collecting feedback from those who might be interested in leasing the space. However, no formal agreements have yet been signed.
“We’re analyzing right now whether the project will be built on spec or not,” said Lyman. “It’s still early, but the interest has been there and the building has been well-received.”
Sobrato also owns two other sites just down the street from the Market Towers project: Block Two and Block Three. According to an economic report released by San Jose’s Office of Economic Development, the two sites could each accommodate up to 500,000 square feet of development. Lyman stated that between Blocks Two and Three, Sobrato could provide a potential tenant with more than one million square feet of space downtown. Sobrato purchased Block Two, along with the current site of the Market Towers project, known as Block Eight, in 2010 for $20 million.
“We’re very bullish on downtown, for the same reasons that I think everyone else is,” said Lyman. “Downtown has become more of a tech market, which has just broadened the potential tenant base. It has Caltrain Stations, BART is coming into downtown, plus all of the residential that’s gone up. Retail is turning over and getting better, too.”
In recent years, the City of San Jose has seen an explosion of interest in developing office space in the downtown core. Until recently, downtown San Jose has been home to local retailers and professional service firms. However, interest from major employers such as Google and Adobe has spurred a change in tenant requirements and has peaked developer interest.
“There just hasn’t been a lot of new office development in downtown recently, and the tenant needs have changed over time,” stated Lyman on how Sobrato’s proposal compares to past and future development. “Historically, downtown has been more traditional, with smaller floor plates at the center core and professional services firms. Now most recently, we’ve seen an influx of tech where the needs are a bit different.”
According to the San Jose Downtown Association, there are nearly 50 developments under construction or in planning in San Jose’s downtown core as of April 2019. The eight largest office proposals total more than 16 million square feet of space, nearly double what currently exists in the market to-date. Among them includes Valley Oak Partners and TMG Partner’s Platform 16, a 1.023 million square foot office development, as well as Boston Properties’ 1.8 million square foot campus on Almaden Boulevard and Woz Way.
For now, with so many projects in the pipeline, it is clear that downtown San Jose’s transformation into a highly-urban tech driven center is already underway—and is expected to continue.