After San Jose accepted its permits on Wednesday, Caltrain is proceeding with its plans to build two commercial towers near Diridon Station, despite the current office market’s difficulties.
Caltrain anticipates collaborating with a developer to construct a 15-story and 16-story skyscraper on the 3.09-acre property situated between Crandall and West San Fernando streets on the west side of South Montgomery Street.
Despite the market being a little difficult for office space, Caltrain transit-oriented development director Nadine Fogarty stated, “We’re very excited about the future for this project because it’s an excellent (transit-oriented development) location.”
The entire project would provide 1.1 million square feet of commercial space with a variety of uses in mind, such as retail, entertainment, and offices.
In order to facilitate commuters’ access to Diridon Station, it also includes designs for a plaza and an acre of open space that is open to the public.
Despite the proposal’s proximity to public transportation, officials pointed out that in order to maintain consistency with other nearby projects, such as Google’s Downtown West building, four levels of underground parking would provide 792 shared spaces.
Aaron Aknin, a cofounder and co-owner of Good City Company, stated that as planners for this, we wanted to advocate for the least number of parking feasible. Although we would really like to go down, we still want a structure that is feasible and marketable.
Although the site development permit was authorized by the city this week, it is still unclear when and how long the project will be completed.
Caltrain does not develop its properties because it is a public organization. Its practice is to sign a ground lease after reaching an agreement with a developer to construct the project. Over time, Caltrain would continue to be the property’s owner.
Caltrain’s development process, according to Fogarty, involves evaluating the market to ascertain time prior to issuing a request for proposals to choose the development partner.
Like the other major cities in the Bay Area, San Jose’s downtown office market has had difficulty filling vacancies since the pandemic ended, even though more firms are enforcing stricter return-to-office policies.
In the upcoming years, a number of big corporations have departed or intend to leave downtown in favor of other excellent locations throughout the city. For instance, PwC agreed to lease One Santana West to its employees early this year.
The VTA, on the other hand, aims to move its headquarters and combine several of its outlying offices into the downtown building that PwC is leaving.
Major projects downtown and throughout the city have also been delayed or reimagined as a result of the office market downturn.
One of the biggest development plans in the area, the Downtown West urban village project, was temporarily put on hold last year while Google reevaluated its schedule.
On 80 acres next to Diridon Station, the proposal planned a mixed-use urban village with 500,000 square feet of retail space, 7.3 million square feet of offices, and thousands of dwellings that could support tens of thousands of jobs.
Notwithstanding the difficulties, there is a significant chance for development in the downtown region, particularly in the vicinity of Diridon Station. City officials should invest billions of dollars to transform Diridon Station into a world-class transit hub in addition to BART and high-speed rail that are coming downtown. This would help them achieve their goals for both economic development and climate change.
Anchored around the SAP Center and the station, the 250-acre Diridon Station area may house tens of millions of square feet of business space and more than 12,000 residential dwellings.
In an effort to boost passengers and generate long-term income, Caltrain, like other transit organizations, has started to concentrate more on constructing transit-oriented development projects.
The initiative is also viewed as a benefit to the city if it is successful. The project would use union workers and generate $12 million in commercial linkage fees, which support the creation of affordable housing.
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