Verizon Wireless has been searching for office space and eyeing large projects in San Jose for months, but now it has zeroed in on Coleman Highline, a 1.5 million-square-foot office development near the city’s airport, according to several sources with knowledge of the discussions.
As of Friday, there’s no indication that New York-based Verizon has signed a lease just yet, but industry insiders say a deal is likely to be inked in short order. The telecommunications company has been looking for more than 600,000 square feet of space in the South Bay city, according to industry sources, and market experts say it’s no surprise the company landed on the still-under-construction Coleman Highline.
“They had half a dozen choices, and less all the time,” Phil Mahoney, executive vice chairman for Newmark Knight Frank, said of the lease rumors Friday.
Edmund Najera, executive managing director at Newmark, agreed with Mahoney’s assessment. “The reality is that everything that has been brand new construction is frankly spoken for,” he said.
But Coleman Highline, though it’s one of the few in San Jose that can offer more than 600,000 square feet in a single campus, isn’t a last resort, Najera added. Nearly 735,000 square feet in four office buildings and an amenities building has already been claimed by video streaming technology company Roku, and much of that space isn’t completed yet.
“It is a fantastic option that is newer construction in a great location in walking distance to transit with the light rail and Caltrain,” Najera said.
Representatives for Hunter Properties, the Cupertino-based developer behind Coleman Highline, declined to comment for this story.
But in April, the company submitted plans and an application to build get started on two more office buildings in the multi-phase development that will eventually include eight buildings alongside up to two new hotels and three secured parking structures. Industry insiders say Verizon is expected to take both of those buildings, totaling more than 667,000 square feet. Using conservative estimates of one employee per 200 square feet, the buildings could accommodate around 3,340 employees.
San Jose city officials are slated to vote on the development submittal next month, a decision that could allow Hunter Properties to start construction as early as this summer.
That’s key because few developments are poised to come online as quickly as Coleman Highline, Mahoney said. The next development set to come online with space for companies to lease in San Jose will likely be Jay Paul’s massive vision for the city’s downtown, where the San Francisco-based developer is looking to build more than 4 million square feet between two properties. Mahoney is the leasing broker for those projects.
If Verizon looked outside of San Jose, they’d find “a few” more options that could potentially satisfy its 600,000-square-foot space needs, Mahoney noted.
Today, Verizon has its Silicon Valley outpost along Trimble Road in San Jose. It’s unclear whether the anticipated move to Coleman Highline would be an expansion or a wholesale move.
Roku, previously headquartered in Los Gatos where it subleased space from longtime business ally Netflix, is moving its headquarters to the developing business park near the border of San Jose and Santa Clara. The company has started moving into at least one of the buildings.
Notably, news of the pending lease comes as Yahoo Inc., which is owned by Verizon, owns a spate of land in Sunnyvale, where the company has long had the city’s blessing to build new office space. Nothing has risen on the site to date, causing some to speculate that the company may opt to sell the property and its entitlements rather than build the office space on its own.
That would be a similar move to what Yahoo did with a 49-acre property at 3005 Democracy Way in Santa Clara. There, Chinese developer Kylli is now attempting to expand on the 3 million square feet of office space that Yahoo got approval to build years ago. Kylli has proposed a massive mixed-use community with as many as 6,000 residential units, park space and retail that could rise in buildings as tall as 400 feet.
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