SAN JOSE — Google has pushed ahead with efforts to salvage parts of older buildings as well as rescue complete historic structures that are within the footprint of the search giant’s downtown San Jose transit village.

The tech titan has offered the public pieces of the now-shuttered Patty’s Inn, whose roots as a downtown San Jose watering hole date back to the Great Depression.

Google also offered up for salvage sections of the former Sunlite Bakery Bread Depot building and will rescue the ornate entryway to the old structure, preserving the entrance elsewhere in the company’s project footprint.

Across the street from the bakery site, the old Hellwig Iron Works at 150 South Montgomery Street is expected to be preserved and creatively reused as a key component of Google’s new Downtown West neighborhood of office buildings, homes, shops, restaurants, hotel facilities, open spaces, entertainment centers and cultural loops.

“Google taking the time and opportunity to offer salvage of older buildings is commendable,” said Bob Staedler,  principal executive with Silicon Valley Synergy, a land-use consultancy. “It takes quite a bit of time and energy to make those salvage items available to the public. This effort shouldn’t be taken for granted.”

One of the numerous documents prepared in connection with the Downtown West proposal addressed Google’s plans to preserve several key buildings in the footprint of the game-changing project, where the search giant eventually intends to employ 20,000 to 25,000 tech workers.

The former Hellwig Iron Works building, constructed sometime around 1935, is one of the buildings that’s expected to be reused as it exists, although it’s likely some additions could be made to the structure.

After the ironworks closed its doors, Navlet’s Florists and a Taiko performance studio also operated in the distinctive brick building.

“150 South Montgomery Street, last occupied by San Jose Taiko, is being repurposed for adaptive reuse,” a Google spokesperson said.

It’s likely that the Hellwig Ironworks could be expanded as part of the building’s reuse, according to documents on file with city officials.

“One or more additions and adaptive reuse of the building to accommodate new arts and cultural uses” are envisioned as part of the Hellwig structure’s future, the city documents show.

Among the other historic or noteworthy buildings that are being retained, reused adaptively, or relocated:

• Kearney Pattern Works and Foundry at 40 South Montgomery Street, constructed in 1922. The historic sections of the building will be relocated about 30 feet to the south. “Once relocated, the building would be expanded and adaptively reused to accommodate new retail, cultural, arts, education, and/or other active uses,” the city report stated, with the new frontage on Montgomery Street. The non-historic portions of this building on South Autumn Street would be demolished.
• San Jose Water Works building at 374 West Santa Clara Street, constructed in 1934. The building is being preserved and renovated.
• Stephens Meat Co. “dancing pig sign.” Google removed and preserved the iconic sign that for decades was a fixture near the Diridon train station and the SAP Center. The sign, temporarily at San Jose History Park, will eventually find a permanent long-term home in the Downtown West project.
• Sunlite Bakery at 145 South Montgomery Street, constructed in 1936. Google has decided to rescue the Art Moderne-style entrance of the structure and relocate it elsewhere in the company’s new transit-oriented neighborhood.

The office building is slated to become “a cornerstone of the Downtown West neighborhood that we are developing,” Kent Walker, president of global affairs of Google owner Alphabet, said in April 2022 during a San Jose event to discuss the tech titan’s investments in the Bay Area.

The preservation of so many historic and existing prominent buildings will help Google’s new neighborhood to blend in with the existing areas on the western edges of downtown San Jose, in Staedler’s view.

“This shows a commitment to honoring the historical elements of San Jose while making way for the next evolution of the Diridon Station area,” Staedler said.

At present, Good Sam hospital accommodates 273 beds on the grounds of the healthcare organization’s campus at 2425 Samaritan Drive in southwest San Jose.

Once complete, the new campus would contain 419 beds, according to plans on file with San Jose city officials.

“HCA seeks a new planned development zoning to replace the existing zoning to address seismic retrofit requirements as required by Senate Bill 1953, to modernize hospital facilities and to improve access to comprehensive healthcare for the growing population,” Elizabeth Cobb, a senior project manager with Kimberly-Horn, a planning consultant for HCA for the hospital expansion.

