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July 13, 2015

Apple deal gives economic boost to north San Jose

Contra Costa Times

George Avalos

SAN JOSE -- Apple's decision to lease a big office building in San Jose gives a boost to North San Jose and could bring well over 1,000 jobs to that part of Silicon Valley.

Neither Apple nor property owner and developer Ellis Partners would confirm that Apple is the new tenant of the 290,000-square-foot building near the corner of Orchard Parkway and Charcott Avenue in North San Jose. However, multiple sources familiar with Apple's real estate activities said the Cupertino-based technology company is the tenant.

"The building is no longer available for lease," said James Ellis, a partner with the Ellis realty firm. "We've been working for quite some time to get the building occupied."

With a lease of this size, Apple would likely move about 1,450 employees into the building, which once was the headquarters of tech firm Atmel.

"Any time Apple takes a large and prominent property like this, it's good for that market," said David Vanoncini, managing partner with Kidder Mathews, a commercial realty firm.

Ellis undertook a major renovation of the building to make it more attractive to Silicon Valley companies that seek to dangle attractive work spaces in front of prospective employees they seek to recruit or retain.

"We built four new atriums and completely upgraded the interiors and exteriors of the building," Ellis said.

The site could accommodate a further expansion for Apple. Next to the existing building that Apple is expected to occupy for seven years is about 12 acres of empty land on which Ellis Partners could develop three more buildings that would total 665,000 square feet.

Apple -- like Google -- has been busy leasing space well beyond its home base.

"With a lot of these tech companies, it's really being driven by what they need in a specific building," said Phil Mahoney, an executive managing director with Newmark Cornish & Carey, a commercial realty firm.

Before this North San Jose deal, Apple had multiple leased buildings in Santa Clara and Sunnyvale.

Mountain View-based Google has captured office spaces in Sunnyvale, Palo Alto and Redwood City, along with numerous property purchases and leases in Mountain View and plans for major new office projects and campuses.

While North San Jose might seem somewhat removed from Apple's Cupertino headquarters, that location is proximate to a big chunk of Apple employees residences.

About 25 percent of Apple's Cupertino-based employees live in San Jose, a 2013 economic study by Keyser Marston Associates determined. That is by far the largest concentration of residences of Apple employees who work in Cupertino.

In 2012, Apple had 16,000 workers in Cupertino, according to the Keyser Marston study, which would suggest that 4,000 Apple employees were living in San Jose and working in Cupertino at the time. The next largest concentration was San Francisco, with 12 percent of the Cupertino workforce.

"Apple has nowhere to grow in Cupertino and Sunnyvale is already much spoken for in terms of leasing," Vanoncini said.

The deal also suggests that there's no letup in the leasing spree by tech companies in Silicon Valley.

"The leasing market is very active," Mahoney said. "Usually it slows down in the summer, but that's not happening this year."

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