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Hotel Developers Grab Site Near Downtown San Jose’s Google Village Project

The Mercury News
01/18/18

Hotel Developers Grab Site Near Downtown San Jose’s Google Village Project
By George Avalos

https://www.mercurynews.com/2018/01/18/hotel-developers-grab-site-near-downtown-san-joses-diridon-station-google-transit-village/

 

SAN JOSE — Realty investors have grabbed a downtown San Jose property that’s expected to be developed as a high-rise hotel, a lodging site that would sprout next to a planned Google transit village.

Diridon Hospitality paid $4 million for the property at the corner of Stockton Avenue and West Julian Avenue on Jan. 16, according to Santa Clara County property records. The county records show that Diridon Hospitality, an affiliate of Dallas-based Kade Development, paid cash. The seller was the San Jose Redevelopment Agency.

This deal provides a fresh sign of the Google effect that appears to be spurring a variety of development efforts in downtown San Jose.

“If you look at the site right now, it does’t necessarily show itself as a hotel development property,” said Dharmesh Patel, an executive managing director for hotels with Colliers International, a commercial realty brokerage. “But with the Diridon Station project, the Google development, Trammell Crow, TMG, Adobe expansions, when all that comes to fruition, this hotel would be smack dab in the middle of that activity.”

Realty investors are increasingly eyeing downtown San Jose due to the prospect of 15,000 to 20,000 Google employees who would work a short distance from the Diridon train station. Diridon Station would eventually be a hub for BART and high-speed rail stops, along with today’s existing light-rail, Caltrain, Amtrak and ACE Train connections.

“If the other stuff gets developed, this hotel site would be easily walkable to Diridon Station, the SAP Center, and the Google village,” Patel said.

The West Julian and Stockton site is expected to feature a nine- to 10-story hotel containing 220 rooms, according to Alan Reay, principal executive with Atlas Hospitality, which tracks the California lodging market.

“If you look at what is happening in downtown San Jose generally, whether it is hospitality, retail, residential, dining, when you have all that activity, plus the potential of the Google campus, it can completely revitalize an area,” Reay said. “You also get more hotel projects like this.”

San Jose Mayor Sam Liccardo didn’t want to discuss this specific hotel project. But the mayor did say the downtown area is expected to draw a variety of developments and investments.

“We envision a broad array of uses next to and around the transit village that Google is planning,” Mayor Liccardo said Thursday in an interview with this news organization.

Mountain View-based Google is eyeing 6 million to 8 million square feet of offices next to and near Diridon Station and the SAP Center in downtown San Jose. Those office towers would be able to accommodate 15,000 to 20,000 Google employees in what’s described as a transit-oriented community.

“There will be restaurants, hotels, entertainment, offices, retail, housing, all the things you need for a vibrant urban center,” Mayor Liccardo said.

Experts believe the new hotel at West Julian and Stockton would be developed amid a relatively strong lodging sector in Santa Clara County.

“I think this hotel will do very well, given everything happening in downtown San Jose,” Reay said.

Four hotels opened in Santa Clara County during 2017, including three in San Jose. The San Jose hotels together added about 400 rooms, including the 210-room AC Hotel and the 44-room Hotel Clariana, both in downtown San Jose; and the 145-room Homewood Suites San Jose North. In addition, Residence Inn Cupertino opened in 2017, adding 180 rooms.

“The hotel market in Silicon Valley is still on a growth trajectory,” Patel said. “Revenue per available room has shown some deceleration, but it’s still an upward trend.”

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