Kinship Makes First Investment in Group of Development Projects in Bay Area

Kinship Simeon San Jose

By Jon Peterson

Chicago-based Kinship Capital will make the Post Street Tower project in San Jose its first ever ground development project it has invested in the San Francisco Bay Area.

[contextly_sidebar id=”4clskH5M4RvowdqTS5JDkyxJJRti1OHR”]“We feel very strongly about the overall market in downtown San Jose. It has really gone through a major transformation over the past five years, and we hope that the Post Street Tower project will be a continuation of this improvement,” says Nick Thomson, a principal with Kinship Capital. He declined to state what was the amount the company invested into the future residential project. It will be the majority owner of the property going forward. Public records indicate that the transaction closed at the end of May of this year, and the sale price listed for the surface parking lot is $8.8 million.

Thompson thinks that the downtown San Jose area has been very active. “Over the past 18 months, there have been over 40 restaurants opening, and asking rents on retail space has increased by 30 percent. I think this gives an indication to what has been going on in the area,” said Thomson.

Kinship believes a higher rate of return can be achieved by investing equity in a development deal versus buying an existing property. “ I would think that our investment return will be 200 basis points higher because it’s a development deal instead of purchasing an existing asset,” said Thomson. He would not comment on what the anticipated return for the firm would be on the development in San Jose.

Post Street Tower is a joint venture with Kinship and San Francisco-based SIMEON Commercial Properties. There will be another un-named capital source that will be investing some capital into the project.

“We think that there is and will continue to be in the future plenty of renter demand for apartments in San Jose. The projections for job growth in the future look very good,” says Mike Kin, chief investment officer for SIMEON Commercial.

The project is located at the northwest corner of Post Street and North San Pedro Street. The site covers ½ acre of land and is now being used as a surface parking lot. The plan for the project is to break ground in early 2016 and deliver the project to the marketplace in late 2017. SIMEON is projecting that rents will be somewhere around $4.00 per square foot.

The development will include 182 units of apartments, 7,000 square feet of retail and a 230-stall parking facility. The retail component of the project will have a mixture of potential uses. This could include a coffee shop and gym. The complex will also have its own gym on an upper floor of the property that would include among other things yoga classes.

Image courtesy of Apple Maps

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