“Home run” at Santana Row with new San Jose office buildings, Splunk expansion

SAN JOSE — Splunk, an up-and-coming tech firm, has officially
moved into a gleaming new office building at San Jose’s Santana
Row, whose principal owner and developer sketched a bright picture
for the iconic mixed-use complex on Tuesday.

The mixed-use retail, restaurant, office, hotel, residential,
movie, and entertainment complex in west San Jose has hit a “home
run” with its new 700 Santana Row office building that’s leased
to cloud services company Splunk, Federal Realty Investment Trust,
which owns Santana Row, told analysts during a conference call on
Tuesday.

“On the development side, we’re incredibly active with 700
Santana Row complete and just turned over to Splunk last week,”
Donald Wood, Federal Realty’s chief executive officer, said
during the conference call.

Splunk has leased two big office buildings at the southern end
of Santana Row. The 700 Santana offices that Splunk has just
occupied consist of 301,000 square feet. Splunk had previously
leased 500 Santana Row, which totals 235,000 square feet.

All told, the 536,000 square feet Splunk has leased in San Jose
could accommodate 2,700 Splunk employees.

“This building is a home run,” Wood said, referring to the
just-completed 700 Santana Row building.

Santana Row has effectively managed to reinvent itself yet
bolster its traditional offerings and establish itself as a
Northern California destination, even in the face of a forbidding
“retail apocalypse” that has chewed up the business models of
venerable brick-and-mortar merchants such as Sears and
Macy’s.

One crucial component of the development alchemy that has
transformed Santana Row: Two big office buildings that were
constructed, then swiftly leased up, primarily to Splunk.

Other key ingredients: Adding unique restaurants such as Blue
Bottle Coffee, Momosan Ramen & Sake, and Meso Mediterranean,
and tapping into a wave of interest in fitness outlets by signing
up companies such as Hot 8 Yoga, Barry’s Bootcamp, and
SoulCycle.

While a small merchant might leave Santana Row from time to
time, officials at the center say Santana Row is effectively
completely full.

Federal Realty has launched a major development project on the
west side of Santana Row with the first of several office buildings
that will become new tech campuses near the legendary Winchester
Mystery House.

“Across the street, at Santana West, construction is well
underway,” Wood said. The initial building is called One Santana
West and will total 360,000 square feet.

Federal Realty intends to spend $100 million on One Santana West
during 2020, another $150 million in 2021, with the first rental
income anticipated around 2022, Wood stated during the conference
call, which was held to discuss Federal Realty’s financial
results for the fourth quarter of 2019.

It appears Federal Realty has an excellent chance to land a
tenant for One Santana West.

“Strong interest in the building at this very early stage is
encouraging,” Wood told the analysts.

 

Source: FS – All – Real Estate News 1
“Home run” at Santana Row with new San Jose office buildings, Splunk expansion