Office REIT Boston Properties is still deciding when to start construction on a huge tech campus development in San Jose. Douglas Linde, Boston Properties’ president told The Mercury News that they are in the final stages of making its decision on Platform 16, a 1.1 million square foot, three-building office campus occupying a whole city block in downtown San Jose.
The project has faced numerous delays since the pandemic’s start. Boston Properties broke ground on the billion-dollar development in early March 2020, less than two weeks before several Bay Area counties ordered residents to shelter in place.
Linde made it clear that office demand in Silicon Valley has bounced back, lack of demand hasn’t been a deciding factor. “The Class A Silicon Valley leasing market had a particularly strong 2021 with very healthy absorption of office space,” he said.
The supply chain issues, though, are an entirely different concern. Linde said total base building construction costs for Platform 16 jumped by over 13 percent compared to their pricing 24 months ago. On top of that, getting their hands on building materials has been more difficult. The lead time to obtain base building materials after construction drawings are approved has spiked from 20 weeks to 40 weeks.
These supply chain problems have complicated decision-making on Platform 16, which wouldn’t be ready for occupancy until 2025. Boston Properties will likely decide with their partners on whether or not to move forward with the development in the next couple of months, so very soon we will know if large projects that were viable pre-pandemic still pencil in today’s economic environment.