I recently sat down with the editor-in-chief of the Silicon Valley Business Journal in front of hundreds of city and local business leaders to discuss the future of Downtown San Jose. You can watch a video of my 13-minute conversation with the newspaper's Josh Moss (on the left in the above image) by clicking here. Below are some of my favorite excerpts from our discussion:
On which of our nine downtown projects we’re constructing right now …
The renovation of the old Camera 12 cinema site, called Paseo. That project is nearing “cold-shell” completion. We've announced that some of our tenants will soon move into Paseo.
We also just started construction on our Keystone hotel. That's a Marriott TownePlace Suites extended-stay hotel that caters to long-term business travelers.
On whether we anticipate breaking ground on any of our other downtown projects over the next 12 months …
I would love to say that we will, but it's going to depend on the financing markets. We all saw that light switch in Downtown San Jose turn on about five years ago; it was obvious that San Jose would be the next place where development would happen on a large scale. Covid threw a monkey wrench into it, and now we're dealing with inflation and rising interest rates. The lenders that lend us the money to build the buildings are more cautious.
On whether Silicon Valley Bank’s collapse directly impacted us …
We have a regional bank that we bank with, and they looked like they would have some issues. We had to ensure all of our money was in the correct accounts and that our "sweep accounts" had been done recently. (A sweep account automatically transfers money from one bank or brokerage account into another, usually at the close of business day, to prevent excess cash from sitting in a lower interest-earning account). In the end, it all worked out great.
Then when the federal government said everybody with Silicon Valley Bank deposits above $250,000 is backstopped, that sure made everyone feel a lot better. Now, the Silicon Valley Bank situation obviously didn't help us. Whenever you see headlines like, "Will the American financial economy collapse?", lenders aren't going to be like, "Hey, let me give you a $100 million construction loan." That said, it was great to see the federal government step in and do what it did to shore up that whole sector.
On any suggestions I have for Downtown San Jose to activate its ground-floor commercial space …
For ground-floor retail, what you need is people. Having people downtown is what's important, and there are a variety of ways to do that. We've already hashed out that we need the city to be cleaner. We need to address the homeless issue. We need more police officers, less crime, and things like that. Those are all really important. One of the biggest things we've discussed for years is that we need more housing downtown. More housing downtown means more people downtown all the time.
Downtown San Jose really wants to see development, so they have taken a proactive approach to create new housing and ensure our downtown has transit-oriented infrastructure. Seeing all of the people that need to come downtown — that's what activates the retail.
On what’s fundamentally different about Downtown San Jose today compared with 20 years ago …
There's a night-and-day difference. First, people must remember how far Downtown San Jose has come over the years, as the public sector built downtown into what it is today. Then, about five years ago, we started to see private investment come in. In the past, our city's (now-defunct) redevelopment agency would say, "We need a movie theater. Done. We need an indoor-outdoor mall. Done." Now, it's private developers coming in and saying, "We know that the market is here for this type of product, and we're going to build it here." That's the difference.
If you’re looking to defer taxes on a recent capital gain and are considering investing in Downtown San Jose real estate, contact us today.
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