San Jose developer Gary Dillabough on Pandemic, Adam Neumann and Structure

SAN JOSE – I reached out to Gary Dillabough one day he was signing a contract for new property in downtown San Jose. What else is new from a man who has bought more than 30 prime properties here in the past three years?

The Atherton developer and venture capitalist has big plans to rebuild downtown America’s 10th largest city to live up to its catchphrase, the capital of Silicon Valley. But he and his company Urban Community have more than just bricks, mortar and square meters, but visions of a new type of environmentally friendly city that is based on the major cities of Europe and the USA

When we spoke to Dillabough about a story more than a year ago – “There’s Google and there’s Gary” – he said his biggest concern was the cost of building materials to complete his major projects, including the restoration of the historic building Bank of Italy at the intersection of Santa Clara and First Streets, building a tower in the parking lot beyond and another block away next to the Museum of Innovation on Park Avenue.

But what about the commercial ramifications of the pandemic – and the newly empowered pajama workforce? And we don’t even talk about these little issues with Adam Neumann, the founder of WeWork who was one of Dillabough’s biggest investors until he was fired from his company last year.

Dillabough got to his feet. Together with his business partner, real estate offshoot Jeff Arrillaga, they have signed a new partner, Westbank Corp from Vancouver, Canada.

“This next phase is going to cost $ 3 or 4 billion to do all of these verticals,” said Dillabough. “That’s what they’re there for.”

In a conversation with 57-year-old Dillabough, a former eBay vice president, he tells us what’s going on. Here is a revised version of the discussion.

Q: Hello gary How is everything with you

A: Obviously this Covid thing is nerve wracking for everyone, right? But it feels like there’s a little glimmer of hope and slightly better leadership now. Hopefully the vaccine is the game changer we’re looking for. But listen, I’m a little nervous about how people view California, and I hope the state, counties, and cities realize that the state needs to appreciate business a little more and is trying to find ways to help businesses thrive here.

Q: What are the California issues that are bothering you the most?

A: There’s just a lot of regulation. It takes a long time to do something. Taxes are just a lot and I am not against paying more taxes. I just don’t think the state is doing a great job of creating homes that make sense for the neighborhood and the environment. It just feels like there are so many little roadblocks.

Q: Other companies are moving to Texas. But you are heavily invested here. How do these regulations that you fear will affect the future of your plans?

A: Well there is just a lack of coordination. Just look at the transit situation. In the Bay Area, I forget how many different transit systems there are … when there should be one. How do we all start to put the greater good before us and then try to make some sacrifices, but try to really make something meaningful and world class here and then look at places around the world to find out how they do it Transport better? How can they live better? Then how do we start making it to scale? And all these frivolous lawsuits that people can bring up and slow down – how do we start taking on some of these projects and bringing them to life faster?

Q: Tell me how the pandemic affected your plans for San Jose. And do you find tenants in your portfolio for all of these office building projects?

A: I think the pandemic has shown us that we feel very efficient from home. However, I think it’s a hollow experience. I do a lot of things, but now it just feels like I’m on Groundhog’s Day. It’s the same over and over again, I don’t feel the energy and excitement that I feel when I’m with other people. And I guess that’s just the way we’re wired. The pandemic really showed me that we need to deliver better solutions to these companies because I believe these companies want to come back. But they want to go back to a place that really offers well-designed infrastructure and user experiences. Places like Austin did that. Places like Nashville do it, places like Seattle do. But for some reason we just can’t get it right here in the Bay Area.

Q: Do you think you can play a role in this, or do you feel like you’re just tipping over at windmills?

A: I think we can definitely play a role in this. Our partner West Bank works in cities like Tokyo and Toronto as well as Vancouver and Seattle. And so they see how these cities are managing all of this and how they are improving and thriving, and I think they are accelerating. We are fortunate to have this perspective. And the architects we bring into the project stable also have global views. So not only do we get a number of local perspectives that are helpful, but also the things that really demonstrate how the world has changed and how we can use those things.

Q: What happened when you heard about Adam Neumann and WeWork? He was a great partner of yours.

A: Adam had to part with these characteristics. He gave us the opportunity to take it out, so we brought the West Bank with us.

Q: Were there any other unexpected things that set you back?

A: On a positive note, our discussions and interactions with the city went much faster and we did more than we expected. We are really lucky to have the city of San Jose. But there will be concerns when you talk to big financiers, big banking partners, about Silicon Valley. When you see HPE (Hewlett Packard Enterprise) leaving Oracle and moving its headquarters, it is certainly something to be concerned about. The city needs to make sure that it really creates a place that offers a safe and clean environment.

Q: It was over a year ago when we last talked and you said you saw a 5 to 7 year horizon for these projects. Are you on the right track

A: Yes.

Q: Can you give me a little status report? Is there a project that you are most looking forward to architecturally? And what is the status of the others?

A: Architecturally, we are most excited about the Bank of Italy building. We have some amazing ideas for this, but for a big project we laid the foundation stone for the former museum square and now call it Park Habitat. That’ll be over a million square feet. I think the design is amazing. Kengo Kuma is our architect. He’s from Tokyo. He’s one of the two or three best architects in the world. We look forward to working with The Tech (Museum of Innovation). The Tech has a brand new CEO, Katrina Stevens. She is great. We are excited to see how we can bring these two projects together and create a special place for the city. At the very front of the building we’re carving 13,000 feet for a sunken garden. Most people would just turn this into a glass-enclosed room that can be charged rent. Were not. We want to make sure it’s really open to the public. And I think the design is just amazing. The real goal was to say that most of the office parks here in the valley are relatively horizontal. And that was, could we take this model and actually rotate it vertically? So it’s kind of a park that makes its way to heaven.

FUN FACTS ABOUT GARY DILLABOUGH

1. He is fascinated by technology products like the Oura ring, an intelligent ring that tracks heart rate, temperature, exercise and sleep. “I think these types of technologies will allow us to create a work environment that is much healthier and enables people to be more productive.”
2. He’s a filmmaker: “It’s one of my favorite ways to relax.”
3. He learned to like whiskey during Covid and can “make a pretty decent Manhattan and Whiskey Sour (Luxardo cherries are key)”.
4. He never really liked beer ”until the guys at Good Karma introduced me to Pliny the Elder. We have it in our office refrigerator now. “

BIO

Surname: Gary Dillabough

Age. 57

Alma mater: Cal Poly, San Luis Obispo, Civil Engineering

Professional background:

Co-founder of the Urban Community development company with long-time builder Jeff Arrillaga

Managing partner at Navitas Capital

Former managing partner at The Westly Group, where he led the smart building and energy efficiency practice

Former Vice President of Strategic Partnerships for eBay and General Manager of Sustainability, where he led investments in solar and fuel cell technology.

At home: Atherton

Family: Mrs. Michelle and three college-age children.

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