November 7th, 2012 is going to be a major milestone for Santana Row as it will mark the project's 10th year of existence. I remember those early days leading up to the grand opening well. Much like the San Pedro Square Market has been my favorite project of 2011/2012, back in the early 2000s I was watching Santana Row like a hawk. Well before SR opened its doors I was taking hard-hat tours, researching Federal Realty, and hunting for any available news on what retail was coming.
On August 19th, 2002 I was in London and just as I was getting out of the shower I heard something on TV about a huge fire engulfing an under-construction project in Northern California. Sure enough, it was Santana Row. The news definitely put a crimp in my vacation.
In early November that year, I snuck into Federal Realty's investor preview party with a college friend. Despite the fire they were still opening, and the finished product looked phenomenal--truly unlike any Silicon Valley project I have ever seen before. While only a handful of retail shops and a single restaurant (!) were scheduled to be part of the grand opening, I got the overall vision of what Santana Row could become. I went home, and immediately made plans to move whatever little stock I had at the time to Federal Realty, which ended up becoming the best investment I ever made.
Over the next two years I was at Santana Row at least two or three times a week. Everyone at Blowfish knew me by name and I dragged all my friends there every weekend for drinks. Any out of town guest that came to visit me would get a thorough tour and history lesson of every block in the Row (...did you know that is a real church steeple imported from Italy serving as the entrance to the flower shop?).
Flash forward to 2012, and you have what is undoubtedly the most successful mixed-use project in the United States, with constant activity 7 days a week, flagship retailers, and restaurant revenue per sqft that rivals the busiest streets in New York. The scary thing is it will probably get even busier over the next 2-3 years.
Now it's time to take a look back at the history of Santana Row with the press release below. There will be some special events to commemorate the 10 year anniversary, so stay tuned closer to Nov 7th!
Silicon Valley’s, Mixed-Use Development Still Booms A Decade Later
Santana Row plays its part in Silicon Valley’s current economic resurgence
San Jose, CA (July 5, 2012) - Federal Realty, which helped spearhead the interest among
developers in urban Main Street mixed-use environments opened one of the most ambitious
projects of its kind in the United States when it developed the $450 million, 42-acre mixed use
village-within-a-city, Santana Row. Last year alone, this development contributed approximately
$24 million in sales tax revenue for the city of San Jose and Federal Realty has paid $40 million
in property taxes since purchasing the land in 1997. Santana Row is a residential, office,
shopping, dining, and entertainment district built around a main street in San Jose, California.
The size and scope of Santana Row make it Federal Realty's largest development to date and
one of the nation's largest mixed-use projects constructed by a single developer.
A decade after opening, and celebrating its 10 year anniversary on November 7th 2012, Santana
Row is firmly established as a thriving shopping and dining destination, combining office,
residential and a 5-star hotel. The shopping center boasts a lofty 30,000 visitors a day, both
local and global, and has created a sense of place in Silicon Valley. Santana Row ranked third
among the top 10 local searches by San Francisco residents in 2011, according to the San
Francisco Chronicle.
Santana Row's pedestrian-friendly sidewalks consistently draw a desirable demographic of
shoppers and diners. The location on the corner of Winchester and Stevens Creek Boulevards
in San Jose is what attracted Federal Realty to this project. It is one of the most affluent areas
in the country with the average household income more than $94,000 and visitors from Asia and
Europe are increasingly spending time and money at Santana Row.
With 70 shops and boutiques, average tenant sales since opening have increased 50% from
$400 to $600 per sq ft, reaching levels comparable to the top fortress malls in the US. With over
20 restaurants, total food sales are approaching $100 million, with sit down restaurant sales
over $900 per sq ft,, as, or more, productive than restaurants in the country’s top urban
locations. As sales increase, so does the revenue generated for the city of San Jose. In step
with Silicon Valley's current economic resurgence, Santana Row’s upscale, 403 residential units
are highly sought after, and its office space is fully leased to a diverse mix of businesses that
value the campus-like amenities the property offers. Federal Realty is underway with a multiphase,
$300 million expansion.
“The combination of our close proximity to high‐quality Silicon Valley neighborhoods and the
richly varied offerings of Santana Row make this an exciting place to live and work. As a result,
our existing office and residential space is currently 100% leased and we continue to receive
significant interest from the market says Jan Sweetnam, Vice President, West Coast Chief
Operating Officer, Federal Realty Investment Trust.”
Santana Row’s amenities include 20 restaurants, a Club One Fitness Center, two parks, two
plazas, Hotel Valencia, 403 luxury rental apartments, 219 residential condominiums, nine spas
and salons, on-going events including high-profile fashion shows as well as a wide range of high
quality retail shops.
Expansion plans include a resort-style residential community of 212 rental homes, expected to
be completed fall 2013. The addition of this residential community will bring the total number of
rental homes at Santana Row to 615 which, along with 219 privately owned condos that Federal
Realty sold in 2005-6, bring the total number of on-site residents to approximately 1,500. Plans
are also being finalized for a Class-A Technology Office Building, to be built on at the corner of
Winchester Boulevard and Olsen Avenue. The six‐story tower will house approximately
220,000 square feet of office area along with over 600 parking spaces. The office space is
designed with large, open 36,000 square foot floor plates and ceiling heights over 13’ tall to
provide superior natural light and is expected to receive LEED Gold certification. The building’s
location on Winchester Boulevard in Santana Row provides easy access to and from Highways
I‐280, I‐880 and 17. Plans are also being formulated for a “capstone building” at the end of
Santana Row which will include a signature plaza, office and retail space, and below-grade
parking.
