Mega deal: Google buys Cisco buildings in north San Jose, gains right to acquire more

SAN JOSE — Google has bought three office buildings in north San Jose from Cisco and struck a deal to buy a fourth — an unexpected move that sets the stage for another major job hub for the search giant in the Bay Area’s largest city.

With the latest transactions, Google now has laid the foundations, through a wave of property purchases and leasing deals, for at least four distinct — and huge — employment centers in San Jose, including a transit-oriented development called Downtown West that would dramatically reshape the city’s urban core.

“With this play, it really cements what Google is doing in downtown San Jose,” said Dave Sandlin, an executive vice president with Colliers International, a commercial real estate firm. “There is more and more of a presence for Google in San Jose. While it’s not a perfect system, the light rail line can connect these north San Jose campuses with the Google development downtown.”

On Dec. 3, Google bought two north San Jose properties from Cisco Technology that contain three office buildings and a parking garage on West Tasman Drive between North First Street and Villa Montana, according to Santa Clara County property records.

The same day, the tech titans filed a purchase and sale agreement giving Google the option to buy a fourth office building adjacent to the other three, a public document showed.

“Google’s latest investment underscores that world-class employers are continuing to invest in world-class cities like San Jose,” said Carl Guardino, president of the Silicon Valley Leadership Group. “To Google’s credit, the common denominator to their downtown and north San Jose sites is access to transit options for their employees, minimizing traffic impacts and maximizing employment opportunities.”

County documents filed on Dec. 3 show that Google paid $123 million for the three office structures and the multi-level parking garage. Financial terms for the purchase option weren’t immediately disclosed.

“I can confirm that yesterday, our purchase closed for three of the Cisco buildings,” Michael Appel, a spokesman for Google, said on Wednesday.

The buildings that Google has bought have addresses of 175, 255, and 285 W. Tasman Drive. The building for which Google has obtained an agreement to purchase is located at 225 W. Tasman.

If Google completes, as anticipated, the acquisition of the fourth building, the digital behemoth would own four adjacent office buildings and the garage.

The quartet of office buildings and the parking structure sit atop 25 acres. The properties are across the street from the Champion light rail station.

And it could be the land that’s the real prize for Google in this instance.

“Long-term, these Cisco buildings are going to be torn down and replaced by modern buildings,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy. “San Jose has a lot of old tech buildings that need to be torn down and rebuilt with higher densities. That’s one way to solve San Jose’s problem of a lack of jobs.”

If Google completes the purchase of the fourth building, the company would own four office structures, constructed more than two decades ago in 1996, that together total roughly 553,000 square feet. That would be enough space for 2,200 to 2,800 Google employees.

Yet just a few doors down the street, at the corner of North First Street and West Tasman Drive, a unit of Samsung Electronics occupies a gleaming and modern complex of office towers totaling 1.1 million square feet on a 9.4-acre site.

Were Google to someday seek and win permission to replace the existing four Cisco buildings with modern offices and at a similar density to the Samsung complex, Google could create a campus on Tasman Drive of 2.5 million square feet — which would be large enough for 10,000 to 13,000 workers.

Since the purchase has just been completed, Google noted that it’s still too soon to know what would be the intended use of the Cisco buildings or if they might be redeveloped.

Separately, sources with direct knowledge of Google’s expansion efforts in north San Jose said that the company has decided not to lease up to 900,000 square feet of offices in The Assembly at First tech campus on North First Street. Google’s interest, the sources said, shifted to ownership of the Cisco sites.

The potential West Tasman campus is only the latest prospective employment hub for Google in San Jose.

“Google is now a digital nation-state” is how Mark Ritchie, president of Ritchie Commercial, a real estate firm, has described the tech titan’s dazzling expansion endeavors in Silicon Valley.

Through its purchase of several buildings in north San Jose near Alviso, Google has quietly assembled what would be a huge tech campus. Google has paid $409.3 million to buy a mix of office and industrial buildings near North First Street and Nortech Parkway that together total 1.27 million square feet.

Just a bit further south, at the corner of North First Street and East Brokaw Road, Google has leased four buildings totaling 729,000 square feet from legendary development firm Peery Arrillaga.

In downtown San Jose near the increasingly busy Diridon train station, Google has proposed Downtown West, a transit-oriented community of office buildings, homes, hotel facilities, shops, restaurants, entertainment hubs, cultural centers, and parks where the search giant could employ up to 25,000 workers.

“These deals show that Google believes San Jose is for real,” Sandlin said. “Now that Google is creating mass, you will probably see more of Google’s names on buildings in San Jose.”

Share this: Print

View more on The Mercury News