SAN JOSE – A striking San Jose office constructing has signed a serious lease with a cutting-edge technology company, a deal that provides a hopeful counterpoint to the Bay Area's dismal emptiness situation.
A serious recent tenant has agreed to take some space in One Santana West, a brand new office constructing at 3155 Olsen Drive across from San Jose's Santana Row neighborhood, in keeping with executives at Federal Realty Investment Trust, the first owner and developer of Santana West.
The lease was announced during a conference call between top Federal Realty officials and Wall Street analysts to debate the true estate company's second-quarter (April-June) financial results.
“Lessing continues at Santana West with a newly signed agreement with an AI-powered cloud database provider for 24,000 square feet on the ground floor of the state-of-the-art building,” said Donald Wood, CEO of Federal Realty, in the course of the conference call.
The technology company's deal expands the apparently brisk leasing activity at One Santana West, which covers a complete of around 35,000 square meters.
“Active negotiations with other potential tenants for much of the remaining building should enable us to continue to report new closings,” Wood said in the course of the conference call.
Before signing the lease with the AI technology company, One Santana West had enticed two other firms to sign leases.
– PwC, a titan within the skilled services sector, signed a lease for 13,000 square meters within the spring.
– Acrisure, a fast-growing financial technology and insurance company, has leased 29,000 square meters at the top of 2023.
Newmark, a industrial real estate firm searching for office tenants for Santana Row, has leveraged the goal neighborhood's array of amenities to draw tenants for space at One Santana West.
“Leasing Santana West to this new AI-based technology company will put us well over 50%,” said Dan Gee, Federal Realty’s chief financial officer, referring to the constructing’s rent.
Federal Realty didn’t disclose the name of the premises' tenant.
The lease comes at a time when office emptiness rates across the Bay Area are at or near historic highs.
“This is an important sign for the San Jose office market,” said Bob Staedler, managing director of economic real estate firm Silicon Valley Synergy. “Every lease is important to capitalize on the huge number of vacant square feet of office space.”
One Santana West appears poised to draw much more tenants, who together could take up large portions of the office constructing's additional space.
However, activity and interest are so strong that Federal Realty believes One Santana West could possibly be full within the relatively near future.
“We will be pretty well leased towards the end of the year, early in the first quarter of next year,” Gee said.
In 2023, Federal Realty began searching for multiple tenants for One Santana West. The deal with attracting tenants who require lower than all the constructing appears to be paying off.
“We are seeing really strong demand there,” said Gee, pointing to the interest of smaller tenants.
The real estate company's original approach was to draw a single large tenant for all the One Santana West constructing.
“Federal Realty is showing true leadership in breaking down its building into smaller spaces,” Staedler said.
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