Imwalle Properties expects OK for office tower in San Jose

Developer may pause project amid tech layoffs and uncertain market conditions

Imwalle Properties' Don Imwalle Jr. and a rendering of 250 Stockton Avenue, San Jose (LinkedIn, Steinberg Hart)

TRD Staff

Feb 23, 2023, 12:00 PM

A 15-story office tower in Downtown San Jose is one hurdle away from approval. But Imwalle Properties said it won’t break out the shovels “any time soon.”

The Campbell-based developer is on the verge of winning final approval for its 910,000-square-foot office building at 250 Stockton Avenue, the San Jose Mercury News reported.

The 213-foot-tall glass tower would rise between Julian and West Santa Clara streets, near SAP Center and Google’s proposed Downtown West transit village at Diridon Station.

It’s expected to be approved next week at a city planning director’s meeting.

But rampant tech layoffs and uncertainty around remote work policies since the pandemic have raised questions about the demand for offices in the Bay Area.

Don Imwalle Jr., a principal executive with Imwalle Properties, is aware that city approval of the tower is just one major hurdle before construction. The question is: When can it break ground?

“With the way the economy is now, this building won’t be coming out of the ground any time soon,” Imwalle told the Mercury News.

The horseshoe-like tower, designed by Steinberg Hart, features slanted glass windows and W-shaped exterior trusses. Earlier reports called for 16 stories and 1.3 million square feet, with 60,000 square feet of open air-decks.

It would replace a 94,000-square-foot, single-story commercial building.

Job layoffs coupled with an uncertain office market has caused Google to rethink the timeline for launching the initial phase of its new transit neighborhood – which could also affect Downtown development.

Downtown San Jose is still recuperating from pandemic shutdowns.

San Jose officials have told Joint Venture Silicon Valley that sales tax revenue in Downtown is only 35 percent of what it was prior to the pandemic, according to Russell Hancock, president of the think tank.

The rise of remote work — and the exit of employees from their daily commute offices — has been a financial blow to downtowns in San Jose, Oakland and San Francisco, according to a report stemming from the newly released 2023 Silicon Valley Index.

Fewer office workers mean less foot traffic, which means less business on the street.

“We are seeing the effects on our downtowns,” Hancock said during a recent presentation to discuss the index. “The downtowns are where we are seeing a crisis.”

Trophy office sales in Bay Area downtowns have hit a 10-year low.

Imwalle sees signs of a turnaround that could bode well for the sleek offices planned for 250 Stockton Street.

“Every day it looks like there are more cars driving on the road,” Imwalle told the newspaper. “As more people return to the office, that can help our project.”

Plus, Imwalle believes the current tech layoffs won’t dent the economic power of Silicon Valley.

“As bad as the tech layoffs are, the fundamentals of Silicon Valley are still there,” Imwalle said. “There is a need for more AI (artificial intelligence) and other technologies this area creates. Don’t bet against Silicon Valley.”

— Dana Bartholomew