TransWest Executes 212,000 SQFT Lease in Seattle to Support Growing Client Base

https://news.theregistryps.com/transwest-executes-212000-sqft-lease-in-seattle-to-support-growing-client-base/

TransWest (https://www.transwestco.com/) , the Seattle based corporate transportation leader, has executed a lease for 212,000 square feet of commercial property along First Ave South and the West Seattle Bridge in efforts to support their growing Pacific Northwest client base.

The lease at 60 S Spokane and 3411 1st Ave S will set a new highwater mark for industrial yard in Seattle, comprising of a 33,000 square foot office, training, and maintenance facility, and 174,000 square feet of yard space for their fleet.

“This first-class facility is intended to be our long term home in the Pacific Northwest that will allow us to serve and support our fast-growing operations and leading position within the Pacific Northwest,” shared Russell Nickel, TransWest CFO.

John Vernon of NAI represented TransWest while Evan Lugar of Kidder Mathews and Kevin Skillestad of Neil Walter Company represented REDCO Development. “We are very pleased with the final result” added Jason Freise of REDCO development “and want to give special thanks and recognize the collective efforts of TransWest, John, Evan and Kevin for such a successful outcome.”

This site along with other recent transactions closed just this last month with executed leases in escrow indicates REDCO’s commitment and strength in the Seattle SODO industrial market.

TransWest develops and delivers custom transportation services and off-site parking procurement and management solutions for some of the most innovative and demanding clients throughout North America.

REDCO Development (“REDCO”) is a 3rd generation real estate development company focused on the adaptive re-use and repositioning of commercial properties. REDCO concentrates primarily on value-add, infill opportunities and opportunistic development along the West Coast.

SODO property sells for over $7M

https://www.djc.com/news/re/12137276.html?action=get&id=12137276&query=redco

The O.B. Williams millwork complex at 1939 First Ave. S. sold for over $7.2 million, according to King County records. The seller was McCoy Properties LLC, which acquired the property in 2000 for $950,000.

The buyer was Redco First Ave 1939 Owner LLC. Redco, based in San Francisco, has lately become an active buyer of industrial properties.

The deal was worth about $176 per square foot.

Developed on a little under an acre, there are four buildings with about 41,224 square feet. They date from about 1907-1914.

O.B. Williams was founded in Fairhaven, near Bellingham, in 1889. It moved to Seattle in 1902. The business was owned during the postwar years by the McCoy family, who began selling it to current sole owner David Wick in 2000.

Meanwhile, Redco keeps adding to its industrial portfolio. Last month it bought the nearby Northwest Castings building, also in SODO, for $4 million.

Redco to clear big SODO site for possible redevelopment

https://www.djc.com/news/re/12130812.html

The recent buyer of the 4.5-acre Hardware Specialty Co. property, at 60 S. Spokane St. in Sodo, has filed a demolition plan to clear the site.

The architecture firm Nelson filed the plan on behalf of the San Francisco-based owner.

Redco acquired the property last July for $22 million. At the time, family-run Redco said it would lease back the property to the seller, Hardware Specialty Co., for a while.

Clearing the property, which is also bounded by Colorado Avenue South and the Spokane Street Viaduct, is a likely first step to redeveloping.

No new building plans have been filed.

Redco calls it “well positioned for continued last mile delivery or redevelopment opportunities.”

The DJC was unable to reach Redco for comment.

Family-run Hardware Specialty Co., which specializes in maritime products, moved to Lynnwood last September.

On behalf of Redco, Kidder Mathews has been attempting to lease the old complex, with about 80,000 square feet in multiple old buildings, for about six months. KM also says it could be rented as a bare yard.

Redco is run by Jason and Chris Freise; the latter knows the Seattle market from a local stint here with Vulcan Real Estate. Their company is named for their grandfather's old masonry business: Robert E. Daniels Co. Masonry, aka Redco Masonry.

California investor REDCO Development nabs 2 Seattle properties for $31M

https://www.djc.com/news/re/12124095.html

New firm Redco Development has entered the Seattle market with a splash. In two sales King County recorded on Wednesday, the Bay Area investor has purchased two older industrial properties for about $30.75 million. They are:

• The Nordic Building, at 548 First Ave. S. in Pioneer Square, which sold for $8.75 million. The seller was Nordic Cold Storage, which occupies and has owned the property for decades. The county says it has 68,700 rentable square feet. It was constructed 1904 as a cold storage and meat smoking plant, back when there were railroad tracks on both sides of the building. The deal was worth about $127 per square foot.

