Amid office market challenges, long-delayed 9-million-square-foot Santa Clara development makes a big pivot

As the Silicon Valley office sector struggles to rebound from the pandemic developers behind a massive mixed-use village in Santa Clara are looking to pivot potentially swapping out office space for industrial uses like warehouses and details centers Located across the street from Levi s Stadium on acres of mostly vacant city-owned land the Related Companies are looking to build more than million square feet of new homes shops restaurants hotels and offices in what is expected to become a regional entertainment hub Related Articles Oakland hotel is seized by lender as Bay Area lodging territory fades Downtown San Jose housing tower lurches into default Two facts centers may sprout in San Jose to help meet requirements of AI tech boom Historic South Bay building is bought as office area stays frail Santana Row in San Jose is poised to produce its first housing in a decade But the project which was approved by the Santa Clara City Council in has faced a number of unexpected delays including a lawsuit from the city of San Jose escalating construction costs and regulatory challenges over remediating a part of the site that once housed a landfill The latest quandary a stagnant office sphere in which vacancy rates sit at around in Silicon Valley overall and even higher in places like downtown San Jose has created further challenges for a project that has yet to get shovels into the ground On Tuesday evening the council approved a new option for the mega-development that could solve several of its woes Instead of building roughly million square feet of offices on the northeastern section of the project Related wants to put in million square feet of industrial or manufacturing space The offices are expected to be transferred to the part of the project known as the City Center the heart of the maturation that will serve as the main entertainment core Nicholas Vanderboom the chief operating officer of Related California notified the council that the new plan will allow them to adapt to the changing sphere which he mentioned has been demanding more space for manufacturing and industrial uses including content centers We also think that consolidating the office into the City Center will ultimately help us with the feasibility because that s the type of office that really is in demand he declared It s not the office campus milieu at present it s the downtown walkable mixed-use setting where office space is leasing whether that s Santana Row or downtown Sunnyvale The council s approval of the new scheme gives the developer more flexibility to proceed in a challenging rise region If conditions shift and office space is once again in demand Related can move forward with the previous plan approved in Hopefully six months from now a year from now we ll start to see an office realm come back we ll start to see a hotel area come back noted Steve Eimer executive vice president of Related It s happened before and we believe it will happen again We want to be there to take advantage of it Santa Clara Mayor Lisa Gillmor called the new plans a proactive response to the changing area demands and mentioned she hopes that it will help trigger the growth of the City Center part of the vision With this project we will finish the Live Work Play puzzle that we ve been working on for decades she disclosed Not all of the council however was amendable to the new changes with Councilmembers Raj Chahal Kevin Park and Suds Jain casting the dissenting votes on Tuesday Along with the additional plans the council approved amendments to the expansion agreement which included increasing the percentage of affordable homes the developer must build from to of total units and deepening the level of affordability from of the area median income to an annual income of for a family of four The expansion agreement a -year contract that allows for the build-out of the project in phases also dictates certain fees the city will receive from the developers Given the delays and the feasible pivot Chahal disclosed the city should be trying to get better buck for our land value The land belongs to all of us to all of the residents he noted If there s a chance we can do that if the developer is having a benefit of changing the zoning from office space to information centers we should be getting something more Jain who has pushed the city to adopt more environmentally friendly policies yearned to require that any figures center that Related adds on the site will use carbon-free electricity a proposal that was shot down by the majority of the council Santa Clara has become a hub for material centers over the years to the point that the more than content centers now consume roughly of the city s strength through its utility company Silicon Valley Power The fact that the city did not benefit over all that time is a difficulty for me Jain mentioned of the delays Everyone sees that facts centers are becoming increasingly a huge concern for circumstances change and the carbon impacts of content centers is immense Largest part of the large companies have commitments to having carbon free electricity for their input center and becoming carbon neutral businesses