Group Led by Shoe Retailer Pays $24M for San Jose Offices

A group led by a Shoe Palace executive has bought a 157,500-square-foot office tower in Downtown San Jose for nearly $23.8 million — 70 percent less than it traded for in 2017.

The undisclosed group led by George Mersho, CEO of the Morgan Hill-based footwear firm, purchased the 11-story building at 303 Almaden Boulevard, the San Jose Mercury News reported.

The seller of the Class A offices at Almaden and West San Carlos Street was AEW Capital Management, based in Boston. The deal works out to $151 per square foot

AEW bought the property in 2017 for nearly $80.2 million, or $509 a square foot, considered a record-high price for an office building in Downtown.

The sale of the triangular building, built in 1995, could set a benchmark for offices in central San Jose.

“This deal is a positive sign for the office market,” Dave Sandlin of Colliers told the Mercury News. “We now know the price that a Class A building in San Jose will trade for, and in this case, a prime Class A office building.

“People can judge the value of their buildings based on the price for 303 Almaden.”

Mersho also heads Bridge Group Investments, based in Morgan Hill. The firm has recently teamed up with Los Angeles-based Steerpoint Capital on numerous commercial deals, according to the Mercury News.

It wasn’t clear if Steerpoint was involved with the purchase of the office building at 303 Almaden.

Across the Bay Area, offices from Downtown San Francisco to Downtown Oakland have seen their values plummet during a shift to remote work, soaring vacancies, as well as rising mortgage rates that have led to a series of defaults by landlords.

In October, Downtown San Jose had an office vacancy rate of 31.5 percent, according to CBRE.

In July of last year, Mersho’s Bridge Group Investments and Steerpoint Capital bought the 735,000-square-foot Shops at Montebello mall in Los Angeles County for $87 million.

The previous month, an affiliate of Mersho sold a lot in South San Jose for $19.9 million to Houston-based Hines, which bought the parcel of unknown size at 644 Piercy Road.

— Dana Bartholomew