“In the past 12 months, more than $1 billion dollars’ worth of downtown property has changed hands,” San Jose Downtown Association Executive Director Scott Knies announced at the start of his annual State of the Downtown address on Oct. 12.
“This massive investment by the private sector is more than half of what the San Jose Redevelopment Agency spent downtown during three decades.”
Several media outlets picked up this statement and confirmed the $1 billion spending threshold. Highlights of the past year:
u Google added at least $216 million in property to its buying binge on the west side of downtown, a total commitment so far approaching $360 million inclusive of a $67 million purchase of several City of San Jose-owned properties and other agreements.
– Jay Paul Company’s acquisitions of CityView Plaza and the old
JC Penney building at First and Santa Clara amounted to $329 million;
– DivcoWest and Rockpoint Group partnered to acquire Riverpark Towers for $228 million;
– Eagle Canyon Capital bought the Fairmont hotel for about $221 million;
– Gary Dillabough’s Urban Community claimed nine different properties for $215 million;
– Beacon Capital Partners acquired 160 W. Santa Clara St. for $101.5 million;
– Adobe bought the land for its fourth tower for $68 million.
“Downtown is firing on all cylinders on private and public investment,” said Councilmember Raul Peralez, who is also a Valley Transportation Authority (VTA) Board member.
The past month revealed a bounty of real estate activity, topped by Sobrato Organization’s proposal to build Market Street Towers on the 1.5-acre “Block 8” property at San Carlos, First and Market streets.
“This is what we call a 100 percent corner,” Knies said. “We’ll see employees spilling out to go to conventions, Plaza Park and restaurants.”
Designed by Miami-based Arquitectonica, Market Street Towers is actually one building meant to look like four towers. The 17-story project would total 600,000 square feet, including 19,600 square feet of ground floor retail. Workers on the top floors would look out onto two rooftops filled with gardens.
The project could host up to 3,200 employees and would be built with a technology company in mind as a tenant. Sobrato buildings are known for their quality. Like the Sobrato-built 480 Almaden Blvd., now owned by Oracle, this project would be built on spec.
“This will be a centerpiece urban project,” Knies added.
Other development items reported the past month include:
New SoFA proposal: Insight Development has proposed a mixed-use project in SoFA at 477 S. Market St. off Balbach Street, home of Tate Family Complete Auto Care since 1955.
The six-story design by Steinberg Hart resembles the look of Steinberg’s The Pierce apartment project a few blocks away. The ground floor retail area would be 4,700 square feet, with four levels of parking below it and 130 residential units on five floors above. Plans include a rooftop patio for tenants.
Alternative housing: Starcity plans to bring its “co-living” concept to San Jose, building from the ground-up at 199 Bassett St.
in the North San Pedro district.
Starcity, which started in 2016 in San Francisco, has four buildings in San Francisco. The company said 199 Bassett would be its largest, with up to 790 bedrooms.
The easiest way to define co-living is to call it a dorm for adults because tenants live with other people and share common areas. Utilities, cleaning services and basic supplies are taken care of; events are planned for residents; and quiet hours are necessary. But unlike dorms, co-living habitats offer each individual a private furnished room.
“We’re able to create neighborhoods within each development, fostering community in high-density urban areas,” said Starcity co-founder
and CEO Jon Dishotsky, who added that the Bassett project will accommodate couples and families as well as singles.
Co-living could become a more affordable solution that helps cities retain their middle-class workforce. In San Francisco, co-living spaces reportedly cost 20-30 percent less than studio apartments. In San Jose, rents for 199 Bassett are expected to be affordable to people making about 80 percent of area median income.
Swenson and Amcal are building a similar project, the Graduate, at San Carlos and Second streets, that will have 260 units and 1,039 beds.
Poll – 68 percent support Google’s plans: An overwhelming majority of San Jose voters support Google’s proposal for a transit-oriented development on the west side of downtown, according to a poll conducted in September by Silicon Valley Leadership Group.
“We’re unified in our support of Google to come to downtown San Jose,” said Carl Guardino, SVLG president.
Specific elements of the project revealed higher degrees of support:
– 87% favored new restaurants and retail u
– 87% providing new parks and open space
– 86% ensuring at least 15 percent of new homes constructed are affordable and for working families
– 86% creating millions of dollars in additional tax revenue for City of San Jose services
– 85% providing 15,000-20,000 new jobs over the next 10-12 years
– 82% connecting the Diridon area to nearby parks, business and shopping districts
– 81% creating a new bike/pedestrian trail along Los Gatos Creek
– 78% providing more than 2,600 new homes downtown
– 76% locating the project near the train depot and arena.
