By Meghan Hall
San Jose’s retail core has huge gravitational pull thanks to its diverse mix of retailers, services and entertainment options. In recent weeks, a number of properties have sold nearby, and another key development site has been posted for sale and could add to the mix. An offering memorandum obtained by The Registry shows that 2850 Stevens Creek Blvd., described as an “extremely rare” hotel development opportunity, has been listed for sale for $18.6 million.
The property is currently being marketed by Marcus & Millichap. The offering memorandum notes that currently, the property totals 23,753 square feet, or about 0.55 acres.
Previously, Choice Hotels International and Cambria Hotels & Suites, had originally anticipated building their own hotel at the property, with plans to open the expected development in 2018. Public records indicate that the project team did file for site development permits; however, the development team never followed through on their plans.
“2850 Stevens Creek is a fully entitled and shovel ready project that proposes to develop the existing gas station into a 10-story hotel with 172 guestrooms,” explained Marcus & Millichap’s First Vice President of Investments Yuri Sergunin. “It’s a rare hotel development opportunity in a prime location with direct proximity to Santana Row and Valley Fair, one of the most vibrant and highly sought after business/entertainment destinations in the Northern California region.”
Preliminary plans for the project show the first floor would accommodate the lobby and reception area, a lounge, restaurant, and kitchen. Several levels of above grade parking would be provided, and floors five through nine would contain the guestrooms. The rooms, state plans, would range in size from 300 to 700 feet in size. On the fifth floor, a fitness room would be available to guests. On the top floor, another restaurant area, kitchen and meeting rooms would be available.
The development would be in line with San Jose’s Urban Village Commercial land use designation for the property, which applies to a number of assets along Stevens Creek Boulevard and Winchester Boulevard, as well as properties near Interstate 280. These assets were identified as being prime for redevelopment. Such redevelopment is intended to support more commercial activity and include projects oriented toward mid-rise office buildings and hotels, as well as neighborhood-serving retail uses.
Perhaps one of the biggest draws for a potential buyer, however, is the site’s proximity to both Santana Row and the Westfield Mall. In recent years, millions have been spent on repositioning and building out both assets. Marcus & Millichap states that Santana Row is one of the “most successful” examples of mixed use developments within the United States, and draws daily crowds.
“Santana Row is Silicon Valley’s premiere destination for shopping, dining, living, and more. With over 70 shops, 20 restaurants, and 9 spas and salons, there’s something for everyone at the Row,” states the offering memorandum.
By 2024, more than 600,000 people are expected to live within five miles of the property, meaning that a future buyer or developer could capitalize on more foot traffic to the area. Property owners and investors are looking to take advantage of these market fundamentals moving forward. In the last several months, several other properties have traded hands, including 425 S. Winchester, which was purchased by KT Urban for $7.6 million and who will redevelop the asset into a five-story mixed-use residential project. 385 S. Winchester, another retail asset_old in March this year as part of a 1031 exchange for $5.2 million, and most recently, 2910 Stevens Creek Blvd. sold for $17.6 million.