• The Hardware Specialty Co. property at 60 S. Spokane St. in Sodo, which sold for $22 million. The seller was also the occupant, which purchased the property in 1996 for $3.5 million. The 4.5-acre property, just north of the Spokane Street Viaduct, has multiple attached buildings with around 85,000 square feet. It was developed in 1941. The deal was worth around $259 per square foot.

Brokers were not announced in what Redco says were off-market transactions. Redco says it will lease back both properties to the sellers for a few years.

Redco, founded earlier this year by Chris and Jason Freise, is named for their grandfather's old masonry business: Robert E. Daniels Co. Masonry, aka Redco Masonry.

Chris Freise, who once worked here with Vulcan Real Estate, was until recently with Lift Partners of San Francisco, which has purchased several old industrial properties in our region, then leased them back to the sellers or occupants. Redco seems to be following a similar investment model. It lists nine properties in its portfolio, mostly in California.

While no redevelopment plans have been filed yet for the Nordic Building, Redco says its “business plan is to (use) cash flow as a cold storage building while working on redevelopment plans as office or residential with additional floors added similar to adjacent properties.” Renderings on its website show just that.

Also addressed at 547 Occidental Ave. S., the four-story midblock building is in the Pioneer Square Preservation District, just west of CenturyLink Field. Any additions would have to be approved by the preservation board.

A past example of such an addition is the Reedo Building immediately to its north, now home to Elysian Fields, where a bilevel fourth floor with mezzanines was added in circa 2006 by past owner Greg Smith.

On the west side of the Nordic Building is the Triangle Tavern (officially called Seattle's Historic Triangle Pub); and west of that the viaduct is nearly gone, greatly increasing the value of the Nordic Building.

Including the Nordic Building's basement, which is entirely refrigerated and features a giant compressor wheel, the building totals around 83,400 square feet.

Family-owned Hardware Specialty Co. was founded in 1947. It specializes in maritime products. No redevelopment plans have been filed there. But, as with Nordic Cold Storage, Redco's website does show a possible future plan. That total redevelopment could yield a large four-story warehouse of the kind so coveted by the logistics industry.

Historic One Montgomery St. building in downtown San Francisco sells for $82 million

https://www.bizjournals.com/sanfrancisco/news/2019/07/03/historic-one-montgomery-st-building-in-downtown.html

A Palo Alto developer and a Boston-based real estate management company have teamed up to buy a San Francisco office building for $82 million.

REDCO Development and AEW Capital Management, L.P. closed on a deal to acquire One Montgomery St., a 100,000-square-foot office building, from 601W Companies. 601W, which is based in New York City, was represented by brokerage CBRE on the sale.

The building — currently occupied by Wells Fargo — sold for about $820 per square foot.

REDCO plans to reposition the building’s place in the market but would not divulge further details .The bank’s below-market lease is up at the end of the year. The Palo Alto-based development company specializes in value add commercial opportunities and sees One Montgomery as a unique opportunity in the North Financial District, said Chris Freise, managing partner with REDCO. “We think it’s in one of — if not the — best locations in San Francisco,” Freise said, citing the proximity to the Montgomery BART station and other amenities in downtown San Francisco.

Any potential development would mark yet any change in the building’s long history of adaptation. Originally built by well-known San Francisco architect Willis Polk in 1908, the building was occupied by the First National Bank of San Francisco and stood 12 stories high. Later acquired by Crocker Bank, the building’s top ten floors were remodeled to match modern aesthetics in the 1960s.

In the 1980s, top 10 floors were removed in conjunction with the construction of the adjacent Crocker Galleria and the 500-foot-tall One Montgomery Tower, which sits across the street. On the roof of the — now two-story — building, a deck and garden was built, which is still a privately-owned public open space (POPOS) today. Wells Fargo has leased the entire building since 1984. Remnants of its long history as a bank are scattered throughout the building, including a board form concrete shell, columns from earlier architectural eras and a massive vault left over from the 1908 design.

In 2016, 601W Companies submitted a proposal to build a 33-story hotel and residential tower atop the historic building that would rise to 500 feet. The San Francisco Planning Commission recommended against that proposal, citing concerns about the effects of its height on the surrounding area and a need to take “care in remodeling older buildings to enhance rather than weaken their original character” in its report.

