By Meghan Hall
The pace of hotel development in the Bay Area — and particularly in San Jose — will not be slowing anytime soon. The region’s bustling tourist industry and booming economy draws visitors and business travelers from all over the world, producing a vibrant hotel economy that indicates a healthy increase in hotel supply over the next 12 to 36 months, according to Atlas Hospitality. Developers such as Los Altos, Calif.-based Knowhere Holdings along with Temple Hospitality, an entity associated with Vijay Mathur of Morgan Hill, Calif., are jumping on the hotel development train; according to San Jose City documents, Knowhere and Temple are in the process of building not one — but two — hotels on Piercy Rd. in South San Jose. In a unique twist, however, the hotels will be located right next to one another, despite separate ownership and management.
“Everybody sat down and got to know each other, and we figured it was better to work together than apart,” explained Bryan Robertson, chief development officer at Knowhere Holdings. “We’re all going for the same thing.”
Although there were initially discussions of combining the lots to produce one, larger hotel, Robertson said the idea was quickly discarded due to a number of logistical and future resale reasons. Instead, the decision was made to construct two hotels, complementary to one another. Both projects are going through the entitlements process together and are expected to break ground around the same time, although according to San Jose City documents, each hotel represents a separate, distinct development up for review by officials.
“We collaborated on pretty much everything we could collaborate on to achieve the common goal: to get these hotels built and get them built as quickly as possible,” said Robertson. “Combining efforts was just one way of expediting that.”
The first hotel is slated to be a Residence Inn located at 459 Piercy Rd. and will be a five-story, 112-room building. Temple Hospitality is in charge of its development. The first floor of the hotel would contain a main lobby reception area and outdoor pool. It is anticipated that the project would be constructed over a 15-month period, beginning in the summer of 2019. The new Residence Inn will cater to extended stay guests, often those traveling for business or families visiting the area for longer periods of time.
The second hotel, which Knowhere is developing, will be slightly larger at six stories tall and 175-keys and a public eating establishment, according to City documents. The first floor would contain the lobby, a convention center, a restaurant facility, guest rooms and outdoor patio space. A swimming pool has been proposed for the central courtyard along the northeast side of the building, while a rooftop bar also makes an appearance in the plans. Construction for the 469 Piercy Rd. Hotel project would begin at roughly the same time as its counterpart this summer. Before the second project can break ground, the demolition of two existing structures — which currently make up one single-family residence — of approximately 4,800 and 1,661 square feet, will need to be demolished. Construction is expected to take about 19 months. While Robertson said it is too early to tell exactly what demographic will use the hotel, business and tourist travelers — and those keen on using the facility’s event space — are likely guests.
“The combination [of the two hotels] will serve a number of purposes,” said Robertson. “We know there is a need for event space, because there are no facilities in that immediate area, and the lack of tourist-centric hotels. There will become an appealing point. But the reason these hotels are complementary is because they appeal to different types of travelers under different types of circumstances. We’re more for those who are visiting for a few days, while the Residence Inn will be for those who are in the area for longer.”
According to Robertson, no hotel manager or brand partner has yet been selected for its hotel, although the site has garnered a lot of interest from major brands, he said. It is important to both developers and the City that the chosen partner knows how to maximize the hotel’s offerings, and that while all of the big names are still in the running, smaller brands and boutique hotel chains are out.
“The decision to finalize which brand takes over at that location isn’t an easy one,” said Robertson. “We’re doing a lot of due diligence, and we’re talking to a lot of players, but we have also realized there’s an importance to picking a brand that has a strong presence and a strong business model.”
The hotels are in a quieter part of town, located just off of State Route 101 on the outskirts of South San Jose. Downtown San Jose, where the McEnery Convention Center, SAP Center and other attractions are located, is about 15 minutes away by car. However, Robertson has no doubt that the hotels will successfully garner business.
“If it’s done right, I think the hotels will be a focal point for the neighborhood,” said Robertson. “There’s no competition; there’s nobody else around.”
Santa Clara County and Silicon Valley had a particularly successful 2018, according to Atlas Hospitality, and downtown San Jose has seen a slew of hotel projects proposed in an attempt to keep up with demand. Cupertino, Calif.-based developer KT Urban recently increased the number of rooms for its luxury hotel at 8 North Almaden Blvd. to 330 rooms, while other hotels, such as Cord Associates’ 105-key hotel planned for 375 and 383 South Baywood Ave. would serve those in and around Santa Row.
“We’re very bullish on hotels in San Jose for a couple for reasons,” Robertson added. “It’s the tenth largest city in the country, and it is rapidly growing. You’ve got jobs being put into the downtown core and major office developments in San Jose that are creating both demand for hotels housing. Unless we see that slowing down, we don’t see a reason to stop doing hotels. We haven’t hit that critical mass of hotel density.”