Transit agency hunts for much bigger chunk of South Bay office space

SAN JOSE — A major Bay Area transit agency has suddenly begun to scout for much more office space than first requested to accommodate its headquarters, administrative offices and meeting hub.

The Santa Clara Valley Transportation Authority is now hunting for as much as three times as much office space as its original requirement, according to real estate documents obtained by this news organization and confirmed by several commercial property experts.

The VTA now is looking for as much as 500,000 square feet of office space near a light rail line in the South Bay, according to an updated request for proposals being circulated by Colliers, a commercial real estate firm that is advising the transit agency in its search for a new headquarters.

Previously, the VTA had been seeking 75,000 to 150,000 square feet of offices for its new administrative hub.

Plenty of South Bay markets have buildings that could accommodate a tenant requiring 500,000 square feet near a light rail stop.

The downtown San Jose office vacancy rate is 31.5%, according to a July 2024 report from CBRE, a commercial real estate firm. The overall South Bay office vacancy rate is 16.5%.

“The intended use for this facility is office and administrative work,” according to the VTA headquarters request documents that Colliers is circulating. Colliers brokers Grant Zamudio, Paul McManus, Kevin Moul and Mike Lee are representing the VTA in its hunt for space.

VTA is eyeing 2026 as the target year to move into the new offices. The VTA is hoping to receive the “best and final proposals” for the space by Sept. 18, the transit agency stated. A deal has yet to be negotiated for a specific building.

The transit agency’s quest for new headquarters is surfaced at a time when the VTA has encountered wide-ranging criticism and skepticism over its attempts to bring a BART extension into downtown San Jose.

The BART project has lumbered past its budget targets multiple times and is under scrutiny due to runaway costs.

In the latest iteration of the VTA headquarters search, the transit agency insists that the future administrative hub be within 2,000 feet of a light rail line. The original request specified that the office building be within 500 feet of a light rail line.

“If there are alternative properties that now fit these criteria that you would like to submit, please contact the Colliers brokerage team,” the Colliers agents stated in a new email to the commercial real estate community.

Three office buildings in downtown San Jose appear to be close matches for the VTA’s original — and smaller — preferences. Here are the buildings and some details about them:

— One West Santa Clara, a four-story office building totaling 100,000 square feet. Jay Paul Co. is the principal owner. Newmark, a commercial real estate firm, is seeking tenants for the building, which is at the corner of West Santa Clara Street and North First Street.

— Paseo, a mixed-use office and restaurant building at 201 South Second Street. This building consists of 75,000 square feet of offices and 25,000 square feet of retail and restaurant space. Urban Catalyst is the principal owner of the building.

— 2 West Santa Clara Street, a 10-story office tower totaling 100,000 square feet at the corner of West Santa Clara Street and South First Street. DivcoWest is the highrise’s principal owner. Newmark is seeking tenants for the building.

The new maximum space requirement changes could bring more office buildings into play for the VTA to consider.

Numerous South Bay office buildings are large enough — and empty enough — that they could qualify by being with 2,000 feet of a light rail line.

Even within downtown San Jose, more choices exist with the wider parameters.

Here are some large downtown San Jose office buildings that could potentially qualify for the new VTA headquarters at the expanded size.

— 200 Park, a 19-story office tower totaling 971,000 square feet. The building is at 200 Park Avenue.

— 303 Almaden, an 11-story office highrise that totals 157,500 square feet. The building is located at 303 Almaden Boulevard.

— Almaden Crossing, a 17-story office tower totaling 390,000 square feet at 488 South Almaden Boulevard.

The transit agency also wants the option to buy the office building, even if it starts its occupancy with a lease,  according to the Colliers request for proposals.

The VTA is seeking an option to host public sessions within the building.

“The tenant (VTA) will require an approximately 7,000-square-foot board room which would be available on an exclusive and unlimited basis to house public board meetings,” the Colliers documents state. “This space would be located on the first or second floor of the Building and would include a dais, public seating area for up to 300 people, kitchen, conference room, green room, restrooms, and (technology) infrastructure.”

A decision on a space could come within weeks or months, according to the Colliers document.

“The tenant (VTA) would lease a building from a landlord and sign a lease in Q4 2024 or Q1 2025,” the Colliers document states. The fourth quarter would be the October-through-December period and the first quarter would be the January-through March time frame.