The best bet ever made with public money in the glory days of the San Jose Redevelopment Agency (RDA) was the $35 million subsidy used to lure Adobe Systems headquarters from Mountain View to downtown San Jose in 1994. Maybe the best bet in any city in America.
As we lick our wounds from the delayed massive Google Downtown West project and read the daily doom-line news about massive tech layoffs, how incredible is it that Adobe just opened its third “Founders Tower” of over 1 million square feet, doubling the size of its footprint downtown. Not a dime of public money. It glows like a Bauhaus birdcage with all the Adobe colors visible inside at night as you drive north on Highway 87, hats off to designer Gensler. Even the garage cladding works with its somewhat Mayan look, sort of a Temple of Parking-Itza.
We hear from inside sources that the entire campus is packed to the gills with a hive of workers toiling away at the tip of the artificial intelligence-machine learning spear. It’s not just PDFs they are sending out from their fortress-like offices anymore, that era now seems like Mayberry R.F.D.
But the entire project was a cliff-hanger that happened against huge odds. When the conversation first started between San Jose officials and Adobe it was the most daunting project for redevelopment yet to date. The site had to be huge and contiguous, and there was a short timeline against many competing options for Adobe. As witnessed by Google and the city assembling 80 acres in today’s economy for Downtown West, the massive scale needed for the largest tech employers in the valley easily exceeds the massing possible on any one typical downtown city block. Thus, the sprawling, and wasteful, suburban campuses that still dominate.
The only site that matched was the corner five acres on which the original two towers now stand. Much of that oversized block of land was owned or controlled by RDA as a remnant of the wholesale demolitions in the 1970s that first cleared much of downtown of its past, sadly, to create barren sites for the always assumed massive future growth. Most of the Adobe site was the home of the gorgeous, but abandoned and huge seismic risk Notre Dame School.
There was a catch, a big one, at the corner of Park and Almaden without which the whole Adobe site would’ve failed.
A newly formed bank with deep local community roots and investors, Heritage Bank of Commerce, had just purchased and completely renovated at great expense the one existing corner building and surface parking lot not owned by RDA. This two-story, marble clad 25,000 square-foot gem from the 1970s was originally built as the local headquarters for dominant Security Pacific Bank and a source of great civic pride in the nascent days of RDA. Heritage Bank bought it with partners, it was a big risk for all, and then performed a spectacular art-based renovation to launch the bank, still in business today. As the broker involved on all sides and an early bank shareholder it was a grand time, wine and hors d’oeuvres flowing for all.
Literally the month the doors opened, then-RDA boss Frank Taylor rang up the outspoken new bank CEO and informed him the RDA planned to purchase the site and demolish the building for the planned Adobe HQ construction. I believe his response was “over my dead body” or thereabouts. And RDA of course had eminent domain rights to take the body to court if necessary.
But the bank reminded RDA and the lawyers that indeed the site had already gone through the RDA process to accommodate the very building it bought and you can’t “redevelop” something twice. I am no lawyer, but I bet who would have won that contest.
After a Rubik’s Cube of trying to settle the matter with money and no luck finding a new home for the bank, I knocked on the doors of a certain Japanese-based bank in what was then called Park Center Plaza across the street, as I had noticed that they never seemed to have any customers. Against the wishes of a recalcitrant building owner who would gain nothing from the move, the bank assumed that lease, but only on the condition that it could get unheard of signage rights on the top of the building.
The owners protested loudly and quoted the existing signage laws, but RDA and the San Jose City Council literally rewrote the signage ordinance over a weekend to force the owner’s hands and allow the sublease and subsequent move to 150 Almaden and clear the full site for Adobe.
Ironically, that building and the 12 others on the renamed “City View Plaza” block are now all abandoned and fenced off for the indefinitely delayed Jay Paul mega block that was planned there. I have dubbed it “Pripyat Plaza” for those of you who watched the Chernobyl series, sad to see.
So let us rejoice in the forward-looking pick that brought us Adobe, think of the other bright tech stars with public subsidy that flamed out—Solyndra anyone?
But lastly, I recall having a drink with genius Adobe founder Chuck Geschke at a San Jose Museum of Art board Christmas party just after his new HQ opened. I asked him, “Chuck, does your heart soar when you drive down the road see your logo towering over the city?” His response: “Frankly Mark what warms my heart is the net occupancy cost of $1 per square foot.”
Spoken like a true engineer.
San José Spotlight columnist Mark Ritchie is the owner of commercial real estate brokerage firm Ritchie Commercial, and has spent his entire career in commercial real estate. His columns appear every second Wednesday of the month. Contact Mark at [email protected].