Cisco Decision Clouds Coyote Valley Project

SAN JOSE-San Jose City Hall has told the development team of the Coyote Valley Research Park that they must raise about $100 million for improvements at Coyote Valley before it will provide any of the necessary infrastructure to develop the office campus.

The Coyote Valley Research Park developers, which include Cisco Systems and Divco West Properties, must come up with funds that will pay for a new highway overpass and a flood control pond at a bare minimum. Divco has expressed interest in charging forward with its plans and raising the funds.

The development has been postponed indefinitely from its planned start date in late October, partly due to Cisco’s decision to cancel plans for a 6.6-million-sf headquarters in San Jose. Cisco has not specified whether it will build a smaller campus or not.

Without Cisco as a tenant and neighboring developer, many property owners fear that the area’s corporate image won’t be as high-profile as they’d hoped. Many companies has been relying on Cisco’s presence in Coyote Valley, including some firms that purchased or leased space to be closer to Cisco for sales purposes.

City officials are concerned about the nature of the development and how that might change if Cisco backs out completely. The developer can sell parcels as small as 10 acres under zoning, or can sell to another major company. Without a major tenant, problems with several developers may arise.

Already, the project has been on hold for nearly a year. Provided that Divco can come up with the $100 million for infrastructure improvements, development may begin next spring.