One Santana West office building (foreground left), located at 3155 Olsen Drive in San Jose across the street from Santana Row. (Federal Realty Investment Trust)
SAN JOSE — A steadier Silicon Valley job market and economy have helped to attract tenants to a new but empty office building next to Santana Row in San Jose, a top real estate CEO says.
The interest is significant enough that a tenant could soon lease space in the new San Jose office building, which is known as One Santana West, according to executives with Federal Realty Investment Trust, the principal owner and developer of Santana Row and the office building.
The hopeful assessment was offered by Donald Wood, chief executive officer of Federal Realty Investment Trust, during a conference call this week with Wall Street analysts to discuss Federal Realty’s financial results for the April-through-June second quarter.
“I’m pretty confident that we will have some leasing success in the relatively near future,” Wood told the analysts during the call.
The tenant interest is arriving at a time when Silicon Valley has reached a “stabilization,” as Wood put it during the conference call, for the region’s economy and job market.
“Maybe we are getting to some sort of period of time where things can start happening” in terms of tenants completing lease deals, Wood said.
As a result of the economic improvement in Silicon Valley, tenant interest in One Santana West appears heightened, according to Federal Realty executives.
“We are seeing more than our fair share of looks in the marketplace,” Jan Sweetnam, Federal Realty’s chief investment officer, said during the conference call.
Federal Realty is taking the approach of potentially finding multiple tenants for One Santana West, occupants that might prefer to take one or two floors in the office complex.
The real estate firm’s initial strategy was to scout for a company that wished to lease the entire One Santana West building, which totals 375,000 square feet and is located at 3155 Olsen Drive.
“We are in some earnest and frankly advanced negotiations with tenants that are looking at our space because it is at Santana Row,” Wood said.
Wood also quickly cautioned that it’s entirely possible his optimism will be dashed and his predictions prove to be inaccurate.
“I’ve been snakebitten a couple of times before,” Wood said.
One Santana West is located across the street from Santana Row, a mixed-use destination center of shops, restaurants, entertainment outlets, housing, office buildings, and hotel facilities in an open-air setting.
The nearby amenities at Santana Row are the primary selling point that Federal Realth seeks to dangle in front of prospective tenants as they ponder a possible lease that also means their employees will be back working in a formal office.
“Everyone we are talking to wants to have a carrot to bring their people back into the office, a place where they want to go back to work,” Sweetnam said. “These are the kinds of tenants we are talking to and it’s been very positive.”
Clear indications have emerged to suggest that the brutally high pace for Bay Area job losses from tech industry layoffs has finally begun to abate.
During the first half of 2023, the Bay Area lost 14,100 tech jobs, according to an assessment by Beacon Economics of the official monthly labor reports from the state Employment Development Department.
Those job losses for the tech industry occurred primarily over the first three months of 2023 when technology companies shed a net total of 14,900 jobs.
During the April-through-June second quarter, tech companies actually added a tiny — but encouraging — 800 positions as they raced to harvest promising fields such as artificial intelligence and electric vehicles.
“It feels palpably different in Silicon Valley than it has the last year or two,” Wood said.
Originally published at George Avalos