Palm-lined central plaza with a fountain and orange chairs at Skyport Plaza, with an office tower behind

The County Becomes the Anchor Tenant: Santa Clara Signs On for 30 Years in Two Empty Ex-Qualcomm Towers

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Editor-in-Chief

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Top image: The central plaza at Skyport Plaza, North San Jose, 2021. Photo: Cristiano Tomás / CC BY-SA 4.0 via Wikimedia Commons

For years, two eight-story towers on Technology Drive in North San Jose have stood as a monument to the office market’s hangover: built in 2001, once home to Qualcomm, and, by their new owner’s account, completely vacant today. This week they found both a buyer and a tenant, and the tenant is the County of Santa Clara.

TMG Partners, a San Francisco developer, said Friday that it had acquired Skyport Plaza together with accounts managed by KKR and simultaneously signed a long-term lease with the county. After what TMG called an “extensive renovation” of the two office buildings, the lease is projected to begin in the first quarter of 2029 and run through 2059, with options for the county to buy the property during the term.

The seller, Hudson Pacific Properties, said it closed the sale for $75.5 million before prorations and closing costs. Hudson Pacific Chairman and CEO Victor Coleman described Skyport as “a largely vacant asset that would have required significant capital to lease up,” and said the company would use net proceeds from the sale and another disposition to pay down its credit line.

What the county is getting

TMG describes the property, at 1650 and 1700 Technology Drive and 50 and 90 Skyport Drive, as a 435,000-square-foot office and retail complex: about 393,000 square feet in the two towers, plus two retail buildings of about 42,000 square feet that are 97% leased to a child care center and a handful of restaurants and cafes. Hudson Pacific’s announcement describes Skyport as a 419,000-square-foot office property; the companies did not explain the difference.

County Executive James R. Williams framed the move as a cost play. “By entering into a long-term lease at Skyport Plaza, the County will be able to transition from aging facilities, operate more cost-effectively, and reduce long-term costs to taxpayers,” he said in TMG’s announcement. TMG noted that the site sits within two miles of the county’s Civic Center and called the deal one of the largest public-sector office commitments in San Jose in recent years.

What has not been made public is just as important. Neither announcement disclosed the rent, the renovation budget, which county departments would move, or which county buildings they would leave, gaps also noted by Saratoga’s local news site and the trade publication Private Real Estate Daily. The announcements also did not reference a Board of Supervisors vote on the lease.

A market repricing, one campus at a time

Skyport is the second large San Jose office trade this month to reset expectations. KBS announced Oct. 8 that it had sold The Almaden, a three-building, 416,126-square-foot downtown campus anchored by Zoom’s global headquarters, to SFF Realty Partners. The Real Deal, citing the Silicon Valley Business Journal, reported the price at $82 million, about $197 a square foot, more than a decade after KBS paid $150 million, or roughly $360 a square foot. KBS said it had put more than $49 million into capital improvements.

The broader numbers show a market recovering, but narrowly. Brokerage Kidder Mathews’ third-quarter report found positive absorption for a fourth straight quarter and year-to-date leasing 70.7% above 2025, but said demand “remains concentrated among a relatively small number of large commitments,” led by Google’s renewal of roughly 2.1 million square feet in Sunnyvale. Only about 60,200 square feet of office space was under construction, down 88.2% from a year earlier. Newmark research cited by KBS put Silicon Valley vacancy at 15.2%; The Real Deal cited Kidder Mathews at 15.9%. Firms measure the market differently, but both point the same direction.

The long view

Large tech tenants are signing again, but Kidder Mathews’ report shows the biggest commitments clustering in Sunnyvale and Mountain View. That leaves a generation of early-2000s North San Jose towers looking for a different kind of occupant, and government is a natural fit: it needs space for decades, pays reliably and values a cheap, central location over prestige.

For taxpayers, the arithmetic cuts both ways. Leasing a renovated building at a distressed-era basis may well beat maintaining aging county facilities, as Williams argues. But a 30-year commitment signed before the renovation even begins transfers real estate risk onto the public balance sheet for a generation, and the purchase options matter as much as the rent. Until the county releases the lease terms, residents can judge the deal only by its promise. The test will be whether the numbers, once public, show the county bought itself a bargain or simply bailed out a building.

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