By Meghan Hall
San Jose’s South First Area is in the midst of rejuvenation as investors continue to develop property plans in the cultural, entertainment and arts district. Two of San Jose’s biggest investors are following through with such initiatives and have purchased a development site that could become home to more than 400 residential units. In a deal that closed April 2nd, Gary Dillabough and Jeff Arrillaga of Urban Community purchased 420 S. Third Street for $13 million, or about $325,000 per unit.
The property is located at 420 S. Third St. and the previous owner was affiliated with Atlantis Properties, according to public records. The property is currently developed with the Metro Gardens Apartments. The community has 40 units and was 62.5 percent leased at the time of purchase.
Marcus & Millichap represented the property sellers.
Urban Community is planning a new residential site at the property, which will include several residential towers. Planning documents submitted to the City of San Jose indicate that several high-rises. The smallest tower would rise just 11 stories, while the second and third towers would be 21 and 23 stories, respectively. The buildings will include a mix of for-sale and rental units. The ground floor the developments will feature retail. Amenity spaces and publicly accessible outdoor areas are also planned, but current outlines are still preliminary420 S.
However, in order to proceed with its development plans, Urban Community would need to purchase surrounding property. According to industry reporting, the firm has obtained contracts to purchase the lots for the development of the towers. In all, the properties include about 1.3 acres of land and are occupied by Dakao Sandwich and Dai-Tranh Supermarket.
San Jose’s SoFA District is home to numerous art galleries, theater companies and cultural organizations, including the San Jose Opera, Silicon Valley Symphony and Institute of Contemporary Art San Jose. Since the City’s founding, the neighborhood had a reputation as a vibrant retail district. However, in recent decades, the neighborhood faced economic hardship. New plans for development and the explosive growth of San Jose as a whole, is expected to bolster activity in the neighborhood in the coming years.
In 2016, Sares Regis Group of Northern California began leasing The Pierce, a mid-rise 232-unit luxury apartment and retail community at 2 Pierce Ave. In Spring of 2019, a 130-unit mixed-use development was proposed by Acquity Realty, Inc. at 477 S. Market St., while another 280-foot office building at the corner of Almaden Boulevard and Balbach St. has contributed to the neighborhood’s growth. Other new development includes urban Catalyst’s “The Mark,” a 216-unit residential development which will cater to San Jose University Students (SJSU). Urban Community also purchased the City Lights Theater and related properties for $22 million in the spring of 2020. Urban Community’s purchase included seven parcels along First and Second Streets. Combined, it is hoped these developments will breathe new light into the neighborhood and community as the rest of San Jose develops.