Caltrain eyes 1.1M sf office project next door to San Jose’s main transit hub

Caltrain is looking to bring more than one million square feet of new office space to the doorstep of San Jose’s main transit hub, the center of a transformation of the area spurred by Google’s development plans.

The Bay Area commuter rail service plans to submit a preliminary application to the city next month for a 1.1 million-square-foot office project immediately east of Diridon Station, one of the region’s busiest transit centers and the site of a future BART station.

The area around the station is slated to undergo a sea change in the coming decades that’s due in large part to Google’s plans there; the technology giant has San Jose’s approval to build up to 7.3 million square feet of office space and as many as 5,900 new homes on 80 acres surrounding the transit hub.

“Having the jobs close by gets the commuting patterns coming into San Jose and not out of San Jose,” said Nanci Klein, the city’s director of economic development.

City officials also recently approved a revised vision for a 262-acre swath of land that has Diridon Station at its center and includes Google’s development site. That land could eventually be home to up to 13.7 million square feet of new office space — which includes Google’s office space allocation — and 12,900 new homes, according to an updated area plan that the San Jose City Council unanimously approved in May.

Caltrain expects to see high demand for commercial development in the 262 acres around Diridon Station in the coming years, according to a report addressed to the planning committee of the Peninsula Corridor Joint Powers Board, Caltrain’s owner and operator, in advance of the committee’s Aug. 25 meeting.

The rail service is aiming to start the entitlement process for its office project next door to the station before the city’s cap on new office development in the Diridon Station area is met. If that limit is met before its proposal is approved, then Caltrain anticipates a “substantially more challenging” entitlement and environmental review process for its project.

Designed by Perkins&Will and Arup, the rail service’s preliminary plans show two buildings, each 265 feet tall, that would be separated by a new plaza.

The structures would rise on a rectangular parcel totaling about three acres that’s now home to two surface parking lots located between Cahill, South Montgomery, West San Fernando and Crandall streets. They would offer a combined total of 31,300 square feet of ground-floor space for retail or other “active uses” and about 1.11 million square feet of office space, according to a copy of the plans included in the report. The project as a whole would also create about 330 spaces for bicycles and about four on-street spaces for cars.

The project’s height is the maximum allowed under San Jose’s Diridon Station Area Plan, which sets height and development standards in the area around the station. Caltrain’s proposal is also consistent with the city’s zoning guidelines for the site, which allow for office, hotel, retail or entertainment uses there.

Brian Fitzpatrick, the San Mateo County Transit District’s director of real estate and property development, is managing the project. Fitzpatrick did not respond to a request for comment.

While the rail service plans to advance its two-building proposal through San Jose’s project approval process, it doesn’t intend to build it, assuming the city gives it that right. Rather, it expects to enter into a long-term ground-lease agreement with a private third-party development partner, in which the latter would finance and construct the project. Under that agreement, Caltrain would retain ownership of the land underlying whatever is built on top of it and would collect rent “based on the success of the development,” the report said.

Perkins&Will and Arup plan to submit a formal project application to the city sometime during the first quarter of next year, the report said. Caltrain expects the city to spend about a year reviewing its plans; assuming they’re approved, it will begin the process of looking for a development partner in 2023.