Downtown San Jose Armory deal worth $3 million

SAN JOSE — Millions more are being invested in downtown San Jose with the official completion of the San Jose Armory purchase, public records filed on Thursday show.

A group led by up-and-coming developer and realty investor Gary Dillabough paid $3 million for the historic armory, located at 240 S. Second St., according to documents filed with the Santa Clara County Recorder’s Office.

Dillabough is planning “something special” for the building, whose construction in 1933 was bankrolled by one of the innumerable federal grants the government issued in a quest to ward off the Great Depression.

The two story building includes offices and an assembly hall where soldiers drilled during World War 2.

“A theater, a museum, the best bookstore in the world, something that would be special” could be among the uses for the building, Dillabough said in an interview this week.

A ballet, dance, gymnastics, or other sort of school could also be the tenant for the 19,000-square-foot property, experts said.

The sellers were trusts headed by Frederick Sharkey and Rita Cortez, the county documents show.

“Mr. Sharkey has been using the building to make sets for local theater productions,” Dillabough said.

In downtown San Jose, property purchases by Dillabough-led groups include wide-ranging renovations of the iconic and historic Bank of Italy office tower, a facelift for the old Bank of the West building, a redevelopment of the Museum Place office and retail site that will also expand The Tech Museum, along with a dramatic project for the Lido Nightclub site, as well as a million-square-foot office and retail development at the Valley Title property near Second and San Carlos streets.

Dillabough said this week that his investment groups have bought 17 downtown San Jose properties.

The San Jose Armory deal is a reminder that investors, large and small, developers and tech companies have begun to thirst for development and investment sites in downtown San Jose.

Google has bought numerous properties near the Diridon train station; Adobe intends a dramatic expansion of its downtown headquarters campus. Tech companies are opening offices or seeking expansion sites downtown.

“What separates Gary Dillabough from some of the developers and investors of the past is he has more of the biggest picture about what it will take to elevate downtown San Jose,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land use and planning consultancy.

Dillabough said he’s interested in more than renovations of office buildings in the city’s urban heart. He said he also seeks to create a great user experience in downtown San Jose.

“It’s one thing to have only a dollars and cents short-term view,” Staedler said. Staedler added, referring to Dillabough’s approach: “To actually have a long-term vision about downtown San Jose is refreshing.”

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