The building currently has a 250-foot height limit and is zoned for high-density, making future development a possibility — though anything as big as the 500-foot proposal from 2016 would require a change in zoning.

In addition to representing 601W in the sale, CBRE also arranged for $76.6 million in acquisition financing for REDCO and AEW in the form of a five-year loan from Square Mile Capital. The loan will finance part of the acquisition, along with some of the funding for capital expenditures and re-leasing costs.

Office tenant demand in San Francisco rose to 7.1 million square feet in the first quarter of 2019 with the average asking lease rate of $82.88 per square foot marking a record high, according to CBRE’s statement.

CBRE Executive Vice Presidents Michael Taquino and Kyle Kovac represented the sellers and CBRE Senior Vice President Mike Walker was the financing broker on the deal.

How Jason Freise of Redco Development measures success via quality

https://www.bizjournals.com/sanjose/news/2019/05/24/how-jason-freise-of-redco-development-measures.html?iana=hpmvp_sjo_news_headline

Jason Freise has spent his career so far working his way up the ranks at Southern California-based OluKai, a footwear and lifestyle giant, but his roots, he says, are in real estate and he’s now tapping into that history.

The 34-year-old partner and co-founder of Palo Alto-based REDCO Development is relaunching an old family business this year in partnership with his brother, Chris Freise, who is already a recognizable name in Bay Area real estate circles. Together, they’re following in the footsteps of their grandfather, who in 1956 started the Robert E. Daniels Co. Masonry, known as REDCO Masonry.

Jason remembers the company as a family effort growing up and says he’s wanted to work with his brother again for more than a decade.

“We've wanted to work together and build something together,” he said. “Even after I graduated from Irvine, I did several internships with commercial real estate firms down in Southern California with the intention of someday working together.”

Jason lives in San Clemente in Southern California, but he and his family — his wife Nicaela and 2-year-old son Lincoln — are set to move to the Bay Area as REDCO begins to fill out its portfolio.

This month, Freise sat down with the Business Journal to talk about work, success and what he does for fun. The following Q&A has been edited for length and clarity.

Jason Freise

• Title: Partner and co-founder, REDCO Development

• Age: 34

• Hometown: San Luis Obispo

• Residence: San Clemente

• Family: Wife, Nicaela; son, Lincoln, who is 2 1/2 years old

• Education: Bachelor's of science, political science, University of California, Irvine

• Career: About 12 years at OluKai, working in numerous positions including marketing, sales, sales management and international business.

What’s the best piece of advice — personal or professional — you’ve ever received? One that stands out … was one [Jim Harris, CEO at OluKai] shared with us at a sales meeting. … He was up giving a speech and we were talking about how we differentiate ourselves in market with competitor brands, with brands that were bigger than us at the time, brands that were executing in similar spaces as we were. What he said … is that you don't have to be the most intelligent person to be successful, you just have to care more than everyone else.

What does success look like to you? There are so many different lenses you could take on that question, but I would say success is measured by the quality of life, friends and family. I like having really meaningful relationships with the people around me and being able to enjoy that and enjoy my family as well. I don't think of it as a success in a monetary fashion, I think of it as the quality of life and the quality of the relationships I have.

What do you do when you're not working? My wife and I both used to surf competitively in college, and we find ourselves going down to the beach as much and as often as we can. We were able to get our son [Lincoln] on a board over the summer when Chris and I took our mom to Hawaii for her 60th birthday. … But I would include any sort of outdoor activity. We're outdoor enthusiasts, so it's surfing or going for walks or hiking or parks or camping. We're always trying to do and create these wonderful experiences, both for ourselves but also for Lincoln and our family.

Tell me about your work with the Surf Industry Manufacturers Association. SIMA is a trade organization focused on action sports or surf industry and is the governing body that kind of collectively ensures the health and success of the industry. … I was on the board of directors for about a year and a half or two years and then more specifically as chairman of their Insights Committee, which is a subset of the board that focuses on consumer analytics and data. It's a group that goes out and works with third party vendors to source, secure and publish data on the industry, how certain categories are performing, how certain brands are performing, the overall health and success of both manufacturers as well as retailers …That's something that I think I would love to do and get more involved with in real estate. That's not an industry specific item, it's a kind of a personality item.

