Oracle (ORCL) has moved into a large office tower in downtown San Jose around the corner from the convention center, giving the software giant its first presence in the city’s urban core.
The tech titan declined to comment on the move but is expected to populate the downtown high-rise with 265 to 440 employees. That’s based on typical employee and office space ratios in San Jose.
“This is great,” said Lee Wilcox, downtown manager for San Jose’s Economic Development Office. “A huge name like Oracle moving into the area really helps the downtown.”
Redwood City-based Oracle inherited the empty building in 2008, when it paid $8.5 billion to buy BEA Systems. The 18-story building totals 403,000 square feet.
In the years after the BEA deal, Oracle worked to find tenants for the vacant tower, which it bought for an estimated $58 million, based on this newspaper’s analysis of property records. But only in the past year or so has Oracle been able to gain traction in enticing tenants.
In November 2010, PwC, also known as PricewaterhouseCoopers, announced it would move into the building, leasing 209,000 square feet. In December, Oracle completed its move into 66,000 square feet, occupying three floors.
Only about 39,000 square feet — or less than 10 percent of the tower — is now vacant. The high-rise, commonly referred to as the Sobrato building, was developed by the Sobrato firm in 2002.
“Oracle and Pricewaterhouse bring a lot of young professionals into the downtown district,” Wilcox said.
These and other deals also help gobble up empty buildings in San Jose.
“This definitely helps the downtown,” said Anne Ralston, a senior vice president with Cornish & Carey Newmark Knight Frank. “We are starting to see companies expand downtown or move there.”
At the end of 2011, the vacancy rate for downtown office space was just under 26 percent, Cornish & Carey reported. That’s an improvement from the end of 2010, when downtown San Jose had a 31 percent vacancy rate and from mid-2011, when the rate was 30 percent.
New office tenants also mean activity for nearby merchants.
“The more bodies downtown, the better,” said John Machado, a senior vice president and retail specialist with Colliers International. “These employees will obviously filter into the downtown restaurants and bars; they will use services and banks there.”
Software giant Adobe Systems (ADBE) has its head offices in downtown San Jose at 345 Park Ave.
Some smaller tech firms have been expanding there as well. Xactly recently leased 30,000 square feet at 225 W. Santa Clara St., an expansion from its previous space of 25,000 square feet. Xactly has more than 100 employees downtown, which is 40 percent more than a year ago, and intends to hire more.
“Every business, every employee coming into the downtown helps spread awareness about downtown San Jose,” said Geri Wong, a senior vice president with Cornish & Carey. “People won’t eat at the same place every day. They will venture out. You will have a ring of activity that expands from the office building.”
Contact George Avalos at 925-977-8477.
