SAN JOSE — Kaiser has bought a big chunk of San Jose land, paving the way for a possible expansion by the healthcare titan at the location — a deal that also jolts prior plans for an office project on the choice site.
The land that Kaiser bought is located at 1601 Technology Drive in San Jose, a short distance from the interchange of State Route 87 and Skyport Drive.
Kaiser Foundation Health Plan paid $43.5 million for the vacant land site, according to documents filed on Nov. 21 with the Santa Clara County Recorder’s Office. Hudson Pacific Properties, acting through an affiliate, sold the land.
The purchase also paves the way for a possible Kaiser expansion in the area.
The just-bought land is next to a parcel that accommodates an existing Kaiser Permanente medical office building, Google Maps shows.
The transaction serves as a reminder that economic conditions have deteriorated for office properties in the Bay Area and Silicon Valley during a time of rising vacancy rates.
In 2018, at the height of the prior tech boom, Hudson Pacific proposed a nine-story office building totaling 350,000 square feet.
A steady stream of tech company expansions prior to the outbreak of the coronavirus made speculative office projects in the Bay Area appear to be a good bet.
The arrival of the coronavirus in 2020, however, doomed numerous plans for office projects.
The virus outbreak prompted state and local government agencies to impose wide-ranging business shutdowns that chased employees away from their workplaces.
Yet even after the effects of the coronavirus faded and the government lockdowns ended, employees returned to their workplaces at an uneven pace.
Plus, tech companies unleashed job cuts and shrank their building space footprints, causing office vacancies to hop higher.
The rising vacancies also made new office projects a risky bet and prompted real estate firms to forsake development endeavors.
The development of medical facilities, in contrast, became a more attractive proposition because healthcare firms are still pursuing sites for expansion.