When did you learn to surf and who taught you? My brother and I both started surfing when we were very young — actually during the building of our grandfather's hotel in Ventura, so I was 4 and Chris was 8. We had the bright orange O'Neill wetsuits and we were just out in the surf line having a ton of fun. … I would say we kind of taught ourselves a little bit. We were fortunate enough to live near the beach in San Luis Obispo and we would check the surf every morning and then run out there, catch a bunch of waves and come back, because it was freezing, and stand under the shower and try to warm up. It was a great childhood.

Chris and Jason Freise launch Redco Development, a new real estate firm targeting Bay Area and Seattle.

https://www.bizjournals.com/sanjose/news/2019/05/24/chris-freise-one-of-downtown-san-joses-busiest.html

A brand-new real estate investment and development firm with lofty goals, equity to invest and a keen eye on San Jose has arrived in Silicon Valley — but it's launching with a familiar face.

REDCO Development, based in Palo Alto, launched this year headed up by two brothers: Jason and Chris Freise, who was until recently a partner at San Francisco-based Lift Partners, a real estate group that has made a name for itself in the South Bay by investing in underutilized downtown San Jose buildings.

Though the launch of REDCO marks Jason Freise’s first formal foray into real estate after more than a decade working in merchandising, Chris says his brother is “a natural.”

“We’ve been around this business our whole lives,” Chris said. “You can say it is new to [Jason], but he’s going to be the better real estate person when it’s all said and done.”

Both brothers grew up surrounded by real estate entrepreneurship. The seeds for their own future venture, they say, was planted by their grandfather’s business, Robert E. Daniels Co. Masonry, as well as the 21-room hotel in Ventura that his family developed decades ago.

Intrigued by the newly designated Opportunity Zones and the long-term investment benefits developers could reap, Jason dreamed up REDCO more than a year ago. The name is derived from the initials of his grandfather’s company name.

“It’s got a lot of emotional connection for us,” he said. “There’s a strong connection to the business and our personal lives because it’s a third-generation family business and it was really started by our grandfather, who got into the business in 1951.”

Jason currently lives in Southern California, where he's spent about 12 years working in marketing and sales for footwear company OluKai, but he and his family are set to move to the Bay Area as REDCO begins to fill out its portfolio.

Chris Freise, meanwhile, has been beating the drum for downtown San Jose’s potential since 2016, taking an active role in scouting and reimagining older properties in the area as a partner with Lift Partners. The San Francisco-based real estate group and Westbrook Partners made headlines in August 2016 when they bought up the so-called “Saratoga Capital” portfolio, which included three well-known, older downtown San Jose buildings in need of some TLC and tenants.

At the time, the Silicon Valley Business Journal wrote about the investment, noting that though the $33.5 million portfolio purchase wasn’t significantly large, “it signals the arrival of a new investor downtown and raises intriguing possibilities about future plans.”

Indeed, Chris made the properties his pet projects. By December 2018, he’d helped turn the portfolio into a set of buildings that ultimately traded for a combined $72.5 million.

Meanwhile, he also had a large hand in turning around 70 Second St., a 24,000-square-foot, three-story office building in downtown San Jose that long sat vacant before a major revamp that drew tech company Wrike. Chris put in major elbow grease that helped downtown real estate investor and developer Gary Dillabough take over the iconic and historic Bank of Italy building in downtown San Jose.

The Freise brothers have a soft spot for those older, overlooked and historic buildings. They want to get creative with turning such properties around and "pivot what people think is possible."

"We are figuring out unique ways to create value with them where people didn’t see it or thought it couldn’t be done," Chris said.

City officials and downtown boosters have told the Business Journal that he has become an integral part of a new generation of downtown San Jose developerswho are injecting new life into the city’s long-overlooked urban core, offering up lofty visions of what the area could become.

With REDCO, the Freise brothers say that vision hasn't changed, but they do want to do more projects — including some that will be much larger — and they’ve got a healthy appetite to build things from scratch.

Already, REDCO has purchased the Chase building at 41 West Santa Clara St. in San Jose. In San Francisco, the company is working on kickstarting a major value-add and development project at One Montgomery Tower. REDCO also owns or is working on deals for projects in Emeryville, San Mateo, Palo Alto, San Leandro and at least two properties in Seattle.

But more is set to come in San Jose and the rest of the company’s target markets, Chris said: “It’s kind of business as usual, but more complex projects,” he said. “We are going to do much more complex land assemblage, heavy construction, ground-up entitlement and development."

