East Bay Times
07/07/16

High-rise Hotel Proposed for San Jose
By George Avalos

http://www.eastbaytimes.com/breaking-news/ci_30102495/high-rise-hotel-proposed-san-jose

SAN JOSE — In a fresh indicator of the region’s bustling economy, a hotel that would be one of San Jose’s tallest buildings is being considered for a site north of downtown.

The planned 24-story hotel would be built on North Fourth Street just west of the interchange of Highway 101 and Interstate 880, not far from Mineta San Jose International Airport.

The proposal, by veteran developer Barry Swenson Builder, is a new indication that realty companies are confident the employment boom and the economy in Silicon Valley have solid staying power.

“As bad as things were in 2009 and 2010, things have come way back for the hotel market in Silicon Valley,” said Alan Reay, president of Atlas Hospitality Group, which tracks the hotel market.

Swenson filed a preliminary application near the end of June with San Jose city planners. “We’re just trying to get some initial feedback on height and density and what the city would like to see there,” said Bill Ryan, senior vice president for development.

Plenty of possible hazards confront the project. If the job market sours and the economy falters, business and leisure travelers could slash their trips. And lenders might turn queasy about financing commercial real estate projects, including hotels.

Still, experts and developers are betting the Silicon Valley economy won’t evaporate in yet another tech bubble any time soon.

The property, located at 1302 N. Fourth St. near the corner of East Rosemary Street, consists primarily of low-rise office buildings. Swenson would bulldoze the buildings to make way for the hotel if the project is approved. The number of rooms for the proposal was not immediately available.

“This hotel has good prospects,” Reay said. “All the pundits were saying that we would see a slowdown in the hotel market. But San Jose and Silicon Valley continue to power ahead.”

Swenson has already developed a hotel project with an unusual twist in the area, a 321-room lodging at 10 Skyport Drive near North First Street. That complex, known as Marriott Residence Inn & SpringHill Suites San Jose, is actually two hotel brands in one building, sharing a lobby and other common areas.

“It’s doing really well,” Ryan said of the dual-brand hotel complex, located a mile from the site of the proposed high-rise.

These projects have emerged amid a surge in lodging activity in San Jose and Silicon Valley generally, as measured by the most meaningful metric in hotel demand: revenue per available room.

Through the first five months of 2016, according to Smith Travel Research, revenue per available room in the South Bay region — made up of Santa Clara County and Menlo Park — averaged $143.80, up 9.8 percent from the same period in 2015.

The Silicon Valley figure was 25 percent above the statewide revenue per available room of $114.64.

At present, 682 hotel rooms are under construction in Santa Clara County, according to a survey by Atlas Hospitality.

These include two hotels in San Jose totaling 254 rooms, a 200-room hotel in Mountain View, a 124-room project in Milpitas and a 104-room hotel in Morgan Hill, Reay said.

“The revenue numbers are phenomenal right now and it’s a strong, healthy hotel market in Silicon Valley,” Reay said.