Oracle to Occupy Three Floors of Downtown San Jose Office Tower




Submitted September 29, 2011, 6:50 PM


Sharon Simonson


Enterprise hardware and software maker Oracle Corp. has pulled building permits from the city of San Jose to complete tenant improvements on three floors at 488 Almaden Blvd., an 18-story glass high-rise that Oracle acquired when it bought BEA Systems Inc. in 2008.


The permit, which was approved by the city on Sept. 14, indicates that Oracle intends to occupy all or parts of the third, eighth and ninth stories of the tower totaling 65,000 square feet, said Chu Chang, the chief building official for the city. An Oracle spokeswoman did not return a telephone call or email seeking comment.


San Jose Mayor Chuck Reed said he is delighted that Oracle has decided to occupy a portion of the building, an invitation he had extended to Oracle President and Chief Financial Officer Safra Catz after Oracle first acquired the building. At that time, Catz did not indicate an interest, the mayor said.


“They have a lot of people who work way up on the Peninsula who live in San Jose, so it is a desirable location from that perspective,” Reed said. “We are happy to have them” now.


In all, 488 Almaden has 403,000 square feet. Its other major tenant is Big Four accounting and consulting firm PwC US, which announced in November 2010 that it would occupy 209,000 square feet in the tower beginning the following June. The company signed a 15-year lease and estimated that 1,300 PwC partners and professionals would work in the space and potentially more. PwC vacated 165,000 square feet at 10 Almaden Blvd., a building owned by Equity Office that is also downtown, when it made the move.


The Oracle news is a happy harbinger of better times to come for downtown San Jose, which continues to suffer the effects of the national economic downturn even as the broader Silicon Valley office market is recovering smartly. High-tech companies—those focused on software and services, technology hardware and equipment, and semiconductors and semiconductor equipment—lead the nation in job creation, according to new data from Jones Lang LaSalle. The high-tech sector has recorded the fastest U.S. job growth rate since February 2010, and high-tech services employment is now approaching 2.3 million people, up from 1.8 million in 2003 and 2004, its low point in the last decade.


The Almaden Tower is a symbol of sorts of downtown San Jose’s ups and downs since the dot-com boom and bust of the late 1990s and early 2000s. It was begun on a speculative basis by The Sobrato Organization, a large Cupertino-based office and apartment developer, in the waning days of the dot-com boom and delivered to market in 2002, another tough year for downtown. Over the last decade, various companies have considered leasing and buying it. Yet despite its spectacular appearance and state-of-the-art construction, it remained empty until PwC agreed to its lease with Oracle.


Oracle reported on Sept. 20 that it had seen a 12 percent increase in its first-quarter revenue to $8.4 billion. Net income was up 36 percent to $1.8 billion. Oracle owns its 2.1 million square-foot headquarters campus in Redwood City, according to its most recent annual report. It also owns and leases more than 27 million square feet nationally and internationally, though a fifth of it was being marketed for sublease, lease or sale at that time.


Pat Cisneros, a senior vice president for Ritchie Commercial who has specialized in downtown office leasing for the last 18 years, estimated that Oracle would bring 430 workers to downtown, based on an allocation of 150 square feet per person.


“Oracle will add more energy to downtown San Jose with about 400 to 500 extra employees on the streets using our restaurants, banks, retail,” she said. “Maybe some will purchase a new condo, so they can walk to work.”


The Oracle decision also illustrates the rising preference for companies to locate in vertical urban campuses instead of the traditional low-rise suburban campuses surrounded by parking lots that have been a corporate favorite, she said.


About 100,000 square feet remain available in Almaden Tower, Cisneros said. She is the leasing agent for downtown’s Fairmont Office Plaza at 50 W. San Fernando, where she has 50,000 square feet available.

 
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