On July 6, Boston-based AEW Capital Management finalized the purchase of 303 Almaden Blvd, also known as the Ernst & Young Building, in downtown San Jose.
The nine-story office building sold for $80.2 million, doubling its value since it last traded in 2013, when it was acquired by Rockwood Capital. At $509 per square foot, it topped the previous record holder in San Jose, namely 50 West San Fernando Street, a significantly larger building, which fetched $420 per square foot in 2015.
To put things into perspective in terms of how much the asset gained in value, four years ago Boston Properties disposed of the Ernst & Young Building despite incurring an impairment loss of $3.2 million in the transaction, and shifted its attention to San Francisco instead, citing the San Jose real estate market’s underwhelming performance as the reason for its exit.
Presently, downtown San Jose is gearing up for a very different, more dynamic future. Google has been sizing-up the area around Diridon Station and the SAP Center–just south of 303 Almaden–for a 6-million to 8 million-square-foot development. Having teamed up with Trammell Crow, it has already acquired several parcels inside a 240-acre part of downtown and is currently negotiating deals for five more. Since the tech giant announced its plans, investors have been making their moves in downtown, gobbling up properties around the future project.
The 166,361-square-foot building on Almaden Boulevard sits in a transit-friendly location, near the junction of the I-280 and California Route 87, and just a few minutes away from Diridon Station. Since the currently government-owned large surface parking is very likely to be part of Google’s development, the subsequent changes to driving and access habits will mean Diridon will play a major role in the region.