SAN JOSE — A huge high-tech campus planned for downtown San Jose could be delayed for several years, a sign that the Bay Area’s volatile office market and difficult economy continue to shock real estate projects. This was new evidence.
Cityview Plaza, a large office, retail and restaurant complex in downtown San Jose, is facing development delays. When fully constructed, the project will total 3.4 million square feet.
Jay Paul Co., one of the Bay Area’s most successful and savvy real estate companies, owns the project site and is located on South Almaden Boulevard, West San Fernando Street, South Market Street and Park.・We are planning to develop this property surrounded by avenues.
The developers, acting through an affiliated company, SJ City View LLC, are asking San Jose planners to grant a five-year extension to the site development permit, according to documents on file with city officials.
The current development permit is scheduled to expire in June 2025, according to city planning records. If extended for five years, the permit will expire in June 2030.
J. Paul Co. has completed an office tower at 200 Park Avenue, across from the City View Plaza development.
In the view of Newmark commercial real estate agent Phil Mahoney, one of the brokers seeking one or more tenants for the 200 Park office, the City View Plaza delay is a smart move for J. Paul Co. It appears to be an action. Tower.
“It makes sense for Jay (Paul) to hold back on City View,” said Mahoney, executive vice chairman of Newmark’s San Jose office. “Given the current demand, it doesn’t make sense to build any more office space.”
Silicon Valley’s office market showed signs of slight improvement in the first quarter of 2024, from January to March 2024, according to a preliminary report from commercial real estate firm CBRE.
Silicon Valley’s office occupancy rate was 20.8% in the first quarter, a slight improvement from the 21.1% occupancy rate in the fourth quarter from October to December, CBRE reported. Vacancy rates measure vacant office space resulting from a combination of direct vacancy and sublease.
“The Class A office market is currently showing some stability,” Mahoney said. “But finding tenants is still not easy.”
Regarding the City View Plaza project, J. Paul acknowledged that the Bay Area office market, including Silicon Valley, is less than ideal.
“Due to current financial markets and declining demand for office rentals, the short-term rental feasibility of this project cannot be maintained within the currently established schedule,” J. Paul Co. said in a filing with city planners. It’s gone,” he said.
Planning Department staff is expected to decide on J. Paul Co.’s request to delay development permits in about two months.
Despite the delays, real estate companies expressed enthusiasm about the project and its potential.
“SJ City View LLC (an affiliate of J. Paul Co.) remains excited to bring this monumental project and its strong public improvements to the City of San Jose in the near future,” the real estate firm said in a statement. It is stated in the document.
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