Key downtown San Jose lot owned by Pacific Bell is bought by veteran developer

SAN JOSE — A choice property in downtown San Jose where a new office or residential tower could rise someday has been bought by a veteran developer in a deal with telecommunications titan AT&T.

J.P. Dinapoli Cos., one of the South Bay’s most active and successful developers, has bought portions of two parcels at 95 S. Almaden Ave. between Post Street and West San Fernando Street in downtown San Jose, according to property records filed Dec. 19 with Santa Clara County.

“This was a hidden site in the center of everything,” said Mark Ritchie, president of Ritchie Commercial, a real estate firm. “It’s great to see it moving to a future higher and better use other than a skeleton parking lot.”

The downtown San Jose AT&T property is deemed to be an attractive location for redevelopment in a downtown district that has drawn interest from a widening array of tech companies, developers and investors.

“That AT&T building has been a windowless switching station for equipment rather than people, just a big beige blank on that corner of San Fernando Street and Almaden Boulevard for decades,” said Scott Knies, executive director of the San Jose Downtown Association.

Acting through affiliate Sequoia Del Rey, Dinapoli Cos. paid $35.65 million for the property, according to the public records. County documents show the seller was AT&T unit Pacific Bell.

Steve Horton, a vice chairman with commercial real estate firm Cushman & Wakefield, arranged the transaction.

“The velocity of the office market in downtown San Jose is about to really take off,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy.

The property in the deal provides surface parking for people who work inside an adjacent AT&T building that houses a nexus for the telecommunications giant’s network services in downtown San Jose.

AT&T put the property up for sale in April.

“This is just one of several non-core assets the company has chosen to sell over the last several years,” AT&T said in emailed comments provided by company media representative Vincent Bitong in July.

The adjacent building, which sports an AT&T logo, is a central office and communications hub for downtown San Jose.

“This should have no impact on the service provided to our customers,” Bitong said in the email.

DiNapoli couldn’t be reached for comment on Friday.

The surface parking lot is near the bustling San Pedro Square area, a short distance from a new office tower that Adobe is constructing and a few doors away from Cityview Plaza and Park Avenue, where several mega projects are being contemplated or readied.

In November, developer Jay Paul Co. broke ground on an office tower at 200 Park Ave. that would total 875,000 square feet and rise 19 stories.

Museum Place, a 20-story, 928,000-square-foot mixed-use office and retail tower that would also expand the Tech Museum, has been approved by city officials and would replace the Parkside Hall facility.

Plus, a few blocks away, Google has proposed a transit-oriented community of office buildings, homes, stores, restaurants, and open spaces near the Diridon transit hub where 25,000 people could work, including 15,000 to 20,000 of the search giant’s employees.

Developers increasingly will begin to launch office projects without having a tenant signed up ahead of time, Staedler opined. That’s the approach Jay Paul has taken with 200 Park Ave.

“When you see rents start to rise a little more, you will see more speculative office development in downtown San Jose,” Staedler said.

The site the DiNapoli firm has bought from AT&T would be suitable for an office high rise, according to local property experts.

“It’s the right time for this kind of site,” Staedler said. “It’s a good infill site for office development.”

Downtown experts also are encouraged that it is the DiNapoli firm that has gotten involved with the property.

“DiNapoli has the Midas touch downtown if you look at their last two properties, the fourth Adobe tower and Jay Paul’s 200 Park highrise, both currently under construction,” Knies said.

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