All You Need To Know About North San Jose

We've noticed a lot going on in North San Jose lately, from Trammell Crow building 1M SF of industrial and office space on spec to Apple grabbing up property for what could become a 4.15M SF campus to new offices breaking ground and long-vacant buildings becoming hot commodities.

What's going on? Here's a quick look at all you need to know about North San Jose.

Right Place, Right Time

There are a lot of factors that are leading to a renewed interest in North San Jose, says Jason Rogers, a division manager in the City of San Jose's Department of Planning, Building and Code Enforcement.

First, the area is in a prime spot when it comes to major thoroughfares, conveniently surrounded by Highway 101, Highway 237 and Interstate 880. Then there's the relatively large population base, which is always key when creating jobs.

Jason tells us the streamlined environmental review process for new development is an attractive perk for those considering the area.

One key right now is the uptick in development, which Jason tells us is resulting in development interest throughout San Jose (as we've reported, there's a lot going on in downtown San Jose these days, too). Fewer opportunities on the Peninsula means developers are looking southward—and North San Jose capitalizes on its location with those moves, he tells us.

It's a trend expected to continue into 2016. As rents continue to rise in prime Silicon Valley markets and inventory remains scarce, more deals are moving into tertiary markets, such as North San Jose, Julie Leiker, Cushman & Wakefield director of research, told us. She expects to see those markets continue to thrive in 2016.

High demand in the area is leading to spec development, such as Trammell Crow's MidPoint@237, below.

Vision North San Jose

San Jose's general plan, Envision 2040, is focused on growing North San Jose's industrial base, while also adding housing and retail.

In the past, commercial buildings were limited in how densely they could build in the area, creating a more scattered arrangement of low- to mid-rise buildings with transportation issues, the city reported in its North San Jose Development Policy. The policy seeks to create a denser, more transit-friendly area that works better for companies and residents alike.

Going forward, it calls for:

• Up to an additional 26.7M SF of R&D and office space in North San Jose, with up to 16M SF of that concentrated in the 600-acre urban corporate center along the North First Street light rail corridor (between Brokaw Road and Montague Expressway);
• Buildings in the core area rising six to 10 stories;
• High-density residential development (up to 32,000 units) near employment centers.

North San Jose is attracting companies such as Samsung, which opened its new headquarters (above) there earlier this year.

Current Growth in North San Jose

While calculations have to be fluid for everything that can change during the development process, the numbers Jason shared with us show how North San Jose is moving into its Phase 1 of development:

• For industrial development, there's about 10.2M SF reserved for new development (which also accounts for about 3.1M SF of existing industrial space taken down for residential development). Currently, there's about 8.3M SF of entitled projects for the area, with roughly 1.6M SF to 1.8M SF remaining in unentitled development for industrial, R&D and office uses.
• For housing, there are 7,940 units either approved, under construction or built (the limit for Phase 1 was up to 8,000 units). Jason says there's been rapid growth in residential and now the city is waiting to see similar growth in development to support new jobs.
• As for commercial development to support those employees and residents, there's about 335,700 SF in neighborhood retail and 348k SF in large-scale retail entitled. And that doesn't account for 102k SF of neighborhood retail from the recently approved Dollinger Properties project at East Brokaw and Oakland Road.

With Google signing leases, Broadcom slated to buy Innovation Place, above, and Apple's future plans, there are a lot of big names in North San Jose these days.

Looking Ahead

While the expectation was that the Phase 2 allotment wouldn't kick in for another two to five years, Jason explains that prediction was made before the economy began to strengthen. It's dependent on the market, but Phase 2 may come along sooner than initially expected.

Jason receives phone calls daily asking about the capacity in North San Jose. So the interest is there, and the city hopes it is a precursor to future development, he says.

"We are sitting on pins and needles hoping for that next big project to come through the door to further the growth of North San Jose," Jason tells us.