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“Diridon Station has been a sleeper, but it’s actually the most robust transit hub in all of Northern California,” said Don Little, a Trammell Crow senior vice president and the project lead. "Think of all the people you access and housing markets you open up. There’s no multimodal node like that here."
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Trammell’s designs for the land are still being refined, but executives anticipate developing about 800,000 square feet of office in two buildings rising 10 to 12 stories, and 325 apartment units in a nine-story building. The site, which fronts West Santa Street kitty corner from SAP Center, would be sprinkled with shops and restaurants and include a large public plaza along West Santa Clara Street. The historic San Jose Water Company building would be renovated and repurposed, possibly as an entertainment-focused retail space.
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Trammell, which has developed more than $60 billion worth of real estate over its nearly 70-year history, was searching for a major transit-oriented development site next to Caltrain up and down the Peninsula, Little said. Executives quickly honed in on the Adobe land, attracted to its large size and Diridon’s frequent “Baby Bullet” Caltrain service, the line’s semi-express mode.
“It’s the largest block of square feet that will be built anywhere between here and San Francisco that is transit-friendly,” said Dave Sandlin, a Colliers International broker who represented Trammell in the deal. (Adobe was represented by Carter Beim, also of Colliers International.)
But developers grew even more fond of the location when they looked at the broader transit connections, including Altamont Commuter Express, Capital Corridor, VTA light rail and — eventually — BART and high-speed rail.
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Still, Trammell’s bet isn’t without risk. Downtown San Jose’s office market is improving, but occupancy remains high — about 16 percent in the second quarter, according to Cushman & Wakefield (formerly DTZ). And rents, at $3.14 per square foot for Class A space, are still not generally considered high enough to make financial sense.
Trammell’s belief is that #Diridon will be able to command a whole different price point because it’s offering something new in the downtown area: Large-format floor plates of about 40,000 square feet, which are all the rage in the tech sector and don’t exist in the district — plus the transit access. Trammell will probably need to achieve office rents in the $4 range to make it work, observers said.
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