Santa Clara Valley Transportation Authority has cut a deal to buy a 17-story office tower for its headquarters in Downtown San Jose, while planning a $135 million bond to pay for it.
The VTA approved the undisclosed purchase terms for the 379,000-square-foot building known as Almaden Crossing at 488 South Almaden Boulevard, the San Jose Mercury News reported. The transit agency could shift its hub to the new offices in 2026.
The move comes during a record high for empty offices across the region, depressing prices. The pending seller of the building next to the San Jose Convention Center was not disclosed.
The tallest building in Downtown was bought by Newport Beach-based PIMCO and Menlo Park-based Lane Partners in 2021 for $155 million, or $409 per square foot. It includes an adjacent 11-story parking garage, plus a parking lot across the street.
The building, built in 2002, is managed by a unit of Belmont-based Embarcadero Capital Partners, according to its website. It includes a glass sculpture by Dale Chihuly in the lobby.
The VTA plans to float a bond measure to help finance the purchase, tenant improvements and any necessary renovations. The cost of the bond measure could reach $135 million.
While the agreed-upon price was not disclosed, the transit agency said a tanking office market means it could get a heavily discounted deal. The VTA has been on the hunt for a new hub for months.
“The commercial real estate market is in a position of distress,” Jessie O’Malley Solis, the VTA’s director of real estate and transit-oriented development, told the VTA board during a recent meeting. In her more than 20 years in commercial real estate, “this is the lowest pricing I have ever seen.”
If the talks fall through for Almaden Crossing , the VTA has picked an office complex in North San Jose at 1650-1700 Technology Drive as a backup site, according to the agency.
A broad shift to remote work has pushed office vacancies across the Bay Area to record highs. In the third quarter, Silicon Valley had a vacancy of 22 percent, according to JLL.
Because the VTA would move workers from its current offices to the new headquarters, the move would have little effect on the number of empty offices in the South Bay city.
— Dana Bartholomew
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