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Google village deal in downtown San Jose unleashes property value jump

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Google village deal in downtown San Jose unleashes property value jump

By GEORGE AVALOS | gavalos@bayareanewsgroup.com | Bay Area News
PUBLISHED: September 16, 2021 at 5:45 a.m. | UPDATED: September 16, 2021 at 7:57

SAN JOSE — Google’s proposed new neighborhood on the western edges of downtown San Jose appears to have fueled a sharp jump in property values for a choice site within the search giant’s development footprint.

A big Google-owned property that’s often known as the Water Company Site is now more than twice as valuable as it was before the search giant bought the property, this news organization’s analysis of public records on file in Santa Clara County shows.

The search giant intends to develop a game-changing transit-oriented neighborhood of office buildings, homes, shops, restaurants, hotel facilities, parks, entertainment hubs and cultural loops in downtown San Jose.

Downtown West is the name of the Google transit village, which would sprout near the SAP Center and Diridon train station and stretch for a mile in a narrow footprint.

To acquire the land needed for the new neighborhood, which is known as Downtown West, Google has purchased an array of office buildings, industrial sites, commercial properties, parking lots, residential parcels and vacant properties.

The property purchases began in December 2016, when Google bought an old telephone company and bakery building on South Montgomery Street.

Google, based on a compilation of recorded deeds to formally document the search giant’s acquisitions, has spent at least $459 million on the acquisitions.

Yet it appears that Google has actually plunked down more than that amount. A review of the assessed values for the 14 parcels that make up the Water Company site points to more than $500 million in spending by Google for the Downtown West properties.

This estimate arises from a review of the property values that county officials have posted in the wake of the tech titan’s largest single purchase, a big lot near the corner of West Santa Clara Street and Delmas Avenue known as the Water Company Site.

This property consists primarily of a big surface parking lot as well as the historic San Jose Water Co. building at 374 W. Santa Clara St.

What is certain about the site is that in 2015, an affiliate of developer Trammel Crow called Diridon Station Joint Venture paid $58.5 million to buy the property from Adobe.

Another certainty: The current property value for the site is $130.7 million, a figure derived by compiling the assessed values for the 14 parcels that make up the Google-owned property.

The next certain event for the site occurred in 2018 when Google gained ownership of the property from the Trammel Crow affiliate. However, through a complex ownership maneuver, the price that Google paid to gain control of the key site wasn’t publicly — or officially — disclosed.

State government business records and county documents show that Google now owns the Trammel Crow affiliate — and all of the assets owned by the affiliate. The only assets owned by the Diridon Station Joint Venture affiliate are the parcels that make up the Water Company site.

A mixed-use project of office and housing towers is planned on the property. The historic one-time headquarters of San Jose Water Co. will be retained through the development.

The Water Company site transaction is far from the only example of how Google’s purchase efforts have helped to fuel increases in property values in the footprint of the future neighborhood.

In early 2020, Google paid $2.8 million for a residence at 311 and 313 N. Montgomery St., which was 2.7 times the $1.05 million that the seller had paid for the home in 2018. The seller, Marilou Rayngay of El Dorado Hills, bought the house well after Google’s purchasing activities in downtown San Jose had come to light.

Prior to December 2016, the old phone company building, due to arcane rules for property taxes levied on properties owned by Pacific Bell, wasn’t generating any property taxes and had an assessed value of zero dollars.

After Google bought the phone company property at 145 S. Montgomery St., the assessed value rocketed up to $48.7 million.

Full article by George Avalos: https://www.mercurynews.com/2021/09/16/google-village-downtown-san-jose-property-value-jump-real-estate-tech/