The total building area at the future Good Samaritan medical complex would be slightly under 1.37 million square feet, compared with the current campus which totals 450,700 square feet, the city plans show.

That’s slightly more than three times the size of the existing campus, according to the plans filed by Good Samaritan Hospital, whose owner is Tennessee-based HCA Healthcare.

The project also envisions an interim size for the campus. In the interim phase, the Good Sam complex would total 378 beds and consist of 710,700 square feet.

The existing Good Sam complex provides 1,031 parking stalls. The proposal would eventually create a complex with 2,422 stalls.

Good Sam and HCA Healthcare want city officials to completely rezone the entire 21-acre site that accommodates the existing hospital as well as the future expansion buildings and parking facilities.

In its final phase, the project would add a medical office building totaling 200,000 square feet.

The expansion project is being undertaken largely to comply with the requirements of SB 1953 which obliges all hospital buildings to meet certain seismic safety requirements by a deadline.

Among other key changes that would arise from this proposal, once the expansion is complete:

• The existing main building would no longer provide general acute care services by Jan. 1, 2030.
• The women’s and children’s center may continue to provide general acute care services after Jan. 1, 2030.
• An existing daycare center totaling 7,000 square feet would no longer exist on site after the expansion is complete.

“Reconfiguration of Good Samaritan Hospital needs to consider and evaluate expansion options of the diagnostic and treatment functions, new medical offices and backfilling the existing main hospital building with ancillary support services so as to provide for a comprehensive healthcare campus,” HCA and Good Sam stated in the planning documents.

The hospital rooms in the new main medical center are likely to be considerably larger than the existing rooms.

“Currently, Good Samaritan Hospital does not have any private patient rooms,” Good Sam and HCA stated in the planning documents. “Today, private patient rooms are the norm and are now recommended” in the Facility Guidelines Institute recommendations for the design and construction of healthcare facilities.

In addition to private and bigger rooms at hospitals, operating rooms, as well as diagnostic and treatment departments, have become larger, the planning documents stated.

The project’s initial phase would be the expansion of the diagnostic and treatment functions, and to shift some support services to the existing main hospital building, the planning documents state.

Construction of the first phase of the expansion should be complete by 2029, according to the proposal.

“The proposed improvements are necessary to allow HCA to continue providing high-quality care to the community,” Cobb wrote in the project overview.

The Pacific, as the residential project is known, is deemed to be in a prime location in downtown San Jose, and has received final city approval.

CBRE, a veteran commercial real estate firm, has been hired to market the choice property. CBRE executive vice president Jef Henderson and first vice president Jon Teel are leading the sales effort. CBRE executives Andrew Behrens and Jesse Weber are providing debt and finance expertise in the selling endeavor.

“This property is in the epicenter of growth and development in downtown San Jose,” Teel said.

The highrise housing is being eyed on a property that’s a former Greyhound bus terminal on the corner of South Almaden Avenue and Post Street.

Despite the apparent advantages of the site as a housing development, the project’s principal owner and developer, Z&L Properties, has yet to break ground.

“Putting the Greyhound station site on the market and a transaction to buy it is inevitable,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy. “If you look at their track record, Z&L just doesn’t have the wherewithal to develop properties.”

The developer’s inability to break ground fits a pattern. Z&L Properties has struggled mightily with its Bay Area property portfolio, which is located primarily in downtown San Jose and San Francisco.

The China-based company has completed just one Bay Area project, a double-tower housing highrise in downtown San Jose near San Pedro Square with roughly 640 units. Only one tower is available for occupancy.

The company has also proposed a pair of housing highrises and the revamp and rescue of a historic church at 252 N. First St. in San Jose. Neither tower has been built and the old church is covered by a tattered black tarp.

In 2021, Z&L Properties yielded ownership of one of its development sites, a 1.6-acre property near the corner of Terraine Street and Bassett Street. Z&L’s plans for a big residential tower at that location had stalled.

