WeWork deepens downtown San Jose ties to Gary Dillabough ventures

SAN JOSE — WeWork has taken steps to quietly widen its involvement in downtown San Jose through an alliance with busy developer Gary Dillabough on two more choice sites in the urban heart of the Bay Area’s largest city, according to public documents and property experts.

The latest downtown San Jose sites that have drawn WeWork’s financial involvement are the Valley Title property and the Bo Town restaurant site, both located in the up-and-coming South First Area, or SoFA district.

To this point, co-working giant WeWork has displayed a wide-ranging interest in downtown San Jose sites, primarily in office towers such as the Bank of Italy high rise.

Matters could be changing. For the first time, WeWork has taken a financial stake in two downtown San Jose properties that would become major redevelopment sites, potentially featuring office and residential towers, and adding shops and restaurants to the SoFA district.

“This is a deeper plunge by WeWork than we have seen so far, a much deeper plunge,” said Mark Ritchie, president of Ritchie Commercial, a real estate firm. “They are getting involved with properties that could take five years to develop and cost hundreds of millions of dollars to build.”

The co-working giant’s involvement was revealed in documents that were filed on July 9 with Santa Clara County officials. Dillabough declined to comment about the situation.

“WeWork’s entry into the downtown makes a lot of sense,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy.

The company’s intensified push comes at a time when Google has proposed a huge transit village development near the Diridon train station, Adobe has launched a fourth office tower to expand its three-building headquarters campus, and developers Jay Paul, Dillabough, and Urban Catalyst have been purchasing numerous properties downtown.

“The WeWork involvement downtown keeps the momentum going with what Google, Adobe, Jay Paul, and Dillabough are doing,” Staedler said.

The respective owners of the Valley Title and Bo Town properties, groups led, in both cases, by Dillabough, obtained loans that used the two sites as collateral, documents on file with county officials show. The authorized person who signed for the borrower to activate the mortgages was Roni Bahar, who is WeWork’s director of development. In addition to the public records, sources familiar with the South Bay property market confirmed the WeWork connection to the sites.

One group headed by Dillabough paid $64 million in 2018 for the Valley Title lot that’s roughly bounded by East San Carlos, South First, East San Salvador, and South Second streets.

This month, a Dillabough-led group paid $15 million for Bo Town and two adjacent parking lots, a site that is near the corner of South Second and East San Salvador streets.

The Valley Title site is currently envisioned by Dillabough as a million-square-foot complex of office towers, residential high-rises, shops, and restaurants. No development proposals have emerged for Bo Town.

“WeWork is getting financially invested in what would be a mixed-use village that could involve both the WeWork and the WeLive concepts,” Ritchie said.

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Source:: The Mercury News – Business


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