The Mercury News
High-rise Hotel Eyed for Prime Downtown San Jose Site
By George Avalos
A hotel tower is being planned for a prime site in downtown San Jose, a short distance from a future Google transit village and a pending expansion of the Adobe Systems campus, one of the project’s developers said.
The high-rise lodging would reach 19 stories skyward and has been proposed for a vacant parcel, now used for surface parking, at 8 N. Almaden Blvd. and West Santa Clara Street in downtown San Jose, the proposal from Cupertino-based developer KT Urban indicated.
“Our market research indicates that it’s an excellent time to move forward with hotel rooms in the downtown core,” said Mark Tersini, a KT Urban principal executive.
The high-rise hotel would contain 220 rooms, city planning documents show.
“Everything we are seeing about San Jose and Silicon Valley, with all of the expansions by technology companies, shows you can definitely have enough business for hotels,” said Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks California’s lodging market. “But the question is: When is enough, enough?”
For now, green lights beckon. Major upgrades, developments and expansions are being planned in downtown San Jose, with much of the anticipated activity in the vicinity of the Diridon train station and the SAP Center.
“It’s a perfect location, it has fantastic identity from Highway 87 and is close to the SAP Center,” Tersini said.
Two blocks from the proposed hotel high rise, Mountain View-based Google plans a transit-oriented community of offices, homes, retail and restaurants, a development where 15,000 to 20,000 of the search giant’s employees could eventually work in downtown San Jose.
Just around the corner to the south, Adobe Systems intends to dramatically increase the size of its three-building headquarters campus by constructing a fourth office tower to accommodate a growing downtown San Jose workforce.
Also short distances away, Boston Properties has proposed development of three office towers on South Almaden Boulevard, the Sobrato Organization intends to develop a 204,000-square-foot office building that’s been leased to Santa Clara County, while TMG Partners and Valley Oak Partners plan a million-square-foot office complex that will be marketed to tech companies.
“You have the expansion of Adobe, the anticipated development of Google and other office developments in the future,” Tersini said. “We see the opportunity to meet continued strong demand for additional hotel rooms in downtown San Jose.”
The future hotel would rise next to the existing Hotel De Anza and be across the street from the AC Hotel, which opened in early 2017. When completed, potentially in 2021, the hotel would have off-site parking with a valet, and an off-site laundry.
“The AC Hotel has proven the downtown market can absorb more rooms,” said Bob Staedler, principal executive with San Jose-based Silicon Valley Synergy, a land-use and planning consultancy. “With all the activity from conventions such as the Apple Worldwide Developers Conference to events at the Arena, a hotel that is walkable to the SAP Center is a really smart move.”
During the first three months of 2018, the occupancy rate for hotels in Santa Clara County was 74.9 percent, up 0.4 percent from the similar period in 2017, according to STR, a Tennessee-based market researcher that tracks the lodging industry. The average daily room rate was $200.50, up 4.4 percent from the year before, STR reported.
“What stands out most when looking at the region’s performance is rate growth well above the national average,” STR said in an analysis of the South Bay hotel market. “That has allowed hoteliers in Silicon Valley to consistently grow revenue per available room. The big demand generators in the area, tech companies, provide obvious stability for the hotel industry.”