An alliance led by global developer Westbank, local developer Gary Dillabough, and San Jose-based Terrascape — a firm headed by real estate veterans Tony Arreola and Mark Lazzarini — paid $11.4 million for the choice Terraine Street parcel. The property is in a downtown district known as the North San Pedro neighborhood.

The Greyhound terminal site that’s up for sale has received final approval from the city for the development of 708 housing units. The property has addresses ranging from 60 to 70 South Almaden Avenue in San Jose.

The attempt to sell the Greyhound site arrives at an uncertain time for Z&L Properties.

Zhang Li, a real estate tycoon and principal executive with Z&L Properties, was detained in London in December 2022 in connection with a U.S. investigation into possible kickbacks and bribery involving a project in San Francisco.

A court in London was told last month that Zhang was wanted in the United States over an investigation into the payment of bribes to San Francisco city officials linked to the granting of permits for a project in that city.

Despite the legal turmoil that swirls around Zhang, the prospects could be favorable for the bus terminal development site.

“As one of the most dense development sites” in downtown San Jose, “this will be the future anchor of a whole neighborhood spiraling around the old Greyhound site,” said Mark Ritchie, president of Ritchie Commercial, a real estate firm.

A new owner of the Greyhound property would control a site near and next to several office towers whose occupants might want to live near their workplace.

“You don’t want to have 50,000 people coming into downtown San Jose every weekday and then 50,000 people leaving every night,” Teel, the CBRE executive, said. “You want people to be able to live, work and play downtown.”

Among the existing and future office projects in downtown San Jose that could bolster the new housing development:

• Adobe is preparing to move into a new office tower at 333 West San Fernando Street where the tech titan would employ thousands.
• An office tower at 200 Park Avenue has been completed by veteran Bay Area development firm Jay Paul Co.
• Park Habitat, a tower with offices and gardens at 180 Park Avenue, has broken ground. Global mega-developer Westbank and local developer Urban Community are working to build this project.
• A mega campus bounded by Almaden Boulevard, West San Fernando Street, South Market Street and Park Avenue has been proposed by Jay Paul.

Google continues to push ahead with its development of a new neighborhood of office buildings, homes, restaurants, shops, entertainment sites, cultural loops and open spaces near the Diridon train station and SAP Center, where the search giant could employ up to 25,000 tech workers.

“The Greyhound site is a good location for residential,” Staedler said. “A larger residential population is desperately needed in downtown San Jose.”

The production operation will move to Bishop Ranch 15, which has addresses that range from 12647 to 12677 Alcosta Blvd. in San Ramon.

The relocation to San Ramon is expected to occur this summer and marks another high-profile corporate departure from San Francisco.

“The studio will focus on live sports content with the facility being built with cutting-edge production technology,” the organization said. “The office is expected to welcome more than 100 staffers and freelancers on busy game days.”

The Pac-12 leased about 42,000 square feet in Bishop Ranch 15, the sports organization stated. The athletic conference owns and operates the Pac-12 Network, which features various sporting events involving member schools, as well as numerous regional channels that spotlight local teams.

The conference will shrink to 10 schools in 2024, when UCLA and USC will join the Big Ten conference as part of a wave of realignments that occured nationwide in recent years. The remaining schools, including UC Berkeley and Stanford, are currently negotiating what is expected to be a sizable new media contract, though the effect on basketball and football games previously aired on the network is unclear.

“For the Pac-12, this is not an office, it’s a studio,” said Alex Mehran Jr., president of San Ramon-based Sunset Development, the principal owner and developer of the Bishop Ranch office, retail, restaurant and hotel complex.

“They are building out a very significant studio here,” Mehran Jr. said. “This is an important brand to have for our region. It’s kind of cool to get this deal done with this kind of creative organization.”

The Bishop Ranch 15 office complex will be the new home for the Pac-12 state-of-the-art broadcast and content production facility, along with flexible workspace and meeting rooms for in-person meetings and events.

“This is the kind of creative use that you would normally have expected in San Francisco or Berkeley,” Mehran Jr. said. “Here they have a location and a setup in a place that’s safe and is in a great place to come to work.”