Many Are Gazing Into the Downturn Crystal Ball

https://www.globest.com/2019/02/01/many-are-gazing-into-the-downturn-crystal-ball/

SIOR Northern California chapter recently held its annual kick-off event and panelists addressed the challenges and opportunities in the CRE market, and when will the slowdown occur.

Developers weighed in on challenges, popular markets and slowdown predictions at the SIOR event (credit: Jeff Weil).

SAN JOSE — What are the challenges and opportunities in the Northern California commercial real estate market? And of course, the burning question is when will the next slowdown occur?

The SIOR Northern California chapter held its annual kick-off event at the Silicon Valley Capital Club last week to address some of the most pressing issues in the market today. Moderator Jordan Schnitzer, president of Harsch Investment Properties, peppered the group with questions on market trends, popular markets and slowdown predictions.

Panelists included Scott Lamson, president, Northwest region, Prologis; Don Little, senior vice president of development with Trammell Crow Northern California; Steve Briggs, chief investment officer, LBA Realty; and Chris Freise, managing partner and cofounder at Lift Partners. The panel began by offering a 30,000-foot view of their companies and/or where growth opportunities are occurring.

Freise explained that Lift was started four years ago. With a start-up, of course, there are challenges.

“We have to hustle for deals. There is pressure with construction costs and higher taxes in California,” Freise said. “But there is a lot of opportunity in Seattle and the Bay Area. There is a great quality of life in Northern California.”

Little pointed out there are a lot of jobs but not enough housing in the Bay Area. As a result, affordable housing burdens are often put on a project, he said. Lamson concurred, saying the cost of living in the Bay Area makes it difficult to raise families.

In looking at projects represented by the four firms, Lamson outlined that Prologis has 30 million square feet under construction, averaging 25 million square feet per year for the past three years. He said Prologis has the infrastructure in place for projects in Tracy, where the firm has 250 million and 600 million under construction, with 1 million permitted.

Specifically, Prologis has 160 million square feet in the West, broken down as follows–65 million square feet in Southern California, 40 million square feet in Northern California, 15 million square feet in Seattle, and 10 million square feet in Denver and Reno.

“I thought Tesla would hurt the Reno market but that hasn’t happened in our project there,” Lamson says.

Lamson went on to discuss the phenomenon of multi-story industrial buildings; a development technique that is commonplace in Japan. It makes sense because all floors affect each other, he observed.

“On every project, we ask, ‘can we build multi-stories?’” Lamson pondered. “I’m not sure where our next multi-story building will be: either the East Coast or California.”

Briggs says 15 to 20% of LBA’s business is e-commerce and the Denver, Reno and Tracy markets constitute a “young business” for the firm.

When discussing the hottest areas and trends, it is no surprise that the topic of opportunity zones came up. Freise said Lift is taking advantage of those projects, in addition to industrial and urban development opportunities.

Little also chimed in on the cautions and benefits of opportunity zones.

“Opportunity zones are frothy but the advantages are gravy,” he indicated. “It opens the doors to entrepreneurial capital.”

Little went on to say that Trammell Crow was not a big believer in Livermore or Morgan Hill but now has a project in Morgan Hill scheduled to break ground in fourth quarter 2019. The project is 16 miles from San Jose. Still, labor woes continue to be an issue.

“Labor has become a factor, especially in Oakland but even in Tracy,” Little says.

Freise pointed out that areas of interest for Lift are Oakland, Redwood City and San Jose’s downtown, which is “on a trajectory and there is a lot of room to run in general. However, San Francisco is tight as a drum,” he observes.

Briggs said interest rates and liquidity have a big impact on the market but in general, Seattle and West Los Angeles are the most robust. LBA is cautious about San Jose, however, transit-oriented walkable space is in demand.

Also of caution is exactly when a slowdown will occur, but some are not as concerned as one might think.

“We’d love to see a nice little recession: a good old-fashioned hiccup, not a 2008,” Briggs said.

Little pointed out that the difference in 2008 and now is that banks are more disciplined and the market is forward looking. Lamson agreed that the economy is on more solid footing but says technology may be out over its skis.

“Tech is concerning because it reminds me of 1999 and 2000, but we are in a better position,” Lamson said. “And, e-commerce won’t slow down.”

