By Meghan Hall
The first quarter of 2019 ended on an active note, with the sale of downtown San Jose’s AC Hotel Marriott rounding out a number of notable commercial transactions that indicate investor interest in the heart of Silicon Valley is far from waning. An affiliate of AVR Realty, based in Yonkers, N.Y., bought the hotel at the end of March for $95.4 million, or about $425,000 per room, according to Santa Clara County Public Records.
The sale was first reported by The Mercury News.
The 210-key hotel opened in 2017 and was the first new construction hotel to open in downtown San Jose in the better part of a decade. The hotel was built by Rockbridge Construction, based in Ohio, who bought the site in 2014 for $3.5 million and secured a $29.4 million loan to finance the project’s construction. According to Marriott’s website, the project was “designed to accentuate the modern travel routine,” with its European-inspired décor and offerings. Amenities include the AC Kitchen & Lounge, in-room work stations, a fitness center and outdoor pool.
The property is located at 350 W. Santa Clara St., central to some of the cities’ biggest attractions, including the SAP Center — home to the San Jose Sharks — and the San Jose McEnery Convention Center. The property is blocks from Diridon Station and is easily accessible from State Route 87.
Currently, the AC Hotel by Marriott is still the newest ground-up hotel in San Jose, although there are numerous others working their way through the planning process. Cupertino, Calif.-based developer KT Urban has proposed a 330-room hotel called Almaden Corner for downtown San Jose, while Cord Associates has submitted plans to construct a 105-key hotel at 375 and 383 S. Baywood Ave. near Santana Row.
The surge in hotel development throughout San Jose and the greater San Francisco Bay Area is unlikely to ebb anytime soon, thanks to the region’s strong fundamentals. Across California, the Golden State had 40 percent more hotels under construction at the end of 2018 than at the end of 2017, stated Atlas Hospitality Group in its 2018 California Hotel Development Survey. New hotels and new rooms in planning are up 24 percent and 19 percent, respectively. And, according to the firm’s 2018 Year-End California Hotel Sales Survey, Santa Clara County saw one of the highest appreciation rates in the region, with a median price per room increase of 32 percent over 2017. The average price per room rose 18 percent.
The AC Hotel brand is part of Marriott International’s global portfolio of 19 brands; currently, the brand is part of more than 125 hotels across Europe and the United States. Marriott intends to open 40 additional AC Hotels in the next three years across the United States, Canada and Latin America.