History
Santana Row's history is as spectacular as its Mediterranean-influenced architectural design,
lushly landscaped parks and array of shopping, dining and living choices.
Exactly a month before it was slated to open, an 11-alarm fire raged through the largest
structure, destroying 538,000 square feet of retail space and housing units. The Aug. 19, 2002
fire was the largest in San Jose history and cast doubt on the development, conceived during
the era of the Internet bubble when Silicon Valley's rising income, influx of new residents and
tech dominance seemed endless.
Santana Row was envisioned during those boom years as an upscale neighborhood of
shopping and living, with a charming main street and central courtyard, restaurants, theaters
and a hotel. It was deemed a "smart growth" strategy for the city and then-Mayor Ron Gonzales
was confident in its future.
Construction began in the summer of 2000 at the tired and dated shopping center formerly
known as Town & Country Village. Despite the growing shadow of an economic downturn, the
project continued, buoyed by statistics that showed the San Jose metropolitan area was still
spending above the national average and ranked second in the U.S. in median household
income, according to Claritas/Market Statistics. At the same time, the area's large concentration
of Asian and Asian Americans and their well-known penchant for designer goods made Santana
Row a desirable draw for high-end retailers. “An obsession with quality, aesthetics and brand
loyalty seems to define many Asian customers and that should bode well for certain Santana
Row shops”, said C. Britt Beemer, founder and senior retail analyst at America's Research
Group.
80 days after the Aug. 19th fire, Santana Row opened on Nov. 7 in the midst of the 2002 holiday
season with a mix of 35 local retailers and luxury brand stores that included BCBG Max Azria,
Gucci, Sur La table, Diesel and Anne Fontaine. Also on The Row: art galleries, salons and
restaurants such Left Bank Brasserie and Straits, which had other popular Bay Area locations
and saw growth opportunity at this new location.
In a short time, it was compared to Rodeo Drive in Beverly Hills by The Robb Report, the global
luxury lifestyle magazine.
Shortly after opening in January of 2003, the boutique, 212-room Hotel Valencia opened. Hotel
Valencia now attracts nearly 80,000 business, group and leisure travelers annually. Momentum
continued to thrive and regional and national coverage of Santana Row attracted additional
tenants including big box retailer, The Container Store in fall of 2003 and a six-screen CineArts
Cinema in 2004. By the end of September 2004, 92 percent of Santana Row’s retail space was
leased to 115 tenants with 101 stores open and operating.
Santana Row began the sale of their 219 residential condos in late 2005. The total gross sales
proceeds were approximately $153 million with sell-out completed in 2006.
In 2007, H&M opened their first south bay location at Santana Row.
In April of 2008, Santana Row broke ground on 300 Santana Row, 65,000 sq ft of Class A office
space and 15,000 sq ft of ground floor retail. The building received LEED gold certification from
the U.S. Green Building Council and is 100% occupied, providing over 250 on-site employees
daily to Santana Row. In 2010, Santana Row was awarded the Project of the Decade by the
Silicon Valley Business Journal and was given a new media maxi award by the International
Council of Shopping Centers for its iPhone application. In April of 2010, Santana Row began
construction on 108 luxury rental homes. Within 6 months after completion in October of 2011,
the community was 100 percent leased.
Today, Santana Row is a 1.5 million square foot mixed use community that houses 622
residential homes, over 350 office employees, 70 shops and boutiques, 20 restaurants, 9 spas
and salons, CineArts movie theatre and the Hotel Valencia. Federal Realty has developed the
ultimate neighborhood to live, work and play and the community has embraced this concept for
both economic and social reasons. Tenants include a Tesla Motors showroom; Eyeona, a tech
start-up; and soon to open a new, two-story 27,570 square foot H&M store reflects its firm place
in Silicon Valley as a must-visit destination for locals and visitors in the San Francisco Bay Area.
About Federal Realty
In 2012, Federal Realty celebrates 50 years of being a proven leader in the ownership,
operation, and redevelopment of high quality retail real estate in the country’s best
markets. Federal Realty's portfolio (excluding joint venture properties) contains approximately
19.2 million square feet located primarily in strategically selected metropolitan markets in the
Northeast and Mid-Atlantic regions of the United States, as well as in California. In addition, the
Trust has an ownership interest in approximately 1.0 million square feet of retail space through
a joint venture in which the Trust has a 30% interest. Our operating portfolio (excluding joint
venture properties) was 93.8% leased to national, regional, and local retailers as of March 31,
2012, with no single tenant accounting for more than approximately 2.5% of annualized base
rent. Federal Realty has paid quarterly dividends to its shareholders continuously since its
founding in 1962, and has increased its dividend rate for 44 consecutive years, the longest
record in the REIT industry. Federal Realty is an S&P MidCap 400 company and its shares are
traded on the NYSE under the symbol FRT. For more information, please visit
www.federalrealty.com.
