“How’d you even know we were here?” says Bill Gates, chuckling over the phone. “I’ll meet you in the lobby in 10 minutes.”
Gates sounds amused that someone managed to find where he and his colleagues have been holed up. For the past five years, most people who walk by his office in the fenced-off CityView Plaza in downtown San Jose assume the place is empty.
There’s no furniture downstairs, yet the front door is unlocked. On the building’s directory, inscribed in a tiny font, one name remains: Gates Eisenhart Dawson Attorneys at Law.
It took him 50 years, but Gates (not the computer mogul) finally has the luxury office he’s always dreamed of. The 83-year-old lawyer parks his Lexus SUV right up at the footstep of the building at 125 S. Market St., steps out with a bunch of documents in hand, and greets a reporter with a big smile: “Let me show you to our private elevator.”
There, in the corner of the empty lobby, a metal door slides open. None of its buttons work except for the one that takes you to the 12th floor and the one that sends you back down.
Normally, this scene would suggest a foreclosure or the existence of squatters, but Gates, his partners and staff are legal tenants. Despite everyone around them disappearing, his law firm has dutifully paid its rent each month. In exchange, the landlord keeps the water and lights on and pays for a janitorial staff to service the single floor daily.
“Where else are you going to get this type of white glove service?” Gates says. Although, looking down at the 600,437 square feet of office ruins beneath his upstairs window doesn’t exactly feel uplifting.
It wasn’t supposed to turn out this way. Before the pandemic spurred a mass exodus of office workers in downtown San Jose, CityView was a prime piece of land that powerful real estate groups competed for and city leaders desperately wanted to see redeveloped.
To do so, they just needed the old guard like Gates to leave so that they could bring in the bulldozers.
The race to build in San Jose
In the previous decade, the Jay Paul Company, owned by the San Francisco billionaire Jay Paul, made its name and fortune snagging the likes of Microsoft, Google, Meta and Amazon as single tenants at its massive office properties across the Bay Area. The firm bet it could do the same in San Jose, the region’s most populous city.
Throughout 2018 and 2019, at the peak of the pre-pandemic real estate boom, the Jay Paul Co. purchased CityView and select properties around it for nearly $1 billion, with an eye toward razing everything and erecting a shiny new “urban campus” totaling nearly 5 million rentable square feet of office space.
At the time, the existing plaza was over 90% leased. Ironically, in hindsight, the new owner spent millions of dollars to get those tenants to leave, even hastily acquiring an old office tower up the street for a then-record $667 per square foot, or $238 million total, to potentially relocate tenants who wanted to remain in the area.
“Jay Paul is usually patient, eager to develop things from the ground up,” said a source familiar with the firm’s—and its eponymous founder’s—thinking. “But there, he rushed into an overpay just so that he could have CityView. It didn’t matter what the numbers were. Once he had his heart set on something, there was no stopping him.”
Gates and his longtime partner Jim Dawson nabbed Suite 1200 at 125 S. Market St. in 2009, long before all of the hype of Google potentially coming into town. In the midst of the Great Recession, the pair signed a discounted six-year lease for a 4,446-square-foot office that contained two options to renew for additional five-year increments. Today, Dawson’s corner office has arguably one of the best panoramic views of San Jose.
“Why would we want to go anywhere else if we don’t have to?” he says.
Happy with their business-class digs acquired on the cheap, the tenants exercised their first renewal option in 2015. While in the midst of that term, the Jay Paul Co. acquired their building.
That’s when the pressure campaign to leave began to ratchet up. “They did everything short of literally smoking us out,” Gates recalled.
First, the cafes and restaurants disappeared, followed by the retail, and then the beauty school. One by one, they watched as all of their neighbors slowly left, until they were the last ones standing.
The meeting
In December 2019, at the time a devastating volcano eruption derailed his New Zealand vacation, Jay Paul hopped on a private jet and flew directly to San Jose to personally size up the small law firm that had rebuffed his company’s multiple overtures to exit CityView.
“He was probably wondering if we were some gnats on a windshield or a real problem he’d have to deal with,” said Gates. Representatives with the Jay Paul Co. did not respond to multiple requests for comment.
According to Gates and Dawson, one of the first things Paul did in the meeting was pull out his phone to show them a picture of his 190-foot yacht docked in the ocean. “And here, check it out, this is me on the Forbes billionaires list,” Dawson recalled Paul saying.
The three men, who are all around the same age, shared a cordial conversation in which Paul invited Gates and Dawson to someday join him on one of his worldly escapades. It would all be fun if they would just move along, he implied, so that the Jay Paul Co. could finally get going on its ambitious redevelopment at the same time the other big players were.
Dawson replied, “Sorry, sir, but your priorities are not our priorities.” They wouldn’t see him again.
Just three months later, while the region was still freshly locked down during the pandemic, the Jay Paul Co. won approvals from the San Jose Planning Department to demolish and redevelop CityView.
Janette D’Elia, chief operating officer of Jay Paul, told city leaders at a meeting that the company’s combined investments in downtown San Jose would total more than $5 billion once all was said and done. They intended to start construction later that year.
“This extraordinary investment in our city couldn’t come at a better time when we critically need to get people to work,” former San Jose mayor, now congressional candidate Sam Liccardo said after the approval. “I’m sure in a few months, when the existing projects wrap up, we’re going to have a lot of construction workers out of jobs, and this is going to be really a great shot in the arm for our city.”
At the same time city hall was celebrating, Gates Eisenhart Dawson quietly exercised its second renewal option, extending its lease at CityView to 2026.
