Dec 7, 2018

Exterior of a three-story building in downtown San Jose at 82 E. SantaClara St. A fitness center appears headed to downtown San Jose after anEast Bay company has purchased the site of a long-time furniture storethat’s advertising closeout sales.George Avalos / Bay Area News Group PUBLISHED: | UPDATED: December 7, 2018 at 6:10 am SAN JOSE — A Silicon Valley real estate venture launched by the co-founder of Uber through the purchase of a historic downtown San Jose building has landed big-time financial backing from a major Wall Street player, public documents show. The financial support came to light in the form of a mortgage that was filed in connection with the Nov. 30 purchase by a group headed by Uber co-founder Travis Kalanick of a historic downtown San Jose building that over the decades has been a boxing gym, an Odd Fellow’s hall and a furniture store. The purchasing entity, which is controlled by a Kalanick-led venture called City Storage Systems, paid $7.3 million for the building, Santa Clara County property documents show. Goldman Sachs Bank provided $100 million in financing for a City Storage Systems group that bought the prominent building at 82 E. Santa Clara St. near South Second Street, according to county records. City Storage Systems is a tech-oriented real estate venture that Kalanick now heads up, according to a March 20 tweet from the Uber former chief executive officer. Kalanick used a fund he established called 10100 to obtain what Kalanick stated was a “controlling interest” in City Storage. The mortgage also shows tech entrepreneur Diego Berdakin is involved in the Kalanick venture. Berdakin is the founder of several consumer internet companies, including BeachMint, FabFitFun, Re/Done, iEscrow and Weaving Capital. Berdakin also has invested in Uber. The restaurant and retail components of City Storage Systems appear to have caught Kalanick’s eye. “Of particular interest are City Storage Systems’ leading B2B initiatives, CloudKitchens and CloudRetail, focused on real estate acquisition and development for the food and retail service industries,” Kalanick stated on Twitter. CloudKitchens stated on its website that it provides software and real estate facilities that enable food operators to open delivery-only locations quickly and with minimal up-front costs. The company’s services “allow restaurants to capture existing demand from customers that want their food delivered,” according to the CloudKitchens’ site. The company’s technology can “provide customers with fast delivery and great ordering experience at a fraction of the cost of existing delivery,” the web site stated. It appears that the kitchen component of City Storage is intended to be the primary focus in downtown San Jose. That’s because the mortgage referred to the venture as “East Santa Clara Kitchens,” the county documents show. A Google proposal for a transit-oriented development in downtown San Jose where 25,000 people could work, including 15,000 to 20,000 employed by the search giant, has spurred interest from realty investors and developers in the urban core of the Bay Area’s largest city. Local property experts believe the recently purchased historic building will require a wide-ranging upgrade to prepare the site for its kitchen-related operations. Still, even a major renovation would cost only a small fraction of the $100 million that Goldman Sachs provided. “It’s great to see somebody with the resources of Travis Kalanick getting involved with this beautiful old building,” said Mark Ritchie, president of San Jose-based commercial realty firm Ritchie Commercial. “The building will require an elaborate and extensive upgrade.”