Bishop Ranch attracted another high-profile creative company in a sign that the business park continues to diversify its tenant basis.

In recent years, Striking Distance Studios signed a lease for space in Bishop Ranch at 6111 Bollinger Canyon Road. Striking Distance is a video game maker that developed “The Callisto Project,” a recently-released survival horror game.

Pac-12’s production studio and Striking Distance, along with other unique tenants such as The Lot cinema complex and Equinox fitness center, have landed in recent years at City Center Bishop Ranch.

City Center, by adding numerous restaurants and shops, has effectively become a downtown for San Ramon.

Bishop Ranch management also took steps to retain Chevron, a major occupant at the business park, with a deal to pay $174.5 million to buy the energy titan’s Chevron Park headquarters complex.

As part of that deal, Chevron agreed to lease nearly 400,000 square feet in the BR 2600 office complex in Bishop Ranch, a rental transaction that enables Chevron to keep its world headquarters in San Ramon.

Deals such as the Pac-12 production center are crucial in a post-coronavirus world where more than a few traditional corporate tenants are eyeing numerous ways to scale back their office space.

“With what’s happening in the office market, we are looking for a lot of different kinds of uses to be tenants at Bishop Ranch,” Mehran Jr. said.

The Oakland-area office vacancy rate was 18.6% during the October-through-December fourth quarter of 2022, according to a new report from CBRE, a commercial real estate firm.

The latest vacancy rate was up from a 17.4% level in the July-through-September third period. The Oakland area includes downtown Oakland, Oakland’s Jack London Square district, the Oakland airport area, Berkeley, Emeryville, Richmond and San Leandro.

Downtown Oakland endured the region’s highest office vacancy rate in the fourth quarter of 2022 at 25.3%, CBRE reported. That was up from 24.1% in the third quarter of 2022.

Emeryville posted a 23% office vacancy rate in the fourth quarter, which was a big jump from the 18.1% vacancy rate in that city in the third quarter.

Among other notable markets in the area: Office vacancies during the fourth quarter of 2022 were at 12.6% in Berkeley, 12.5% in Richmond and 11.7% in Oakland’s Jack London Square district.

Three markets managed to post single-digit office vacancy rates: the Oakland airport area was at 9.9%, Alameda was at 7.2% and San Leandro was at 4.1% in the fourth quarter.

Office rental rates were a bright spot in the report. Asking rates for office space in the Oakland market area were $4.52 a square foot per month during the fourth quarter, an increase from $4.50 a square foot in the third quarter.

The region’s largest office lease in the fourth quarter occurred in Alameda, where Exelixis leased 100,300 square feet at 1410 Harbor Bay Parkway.

CBRE stated that no notable office purchases occurred in the market during the final three months of the year. The real estate firm blamed macroeconomic challenges for this slowdown.

Despite the feeble purchasing activity over the final three months of the year, CBRE experts believe that buyers might emerge in more robust numbers in the next several months as prices weaken for office buildings and pressure intensifies on owners to sell their properties.

“Buyers eagerly await price discovery and distress opportunities, all of which will begin to present themselves in 2023,” CBRE stated in the report.

Those were among the unsettling takeaways in a new report about the South Bay office market that was released by the San Jose office of CBRE, a commercial real estate firm.

“The Silicon Valley office market had a slow finish to end 2022,” CBRE stated in a report that covered the October-through-December fourth quarter of last year.

The office vacancy rate in Silicon Valley was 14.1% during the final three months of 2022, which was higher than the vacancy rate of 13.6% for the July-through September third quarter of last year, CBRE reported.

“The current state of the economy impacted headcount decisions, and layoffs continued,” CBRE stated.

Despite the uncertainties, well-heeled investors bought some high-profile office buildings, especially those with big-time tech companies as the tenants.

One case in point: In October 2022, Germany-based Union Investment Real Estate GmbH and Seattle-based Metzler Real Estate Advisors teamed up to pay $222 million for a big Sunnyvale office complex that’s leased to tech titan LinkedIn. The complex has addresses of 684 W. Maude Ave., 686 W. Maude and 480 N. Pastoria Ave. in Sunnyvale.

