SAN JOSEGoodwill of Silicon Valley was able to buy a new headquarters location in San Jose by taking advantage of a failed real estate loan and the collapsing Bay Area office market.
The nonprofit said that it has spent $17 million purchasing an office building located at 1600 Technology Dr. in north San Jose, which it plans to convert into its new headquarters and possibly into office space for other charitable organizations.
The conventional method of locating a prospective buyer and then forking over cash to buy a property was not how Goodwill acquired the office building. According to Santa Clara County public records, it adopted a novel strategy instead.
A life insurance firm that was the property’s lender sold the office building’s defaulted debt to the nonprofit. After then, Goodwill took possession of the site by foreclosing on the past-due loan.
According to documents filed with the Santa Clara County Recorder’s Office, Goodwill and Northwestern Mutual Life Insurance Co., a nonprofit organization based in Wisconsin, reached an agreement whereby the nonprofit took ownership of the office building through a deed-in-lieu of foreclosure.
Originally issued in 2012, the loan was purchased by the nonprofit for $17 million, according to Goodwill.
According to county records, after Goodwill of Silicon Valley finished purchasing the financing instrument and foreclosed on the mortgage, the outstanding balance on the loan was $27.3 million.
According to records kept by the Santa Clara County Recorder’s Office, the building was worth $92.4 million in January 2024. The agreement resulted in Goodwill paying 81.6% less than the office building’s current assessed value, which is 198,000 square feet.
Goodwill’s headquarters and a number of job training and employment opportunity services, such as the Career Technical Education Program, which offers free skill training to assist locals, will be housed in the facility.
The charity organization’s expansion and redevelopment plans include the new Goodwill office center, which is situated close to San Jose International Airport. The acquisition agreement was backed by a $10 million donation from author and philanthropist MacKenzie Scott.
A 75-year-old warehouse complex on North Seventh Street, which was formerly a Levi Strauss manufacturing facility, now houses Goodwill’s headquarters.
Additionally, the former warehouse acts as a central location for gathering, classifying, and distributing donated items for its chain of secondhand shops.
“The core of this real estate decision is Goodwill of Silicon Valley’s mission to assist people in overcoming employment barriers,” stated Erik Hallgrimson, chairman of the Board of Goodwill Silicon Valley. We will be able to carry out our job more effectively thanks to our new headquarters, which will meet both our present and future demands.
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Any empty space in the building that Goodwill doesn’t use will be available for use by other neighborhood nonprofits.
Within three years, Goodwill plans to build a brand-new, cutting-edge warehouse to replace its current location on North Seventh Street, which is no longer able to support the organization’s expansion.
According to the nonprofit, Goodwill was able to secure the funding for the office property deal thanks in large part to the backing of the South Bay community.
Chris Baker, acting CEO of Goodwill of Silicon Valley, stated, “We are in a strong financial position to make this acquisition, which will benefit the community for years to come, thanks to this support, fiscal prudence, and close attention to operational details.”