Meet the new generation of developers building downtown San Jose

https://www.bizjournals.com/sanjose/news/2019/01/03/san-jose-development-boom-dillabough-freise-goog.html

Gary Dillabough may have plans to develop or revamp some of the most anticipated projects and buildings in downtown San Jose, but he doesn’t like to think of himself as a developer.

“Hopefully we’re people who can create an urban community or great user experiences,” said the 55-year-old real estate and venture capital investor. Dillabough, along with real estate guru Jeff Arrillaga, founded and leads a company called Urban Community, which captures the legacy he’s hoping to create as an “urban community builder.

“If we do our jobs well, that’s what people, hopefully, will say,” he said.

And while San Jose’s downtown revival story has been dominated by talk of Google and its mega campus plans, the momentum started well before the tech titan announced in 2017 that San Jose was the next “it” place.

Dillabough is part of a tenacious group of investors and developers — or urban community builders — who have been laying the foundation in recent years for San Jose’s downtown growth after several false starts.

Dillabough photographed at the top of Bank of Italy Building

Downtown enthusiasts say this time, the momentum is real and lasting, and while longtime developers in the area have been critical to the city’s success, downtown has been buoyed by a new generation of investors who have visions for the commercial core that reach far beyond their own property lines.

Downtown San Jose has more than 30 development projects in its pipeline totaling more than 23 million square feet of potential new office space, 7,600 new residential units and more than 650 new hotel rooms, according to Business Journal research. Those numbers include projects that have been proposed, entitled or are under construction.

Scott Knies, executive director of the San Jose Downtown Association, says the current momentum started a few years ago, when new investors began picking up and reimagining Class B buildings that had sat underutilized for decades.

“Speaking to this new generation of owners, they were coming in with entirely different expectations,” Knies said. “They were trying to look at, ‘Well, this district is kind of dead during the day, so we need more offices here.’”

Gary Dillabough is part of a tenacious group of investors and developers — or urban community builders — who have been laying the foundation in recent years for San Jose’s downtown growth after several false starts.

When Dillabough talks about his downtown projects, for instance, he can spit out stats on square footages and parking ratios, but he’s just as quick to draw or pantomime a map filled with paseos and maybe a fountain or two. He muses about retail that may or may not end up in his buildings and is working on new ways to get community members invested — both personally and financially — in his projects. He wants to start a voluntary program for property owners to help out with homelessness in the city.

Urban Community is behind downtown projects like the historic Bank of Italy revamp, a project that will span most of the surrounding block near North First and East Santa Clara streets. That corner has the potential to be downtown’s “main and main,” said San Jose Downtown Manager Blage Zelalich.

Also on that corner is a onetime JC Penney’s store that sat underutilized for years, with the ground level walled off from pedestrians. That was until Lift Partners picked it up as part of a larger portfolio in 2016. The development group set out to make the 101,000-square-foot building a choice location for creative office tenants and landed a lease for the ground level that will bring the first Blue Bottle Coffee shop to the South Bay.

Freise describing Lift Partner’s project at 1 W Santa Clara Street while under construction

“There’s a lot of momentum behind it now, but when we were doing it, it took a lot of convincing of retailers, investors and lenders to believe in the story,” said Chris Freise, managing partner and co-founder at Lift Partners. “Selling it kind of snowballs, so you get the Blue Bottle, and Blue Bottle led to other retailers believing that this was an up-and-coming area.”

Chris Freise from Lift Partners, pictured here in 2017, is one of a new generation of younger developers who are buying up and revamping older buildings in downtown San Jose.

Freise is also part of a new generation of owners that had begun investing back in 2016, before Google was a glimmer in most downtown San Jose onlookers’ eyes. That’s when they they picked up a three-building portfolio from Saratoga Capital for $33.5 million. Since then, the group revamped and helped find tenants for the buildings, then sold the portfolio piecemeal for a combined $72.5 million.

“What tenants want was all here, they just didn’t know it,” Freise said. “You couldn’t convince an office tenant to come tour San Jose that was coming from Mountain View or Sunnyvale, but that is not the case anymore.”

Other steadfast downtown San Jose investors and developers have helped the area get to where it is today. Depending how far back one wants to look, the list includes, but is not limited to, The Sobrato Organization, JP DiNapoli, Lew Wolff, Richard Berg, the late Jim Fox and John McEnery, who built the popular San Pedro Square food hall.

