San Jose Developer Wants to Build AI Incubator in Downtown

Gary Dillabough wants to build an incubator for dozens of artificial intelligence startups in Downtown San Jose.

The co-founder of Downtown development firm Urban Community says he has found a partner to construct the incubator at an unidentified location, the San Jose Mercury News reported. The business partner also was undisclosed.

“San Jose should be the capital for AI development,” Dillabough told the audience of a Silicon Valley Real Estate Breakfast hosted by law firm Hoge Fenton. “We are talking with a potential partner to bring 40 or 50 AI startups to Downtown San Jose.”

Dillabough’s comments were made during a discussion on how to spur economic growth in the city’s urban heart.

The idea was embraced by Nick Goddard, a senior vice president with Colliers. “It would be awesome if Gary Dillabough could get that going,” Goddard told the group.

Downtown San Jose has struggled to recover from business shutdowns during the pandemic, which led to an exodus of office workers, shops and restaurants.

San Francisco, which faces a similar malaise in its Downtown, has experienced a boom in AI company growth. Mayor London Breed has declared the city “the AI capital of the world,” with dozens of companies setting up shop in the Financial District, South Beach, SoMa and the edge of the Mission District.

This month, Andi, maker of an AI-powered chatbot, announced it would move from Miami to 600 California Street.

But Dillabough and his business cohorts say Silicon Valley should be the AI hub. “Downtown San Jose should be the center of AI Valley,” Dillabough told the Mercury News, adding he’s looking at three or four potential locations for the future AI startup mecca.

“There is a lot more tech talent in San Jose than in San Francisco,” Goddard said. “An AI incubator can create a young and buzzy energy in Downtown San Jose. People will want to be around that energy.”

Dillabough, a former eBay vice president and venture capitalist, co-founded Urban Community in 2016 with Silicon Valley builder Jeff Arrillaga. Since then, the firm has invested in San Jose’s Downtown by acquiring the historic Bank of Italy Building, City Lights Theater and other properties.

In July, Urban Community paused development of three towers that would contain 500 homes in Downtown after its development partner, tech startup Nabr, walked away from the project.

— Dana Bartholomew