The lawsuit
By now, the complex had been emptied out, all doors except for one chained, and the main courtyard fenced off. But when it came to its sole remaining tenant, the Jay Paul Co. had its hands tied. It couldn’t just jack up the rent to price the law firm out. According to the firm’s lease, any increase had to be in line with the “prevailing market rate.”
Here, timing was everything. Even though Gates Eisenhart Dawson notified its landlord in May 2020 that it intended to stay at CityView, the renewed lease wouldn’t actually commence until July 2021.
Citing the market conditions from 2020, Jay Paul Co. informed the tenant the new rate would be $5.50 per square foot if they wished to stay. Gates and Dawson argued it should’ve been closer to $3.50 given the sharp rise in office vacancies since the pandemic.
The difference between the two rates was nearly $10,000 a month. “Nobody actually reads this shit except for people like us,” Dawson said.
After a year of failed negotiations, Jay Paul Co. got roped into a bigger fight than it had bargained for when it first embarked on the redevelopment. The tenants sued their landlord in civil court in September 2021, arguing that the new rent was unfair. This set back the CityView demolition even further, with a bench trial not scheduled until July 2023.
According to court documents, Judge Nicole Isger ultimately ruled in favor of the plaintiffs, Gates Eisenhart Dawson, in a trial that lasted a little over two days last summer. Both sides brought in expert witnesses to testify on their behalf, and the courts ended up studying a total of six nearby offices that were comparable in location, size and amenities, among other factors, to render its decision.
Ultimately, it was determined that the prevailing market rate for Suite 1200 at 125 S. Market at the time of the renewal was $3.70 per square foot. The law firm not only got to keep its office, but it got to lock in an affordable rent without ever having to leave.
‘Anything is better than nothing’
Even if they’ve slowed down a bit at their advanced ages, Dawson and Gates are still coming into the office every day.
Between the two, Dawson is the trial litigator and Gates is the behind-the-scenes guy with the business and political connections. Together, they’ve tried hundreds of civil cases and advised thousands of clients, some of whom were involved with powerful real estate interests, similar to the Jay Paul Co.
The firm employs two paralegals, an office manager, a receptionist, a law student and even sublets a desk to a 40-plus-year injury-attorney veteran, John Kevin Crowley, who like them, also refuses to retire.
“That’s my social media,” says Crowley, pointing to four pieces of paper taped to the outside of his office wall. One printout promotes the book he wrote in 2021 about the “history of Jurisprudence.”
“I have to call about that damn thing almost every day,” Gates says, pointing to the thermostat in his office. On a warm Tuesday afternoon, it is 86 degrees outside, and the building’s air conditioning has stopped working, turning the entire floor into a mini sauna.
Since the building was built in 1972, these days whenever one floor needs maintenance, workers just cannibalize unused parts from the vacant ones, Gates says. Letter mail and packages sometimes get lost since some mail carriers assume the building is vacant.
One look into Gates’s office and it is clear why the prospect of moving never seemed remotely appealing to him. His shelves are lined with decades of memorabilia, ranging from pictures with governors Jerry Brown and Arnold Schwarzenegger to awards he won serving in the U.S. military or as chief of staff to the late state senator Al Alquist before he met Dawson.
“We’re cheap and we’re proud of it,” Gates says of the firm’s office. Dawson says he prefers the term “value shoppers.”
As for the Jay Paul Co., CityView has become another expensive drag in a portfolio that used to function as a money printing machine. One of its newer properties, the 181 Fremont skyscraper in San Francisco, recently saw Meta list all 34 of its office floors up for sublease.
In Austin, Texas, the company is also set to unveil a 30-acre office campus in June, according to the Austin Business Journal. Per real estate firm Cushman & Wakefield, Austin has an overall office vacancy rate of 27.3%.
Back in San Jose, local brokers say CityView has quietly been reopened for leasing again since Jay Paul Co. still owes taxes and loan payments on the property and the demolition and redevelopment plans, for now, are postponed.
To make matters worse, the developer completed a brand new 1 million-square-foot office building last year, directly across the street from the plaza, which remains empty to this day. When the Jay Paul Co. first announced the project, called 200 Park, it envisioned a single tech tenant occupying every floor.
Now it serves as a glossy warning sign to other developers not to count their Silicon Valley chickens. Jay Paul Co. is said to be open to any number of ideas to get 200 Park at least partially utilized, according to other brokers who have inquired about the vacant building.
“Anything is better than nothing,” said Bob Staedler, principal of land-use consultancy Silicon Valley Synergy. “It just goes to show how dangerous speculation can be.”
If demand for a newly constructed building is already tepid, then it stands to reason that adding another few million square feet on top of it would be foolhardy for Jay Paul Co. The developer admitted as much in March, when it requested an extension for its redevelopment permit that it secured at the onset of the pandemic.
“Current financial markets and a reduced demand for office leasing have made the short-term leasing feasibility of this project untenable within the currently defined timeline,” Jay Paul Co. said in the filing with San Jose city planners.
Other companies came to that realization sooner.
Last summer, BXP, also known as Boston Properties, paused its massive office development near the Diridon train station despite already breaking ground in 2020. Months later, Google abruptly broke up with its real estate partner, Lendlease, effectively putting its own new megadevelopment on hold too. Others in town are pivoting to either residential or mixed-use projects.
Viewed through those lenses, perhaps the Gates Eisenhart Dawson lawsuit actually saved Jay Paul Co. from throwing more good money after bad.
And if that’s true, maybe the billionaire developer actually owes Bill Gates and Jim Dawson a debt of thanks.
“You think that offer to go on his yacht still stands?” Dawson says.