Vespaio, a housing complex with 162 apartments and some retail and office spaces, located at 130 Stockton Avenue in downtown San Jose. (Cushman & Wakefield)
SAN JOSE — A downtown San Jose apartment, office and retail complex that’s next to the footprint of Google’s transit village has been bought by a joint venture that may seek to convert some of the spaces into live/work units.
Vespaio, a building that features 162 residences, has been bought for $83.5 million by an alliance of real estate firms Windy Hill Property Ventures and Rockwood Capital, according to Cushman & Wakefield, a commercial real estate firm that arranged the purchase.
The seven-story Vespaio building is located at 130 Stockton Avenue near the SAP Center and Diridon train station in downtown San Jose.
The complex is also next to the footprint of a Google-proposed transit village that could become downtown San Jose’s newest mixed-use neighborhood. A bustling Whole Foods Market is just down the street from Vespaio.
Cushman & Wakefield brokers Jason Parr, Scott MacDonald, Seth Siegel, John Hansen, Sydney Ladrech, Brayden Joel, Terry Daly and Dan McLeod helped to arrange the property purchase and the financing for the transaction.
“Vespaio is a strong-performing, best-in-class apartment community with a centralized Silicon Valley location,” said Parr, an executive managing director with Cushman & Wakefield.
The South Bay metro area is deemed to be one of the nation’s strongest housing rental markets, the Cushman real estate agents said. Apartment rents in this area are among the nation’s highest, the real estate firm added.
“San Jose maintains solid apartment fundamentals, with rents back in growth mode,” Parr said. Apartment vacancies remain low, he added.
Hudson Cos., an active Bay Area real estate firm, completed the development of Vespaio in 2020 and sold the mixed-use complex to the Windy Hill-Rockford Capital joint venture.
Earlier this year, Windy Hill submitted preliminary plans to San Jose city officials to convert some of the retail and creative office spaces into live/work units. The live/work spaces would be in addition to the existing 162 residential units.
The preliminary proposal envisions the creation of 13 more residential units, a total that consists of nine live/work spaces and four studios. Live/work spaces typically have dedicated workspaces attached to living quarters.
The Vespaio proposal would result in a new total of 175 residential spaces, compared with the current 162, the San Jose planning documents show. Windy Hill Property Ventures, a veteran real estate firm, submitted the proposal.
Vespaio @ Diridon might become the new name for the property, according to some information contained in the city planning documents.
Hudson Cos. was successful in attracting a number of commercial tenants to Vespaio, primarily ground-floor retail firms — although Vespaio has landed a tech company in one of the office spaces.
Surfaceink, a pioneer in product design and engineering for consumer electronics and tech firms, leased a large chunk of office space in Vespaio, taking about 6,900 square feet on the second floor in 2021.
Mayweather Boxing + Fitness, The Preserve, and Cyclebar have all signed leases on the building’s ground floor, according to Mark Jones, an executive with The Hudson Cos. These leases total a combined 5,100 square feet, based on a site plan in a marketing brochure for the property.
But efforts to attract more office tenants to Vespaio have turned arduous. The slugghish office leasing has made a conversion to live/work spaces a viable alternative.
The economic maladies that the coronavirus outbreak unleashed helped to create big chunks of unwanted and empty office spaces in the Bay Area and Silicon Valley.
Downtown San Jose’s vacancy rate averaged 16.9% during the January-through-March first quarter of 2023, according to a report from Cresa, a commercial real estate firm. Over the same three months, the overall vacancy rate for all of Silicon Valley was considerably lower at 14.1%.
In contrast to the mostly empty office spaces at Vespaio, the 162 residences are roughly 90% leased.
Originally published at George Avalos