Downtown San Jose’s Fairmont Hotel to Be Sold for $250 Million
Downtown San Jose’s Fairmont Hotel to Be Sold for $250 Million
The Mercury News
12/15/17
Downtown San Jose’s Fairmont Hotel to Be Sold for $250 Million
By George Avalos
SAN JOSE — The Fairmont Hotel in downtown San Jose is slated to sell next year for $250 million, according to one of the principal owners of the iconic lodging complex.
The 805-room hotel tower is expected to be bought by Eagle Canyon Capital, a San Ramon-based firm, said Lew Wolff, a principal executive with Maritz, Wolff — a realty investment firm that is the primary owner of the high-rise hotel.
“We have had the Fairmont San Jose for a long time, and we have done very well there,” Wolff said. “We have had some softer times and better times with it. It’s been a lot of fun. This hotel is an icon.”
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The Fairmont, whose 22-story tower opened in 1987, was one of the key components in a decadeslong quest by San Jose city and business leaders to bring more activity into the downtown area.
Wolff and his partners bought the Fairmont in 1996, at a time when the hotel was experiencing financial woes.
“The Fairmont San Jose had fallen on bad times that affected a lot of other Fairmont properties, but we stepped in with a crown prince from Saudi Arabia and bought the hotel,” Wolff said. “We managed to buy the hotel and closed the purchase just about the day before it would have gone into foreclosure.”
Along the way, the Wolff partnership added a 13-story, 264-room annex to the Fairmont San Jose.
“The market did so well that we decided to add those rooms across the way,” Wolff said.
The annex opened in 2002.
“The Fairmont is a pretty good brand,” said Oliver Shah, an executive vice president with Atlas Hospitality Research, which tracks the lodging market. “It’s not as highly rated as Ritz-Carlton, Four Seasons or Shangri-La, but Fairmont is a very good brand.”
According to Wolff, the sellers and the buyers have signed a contract that will lead to a sale. Wolff believes the new owners will carry on with efforts to keep the hotel financially strong and an attraction for guests and travelers.
“Like any other property, we put money into it, maintained it pretty well,” Wolff said. “In talking to the next owner, I believe they will have a real commitment to make it as good and do even better than we did.”
The sale will include only the hotel components of the site, according to Wolff. Not included: ground-floor retail and dining establishments. Also not included is an underground hotel parking garage that’s owned by the successor to the now-defunct San Jose Redevelopment Agency.
The new owners will be buying a hotel in a downtown area that is considered to be a vibrant and strong economic part of Silicon Valley.
“Silicon Valley is a very strong market, but I’m afraid that it might be a little bit overrated,” Shah said.
Wolff is part of a group that has struck a deal to sell a site at 333 W. San Fernando St. in downtown San Jose to Adobe for a new office tower. He believes the downtown has become progressively stronger over the decades.
“We were a pioneer, along with people like Kimball Small and (former mayor) Tom McEnery, in the downtown. And five years ago, we would have liked downtown San Jose to be where they think it will be in five years,” Wolff said. “But with Adobe, and the Google development at Diridon station, with the leadership of Mayor Sam Liccardo, I think San Jose will have an important downtown.”