Longtime San Jose developer Swenson has a master plan for the city’s Guadalupe River, where the company doesn’t own the land it’s proposing for redevelopment. The effort, unveiled in late 2017, was led by Swenson President Case Swenson.

“There are still some of those kind of original, old-time investors,” Zelalich said. “But there certainly has been, over the last two to three years, this infusion of new blood interested in investing in downtown in a small-scale way, but that makes a very large impact.”

Downtown San Jose development by the numbers

Development projects: 30-plus

Potential new office space: 23 million square feet

Potential new residential units: 7,600

Potential new hotel rooms: 650

Meanwhile, bigger players have started to enter the scene since Google said in 2017 that it plans to build a tech campus on downtown’s far west side.

The one that made the biggest headlines this year was prolific San Francisco-based developer Jay Paul Co., which purchased the 600,000-square-foot CityView Plaza in July for $283.5 million, and then picked up the former JC Penney building for $46 million.

Those purchases marked Jay Paul’s first entrance into San Jose. Not long after the deal closed, the company said it plans to redevelop the nearly block-long mixed-use CityView Plaza, likely into something much larger.

And while investors and city officials agree both Google and Jay Paul’s entrance to downtown is critical to the area’s future growth and momentum, their presence also means the secret is out about San Jose’s new cool status. That comes with some drawbacks.

Most notably, land prices have surged since Google’s interest in the city was revealed in the summer of 2017. New investors have entered the market, paying top-dollar for existing buildings with room for improvement and some developers, like Jay Paul, are moving ahead quickly and confidently.

But that means some of the people who laid that foundation — who invest on a smaller, but impactful scale — are feeling the squeeze. Freise acknowledges that it’s gotten harder, but maintains “there’s still opportunity.”

Dillabough, for his part, says he’s planning to hold back on scouting new deals because of how high land prices have climbed in the last few years. “The pricing just doesn’t make much much sense to me anymore,” he said. “But it’s great that Google came down. Google wasn’t a factor at all in why we came down here, so that was a nice validation.”

70N Second - Silicon Valley Business Journal's Structures 2018 Rehab of the Year Award!

https://www.bizjournals.com/sanjose/news/2018/09/20/long-vacant-historic-office-revamp-draws-tech.html?s=print

Back in 2015, San Francisco-based Lift Partners took a gamble when they bought the downtown San Jose building located at 70 N. Second Street.

Its exterior needed a facelift, with a dated façade and an interior in need of new design. Outside, the team tore off the existing red tile and ripped out the glass blocks to replace them with large glass windows adding a modern flair and more natural lighting inside.

The three-level interior features new wood floors, updated fixtures, a more open-concept design and wooden beams to make for a more appealing space for a tech company. The gamble paid off after the pair fully leased the space to project management startup Wrike earlier this year. The deal has added to the growing diversity of tech companies in downtown San Jose and has been used as an example of downtown’s growing potential.

70 N. 2nd Street

Reuse/Rehab Project

Location: 70 N. Second St., San Jose

Size: 24,000 square feet

Cost: $7 million

Start date: May 2015

Completion date: June 2017

Background: The building, located on a light rail transit line and originally built in 1953, had a dated façade, including red tile coating the exterior and old glass blocks. Before leasing the building to Wrike, the owners were negotiating with WeWork, which was considering using the space for a program providing space and tools for early-stage startups. Negotiations started in August 2015 but fell through after about 12 months. Instead, WeWork ended up leasing a 75,000-square-foot space next door in early 2016.

Amenities: Phone booths, wood beams, breakout meeting spaces, storage rooms and a new kitchen space.

Challenges: Leasing new spaces to tech companies in downtown San Jose was a challenge for building owners at the time the property was purchased in 2015. More recently, startups and larger companies like Adobe and Google have claimed real estate or expanded in downtown. Between 2014 and 2017, when Wrike’s lease was signed, 77 tech companies either signed or renewed leases in Downtown San Jose, Colliers International data shows.

Tenants: The building is fully leased to Wrike, which plans to add 40 new employees to its existing team of 70 in 2018. The company held a ribbon-cutting ceremony in April, which was officiated by San Jose Mayor Sam Liccardo and City Councilmembers Raul Peralez and Johnny Khamis.

Tidbit: The real estate was originally purchased for $3.25 million in 2015 and sold for $10.8 million in 2018.