The Mercury News
02/21/18

Hotel Planned for Downtown San Jose’s South Side
By George Avalos

https://www.mercurynews.com/2018/02/21/hotel-planned-for-downtown-san-joses-south-side/
SAN JOSE — A large new hotel is being proposed for the south side of downtown San Jose, which could form a gleaming gateway — along with other projects — to the urban core of the Bay Area’s largest city.

“This is a preliminary review request for a seven-story hotel with 110 guestrooms and two levels of underground parking with 40 parking spaces,” said Genevieve Singh, a spokeswoman for San Jose’s city planning, building and code enforcement department.

The hotel, the latest in a slew of proposals for downtown San Jose, is planned for the corner of South Second and East Reed streets.

In an apparent nod to the rise of transportation besides driving alone in motor vehicles, the hotel also will have 10 long-term and 10 short-term spaces to park bicycles, city planners stated.

The location of the proposed hotel might be seen by some as a bit off the beaten path in downtown San Jose, tucked away at the edge of Interstate 280 on the south end of the city center.

What the proposal may show, however, is that what is considered traditional downtown San Jose might require an expanded definition, according to Bob Staedler, principal executive with San Jose-based Silicon Valley Synergy.

“Downtown San Jose’s sphere of influence is growing, investment opportunities are expanding,” Staedler said.

In the same area of South First, South Second and East Reed streets, The Pierce, a 230-room residential complex, opened recently; and a 285-unit, 27-story residential tower has been proposed next to the hotel site. These three projects could form a southern gateway to the rest of downtown San Jose.

The Silicon Valley hotel market was more robust in 2017 than in 2016, according to a report by CBRE Hotels Consulting.

In 2017, revenue per available room, the most closely watched barometer of the lodging market, was $161.41 in the Santa Clara County/Peninsula market, which was up 5.5 percent from 2016, CBRE Hotels reported.

“The hotel market is strong in San Jose, and there is a need for more rooms in downtown San Jose,” Staedler said.

During 2017, 579 hotel rooms were added in Santa Clara County, up from 127 added in 2016, a report from Atlas Hospitality Group showed. Atlas also reported an estimated 1,443 hotel rooms were under construction in Santa Clara County, compared with zero in 2016. The largest hotel to open in Santa Clara County in 2017 was the AC Hotel San Jose, which added 210 rooms in downtown.

“Santa Clara County has 56 hotels with 9,453 rooms in planning, a 23 percent room count increase over 2016,” Atlas Hospitality reported.

The new hotel project on South Second Street has emerged amid a variety of development proposals for downtown San Jose.

Google plans to build a transit-oriented community of offices and other amenities where 15,000 to 20,000 of the search giant’s employees could work near the Diridon train station on the western edge of downtown San Jose. Adobe has bought land for a fourth office tower that would dramatically expand its downtown campus.

Near the Google and Adobe sites, TMG Partners and Valley Oak Partners are eyeing a million-square-foot office campus downtown, while Trammell Crow is also poised to build a big office campus in the same area west of State Route 87. Plus, several residential towers are under construction in downtown San Jose, with more in the pipeline.

“We have an NHL All-Star Game in San Jose next year, the NCAA Championship for College Football is planned for Levi Stadium, and you have a lot of development being planned for downtown,” Staedler said. “These events, and all the development activity, suggest a healthy market.”