The land sits adjacent to the 750,000-sf office park Paul developed for Ariba in 2000. It has exceptional visibility from Highway 101. The seller is Lockheed Martin Space Systems.

Mahoney says the first phase will include "a substantial portion" of the overall project whether or not there has been any preleasing. If the plan goes smoothly, it will be the first large-scale office development to break ground in the South Bay seen since the market collapsed in 2001.

"There's no significant class A space available until you hit the mid-Peninsula," says Mahoney. "The market right now is moving in the right direction for class A space," with single digit vacancy already in place in Mountain View and coming to Sunnyvale and Santa Clara if current trends continue. "It just makes sense in that 101 corridor to create supply."

Given the development timeline, the space won't be physically ready for about 16 months. That should give time for market rates to rise, which will be necessary for Paul to hit a home run. Currently, market rate is about $1.75 per sf, or $21 per sf. Local industry sources say Paul will need to achieve net rates closer to $25 per sf given the rising cost of construction and the expected delivery date.