CBRE’s survey determined that smaller office lease deals provided the primary propellant for South Bay rental activity for office space during the fourth quarter of 2022.

“Approximately 63% of the total transaction square footage came from deals under 10,000 square feet,” CBRE reported. “Notably, there were no deals signed exceeding 100,000 square feet.”

Santa Clara had the grim distinction of being the weakest South Bay office market during the fourth quarter, with a vacancy rate of 26.2%, CBRE researchers determined.

Downtown San Jose, still haunted by the side effects unleashed by government-ordered business shutdowns to combat the coronavirus, also posted a relatively high office vacancy rate of 17.4%, according to the commercial property brokerage’s survey.

The four office markets with single-digit vacancy rates during the fourth quarter were Sunnyvale, 4.7%; south San Jose, 4.9%; Cupertino, 5.2%; and Milpitas, 6.4%.

Fourth-quarter asking rents for office space came in at an average of $5.65 a month per square foot, which was unchanged from the third quarter, CBRE reported. The $5.65 figure was also unchanged from the third quarter of 2022.

“Many companies continued to evaluate their current footprints and held off on expanding,” CBRE reported. “It is expected they will defer real estate decisions as economic uncertainty continues into 2023.”

The proposed development would be built at 5670 Camden Ave. in south San Jose, the city planning documents show.

The affordable housing project would consist of 136 residences and a self-storage center at that location, near the corner of Camden Avenue and Blossom Hill Road.

Three educational centers — Delight Montessori School San Jose, Beacon School and Cinnabar School — are located next to the site where the development would occur.

Two development firms, Santa Clara-based Roem Corp. and Insite Property Group, based in the Southern California city of Torrance, have teamed up to float the project proposal at San Jose City Hall.

John F. Font Ph.D. Associates and Beacon School currently own the property, a Santa Clara County property database shows.

The overall project site totals 10.7 acres, which includes the existing school site and the proposed locations for the affordable homes and the self-storage center.

The Roem and Insite development alliance intends to request that the city modifies the general plan for the parcel.

The preliminary proposal on file with the city is being floated as a way to gauge feedback from city political leaders, municipal staffers and the local neighborhood.

The neighborhood where the project could rise consists primarily of single-family homes and apartment buildings, although several neighborhood retail centers are in the immediate vicinity. Westfield Oakridge Mall, Almaden Plaza and Princeton Plaza Mall are a few miles away.

The building, located at 826 North Winchester Boulevard in San Jose, had been scheduled to be auctioned off on Jan. 6, but the sale was canceled on Dec. 29, soon after it landed two new loans.

The new loans provided a combined $1.23 million in financing to an affiliate headed up by Kenneth Ryan Koch, a Grass Valley resident.

Tengjun Wang IRA provided about $728,300 in financing for the property and Emerson Vista provided $505,000 in funding, documents filed on Dec. 15 with the Santa Clara County Recorder’s Office show.

A posting by the trustee in the pending foreclosure showed that the auction of the property was canceled as of Dec. 29.

A loan default notice that Socotra Capital, the principal lender for the property, had filed appears to remain in effect, however.

In December 2021, Socotra Capital provided a $6.45 million loan to finance the property. Until several days ago, Socotra was preparing to offer the property for auction or to seize it through foreclosure.

Since the start of the coronavirus outbreak nearly three years ago, the building has had a trio of owners and faced two foreclosure proceedings.

Numerous property transactions show that many investors still hunger for Silicon Valley office buildings despite current economic uncertainties.

Even so, the delinquent loans that have plagued the property are a reminder that more than a few commercial properties in the Bay Area are mired in financial woes.

The current string of owners for the property originated in the spring of 2020, a review of county real estate records shows.

Kenneth Colbert, a Redondo Beach-based real estate executive, paid $8.25 million for the building in March 2020. That was the first month of coronavirus-linked business shutdowns crafted to combat the spread of the deadly bug.

At the time of the purchase, a Colbert-headed affiliate obtained a $6.1 million loan to finance the acquisition.

