From canneries to chip makers to housing, the land on the corner of Race Street and Parkmoor Avenue in San Jose tells the story of Silicon Valley’s evolution.
And for the past 25 years, Sobrato Development has had a front-row seat as it first demolished the canneries to make way for high tech and now is tearing down the office buildings to clear the way for 700 apartments.
Even John Michael Sobrato, who has cut his teeth on redevelopment, is surprised at the rate of change.
“If you had told me 25 years ago I’d be tearing down those buildings I never would have believed it,” said Sobrato, now chief executive officer of Sobrato Development, who was 22 when the accompanying photo was taken. “In a perfect world, we would not be tearing them down. If the rest of the neighborhood had gone commercial, we could have gone another 20 years.”
But it did not, and in 2005 tech was still struggling after the bust, which left Sobrato Development with empty buildings and no tenant in sight.
That wasn’t the game plan when John A. Sobrato, John Michael’s father, bought the 19-acre site for $5.7 million – they estimate it’s now worth 10 times as much – from Glorietta Foods and Pacific Coast Cannery in the early 1980s. The canned fruit industry was fading as orchards were bulldozed to make way for housing tracts, and Sobrato saw the site as home to companies in the then-emerging high-tech industry.
“We started building for the high-tech industry on Bubb Road in Cupertino in the 1960s,” said Sobrato, now chairman of the company. “We ran out of lots to develop and we still had very good demand.”
So the canneries were demolished and six one- and two-story buildings totaling 309,000 square feet took their place. Among the first tenants were Acrian, which manufactured radio amplifiers; Censtor, a semiconductor company; and Array Technology, which made programmable chips.
Then those companies were either bought or went under and in the ’90s, StrataCom leased all six buildings until it was acquired by Cisco Systems in 1996. Finally, the property was subleased to several companies, including DirecTV.
Then came the bust. In 2005, more than 20 percent of Sobrato Development’s 8 million square feet was empty. Today the picture is decidedly different, with a vacancy rate at 5 percent, but the neighborhood was already in transition.
“Two years ago, the market was in the tank, and we weren’t getting any action on leasing. So we decided to start the plan to go to residential,” John A. Sobrato said.
The decision to convert the industrial property to residential wasn’t an easy one, but John Michael Sobrato said that tech didn’t have a chance once the industrial neighborhood began converting to residential beginning with the Santa Clara County Office of Education site followed by the Saddle Rack night club, which sold to KB Home in 2000.
The city has struggled with converting industrial property to residential, fearing jobs will be lost if too much land is converted. But Sobrato said the application to rezone the property went off without a hitch.
Construction will begin on the $200 million apartment development once demolition is done, and will take about 18 months to build.