FM3 conducted the survey and assigned a variance of plus/minus 4.9 percent (95% confidence rating).
Another Google buy: Google and Trammell Crow have made another agreement to buy property near the Diridon Station on the west side of downtown. The latest deal was for the 14,400-square-foot church property at 56 S. Montgomery St., home of Templo La Hermosa of Assemblies of God for more than 70 years. The price has not yet been disclosed.
The company and City of San Jose have an Exclusive Negotiating Agreement for several more properties in the area. Details still need to be worked out, but the
agreed purchase price for the collection of parcels totaling 23.3 acres is $67 million.
Stage is set: The 35-year-old San Jose Stage Company made moves in the past month to set a future course for the SoFA-based theater group, which presents mostly off-Broadway productions to a regional audience.
First, the Stage purchased its theater at 490 S. First St. from the Successor Agency to the Redevelopment Agency (SARA) for $2.3 million. They used creative means — taking a $435,000 loan from Santa Clara County, one of the SARA financial benefactors. The remaining $1.865 million was financed by Swenson, which made an agreement with The Stage to build a mixed-use facility on the 19,343-square-foot property. The Stage theater, currently a 6,700-square-foot, 200-seat facility, will expand to a two-story performing arts center of about 20,000 square feet, with 350 seats, administrative offices and a large lobby area that would include a cafe or food concessions. Swenson will develop an eight-story hotel over the performing arts center. The project has no design or timeline yet.
Second, concurrent with the acquisition and development deals, the City Council approved $1 million in lighting, sound, video equipment and seating upgrades for the new facility. The Council made the contribution on the condition the theater company build the expansion and stay present in it at least 15 more years. In making the grant, the city acknowledged The Stage’s contributions to the creative arts and its generosity in supporting events by many of its neighbors at the theater.
“SoFA is thriving and San Jose Stage has been a big part of it, making it happen for 35 years,” said Councilmember Raul Peralez.
The Stage estimates the theater expansion will cost $4.5 million, not including the property price, and plans to leverage the City’s contribution to reach its fund-raising goals.
Stage co-founders Cathleen and Randall King completed an eventful October by being honored with the Office of Cultural Affairs’ Cornerstone of the Arts Award.
“We achieved another milestone and now own the property we’ve called ‘home’ for 35 years,” said Randall King.
Two more property acquisitions: The Successor Agency of the Redevelopment Agency (SARA) sold two parcels in the North San Pedro housing area to the companies that have planned to develop them for years.
Intracorp of Seattle completed purchasing its 2.4-acre site for $10.3 million on Sept. 28. With the purchase, and $102.7 million construction loan, Intracorp is primed to
start construction of 380 high-density units at Bassett, Julian and Terraine streets immediately.
On Sept. 19, Swenson officially became owner of the 1.2-acre site at Julian, North San Pedro and Devine streets, approved for a 300-unit high-rise residential project. Swenson paid $4.7 million. SARA still has another property to sell in the large subdivision. Trumark, which already has 64 townhome units started on two parcels off Julian streets at Coleman Avenue and Terraine streets, plans 14 more townhomes at the third spot next to City Heights at Devine and Terraine streets, which is in escrow for $1.5 million.
Changes to San Pedro Square: Two small-scale projects that could have mighty impacts on San Pedro Square are under way:
First is a plan to replace the patio and staircase at West Santa Clara Street and Almaden Avenue with a two-story building that would house a restaurant or commercial space on the ground floor and office space on the top floor.
Tom McEnery’s Lyndon Partners and Edward Storm’s Storm Land, LLC, propose a 3,759-square-foot first floor with 22-foot-high ceilings, plus 2,340 square feet of second-story office space that connects with the existing office space on the second floor of the adjacent Lyndon Building. The Lyndon Building, built about 1893, is significant in that it was first home of the Times-Mercury newspaper. The project is currently seeking historic preservation and site development permits.
Second is the former parking area at 8 N. San Pedro St. reconditioned to be an urban event space for corporate events, weddings and private parties called Blanco. The building will have three layers, a Great Room of 3,700 square feet, rooftop of 2,350 square feet and mezzanine of 1,250 square feet. Originally scheduled to be completed “circa fall 2018,” co-founder Michael Doyle hopes the project will be open in January. More at blancovenue.com.