Eventually, the property’s mortgage became delinquent and the building was auctioned off through a foreclosure proceeding.

In June 2021, a group headed by Los Gatos-based Sridhar Capital paid $2.9 million to buy the office building during the auction.

In December 2021, the affiliate headed up by Kenneth Ryan Koch paid $10.75 million for the property. At the same time, the Koch-led group also obtained the financing of $6.45 million from Socotra for the office building’s purchase.

Koch has not responded to requests from Bay Area News Group for comment regarding the situation.

Two of the recent owners of the property envisioned the 0.6-acre location as a site where housing development could occur.

In May 2022, Kenneth Ryan Koch’s group proposed a five-story mixed-use development that would have included housing.

The two mixed-use projects were never built. The city planning records indicate that neither proposal received municipal approval.

The office center, known as Winchester Professional Building, stands empty and is bordered by a chain-link fence. Graffiti mars multiple walls of the structure.

The group, acting through an affiliate, paid $11.9 million to buy a San Leandro site where an auto dealership operates at 1444 Marina Boulevard, according to documents filed on Jan. 5 with the Alameda County Recorder’s Office.

San Leandro Chrysler Dodge Jeep RAM operates on the 4.1-acre San Leandro site, which was just bought by Salty San Leandro, the purchasing affiliate. Carlos Hidalgo, a vehicle dealership executive, heads up the affiliate that bought the property.

Hidalgo is chief executive officer of Fifth Wave, which owns the San Leandro Chrysler Dodge Jeep RAM dealership in the East Bay and Stockton Hyundai, a dealership in San Joaquin County.

The affiliate bought the San Leandro auto dealership property in an all-cash deal, the Alameda County records show.

The new owners of the San Leandro dealership site had their eye on the property for some time before finally being able to buy it. The site is near the interchange of Insterstate 880 and Marina Boulevard and is across the street from the Marina Square retail center, which includes a number of discount retail outlets.

FCA Realty, which is a unit of Stellantis, a Netherlands-based auto manufacturer whose brands include Chrysler, Dodge, Jeep and Ram, sold the site to the Hidalgo-led purchasing group. FCA Realty is also a unit of Fiat Chrysler Automobiles.

Fifth Wave is confident in the prospects for the Bay Area auto sales and property sector.

“We see the Bay Area as a very good market for us,” Walla said. “We really like this property and this location.”

The first phase of Tamien Station, a transit-oriented residential development, has been awarded $64 million from the California Debt Limit Allocation Committee, according to the project’s developers.

Two veteran real estate developers, The Core Cos. and Republic Urban Properties, have teamed up to develop multiple phases of a residential project that is slated to sprout at 1197 Lick Ave. next to the Tamien train station in San Jose. Tamien Station is served by Caltrain, light rail and buses.

The project would produce 135 affordable housing units, the developers said.

Along with the $64 million, the project has also landed financing to the tune of $28.7 million from the Affordable Housing and Sustainable Communities program, $25 million from Santa Clara County and $17.25 million from the city of San Jose.

“Tamien Station is truly a community-defining project,” said Vince Cantore, vice president of development with Core Cos. “We couldn’t be more grateful to our financial partners for helping the project advance to this critical point.”

The funding from the state government means the project now has all the financing it requires to launch construction, according to Cantore.

The 135 affordable apartment units will be family-oriented units featuring one-, two-, and three-bedroom units set aside for people whose household incomes range from 30% to 60% of the area median income. An estimated 67 of these units are allocated for the rapid rehousing of individuals.

The developers hope to break ground on the 135 units sometime during the second quarter of this year, between April and June.

The affordable apartments represent the first phase of the project. Homes that will be offered at market rates will be part of the second phase of the development, according to Core Cos. and Republic Urban.

This first phase is expected to be completed by sometime in 2025, the developers estimated.

The 1.6-acre site where the housing would rise is located on a parking lot that’s owned by the Santa Clara Valley Transportation Authority.

“This project advances VTA’s goal for 40% of all housing built on its transit-oriented development sites to be affordable,” said Ron Golem, VTA’s director of real estate.