Each week seems to be marked by news about downtown San Jose. The central business district of the Bay Area’s largest city has seen much-deserved attention since Apple and Google have announced to build mega-campuses inside the city limits and Adobe doubled down on their urban campus there. This week, another exciting project has been submitted to city planners for consideration—a 220-room luxury hotel at 270 West Santa Clara Street, called Almaden Corner, on the same block as the famed Hotel De Anza and the Axis condominium building.
The project, designed by Portland, Oregon-based C2K Architecture, was submitted by Cupertino-based KT Urban, which has been actively pursuing a number of developments in the city’s downtown core in the recent years. KT Urban’s project is just entering the comprehensive preliminary review process, so at this point in time, the design may be subject to change, as well as the massing and scale of the proposed project.
What the developer has envisioned is a 19-story high-rise that would provide roughly 157,000 square feet of space and 220 guest rooms on a site that is 8,756 square feet in area; today, the location serves as a surface parking lot. The project also envisions 77 parking spots, based on the .35 parking-to-room zoning ratio.
Each floor will have 13 or 14 rooms, depending on the area of each floor, which will taper down in size toward the lower floors of the building. The upper floors are proposed at 7,815 square feet, while the first floor will have 7,500 square feet.
The 19th floor is planned to be a bar with a 15-foot ceiling, while the rest of the floors will be the more standard 10 feet in height. The first and second floors will feature a lobby, retail and meeting rooms. In all, the building is planned at this point in time to be just over 225 feet tall.
Visually, the project fits in the surrounding skyline of the city, sitting next to the Axis building and across the street from several buildings of similar proportion and height. The only exception is the Hotel De Anza structure, which the developer is portraying as a historically significant and artistic compliment to the proposed new structure.
But the impact of this development is more tied to the economic events surrounding San Jose’s downtown core, and the recent hotel transactions in the city show a strong interest in such properties from investors across the globe.
“The market is recognizing that San Jose is becoming a destination for global business travelers. Many of the brands looking to get into the market want their customers to have an entry point into this market,” said Mark Tersini, principal at KT Urban. “The investment being made by Google, Adobe and Apple in and around downtown has definitely raised people’s awareness of the role that downtown San Jose will play in the future of Silicon Valley.”
For the year-end 2017, the San Jose market recorded $190 average rate per room, with an occupancy of 78.1 percent and RevPAR of $148.65, according to the most recent figures from Irvine, Calif.-based Atlas Hospitality Group. Alan Reay, president of Atlas, put these numbers in perspective by comparing them to 2010 when San Jose’s average rate was $105, occupancy was at 64 percent, and RevPAR came in at $67.
“This is driving pricing and new hotel construction in San Jose and Silicon Valley,” Reay said, adding, “It is probably in the top-3 markets from buyer desirability in California.” West Los Angeles and San Francisco being the other two. No other market in the state has seen this kind of growth, he said.
And this interest can be seen in the recent transactions in San Jose. In December of 2017, the 805-room Fairmont Hotel in downtown San Jose’s core sold to San Ramon-based Eagle Canyon Capital for $223.5 million, or approximately $277,640 per room. In June of 2017, New York City-based Blackstone Real Estate Income Trust paid $65 million, or $275,423 per room, to acquire the 236-room Hyatt Place San Jose Downtown hotel complex in downtown San Jose. In the same month, Westin San Jose, previously known as The Sainte Claire Hotel, was sold to the hospitality arm of the South Korean conglomerate Aju Group, which paid $64 million, or just over $374,000 per room.
Tersini added that his firm has been involved with the site for years, and only recently did it take the appropriate steps to explore the best uses for this location. “The site is one of the best corners in downtown and lends itself to a modern, sleek hotel. Proximity to San Pedro Market and the SAP Center are major bonus,” Tersini added. “The modern design will create visual interest at the intersection of Santa Clara Street and Almaden Blvd. The rooftop bar will offer an entertainment option not available in the market taking advantage of our great weather and views of the Santa Cruz Mountains.”
The project is now under review, which the developer hopes will be finalized through this year. The project is expected to kick off in the first quarter of 2019 with a 24-month construction and development pipeline.