New hotel near Google village begins with demolition work
SAN JOSE >> A project to build a new downtown San Jose hotel officially has gotten underway with demolition work for the 176-room lodging complex that would sprout near the footprint of Google's proposed transit village.
The hotel has landed $48 million in construction financing from Poppy Bank, according to Santa Clara County real estate records. Now the work to build the hotel is starting.
Keystone, the name of the new hotel, will operate as a Marriott Townesuites lodging, according to its developer, Urban Catalyst. The hotel site is located at West San Carlos and Josefa streets in downtown San Jose.
The eight-story hotel is being built in an opportunity zone, which enables real estate investors to obtain favorable tax benefits when they substantially redevelop a property in such an area. Ahead of launching the construction of this project, Urban Catalyst raised a significant amount of opportunity zone funding from investors.
The overall project cost is $100 million, according to Erik Hayden, chief executive officer and founder of Urban Catalyst. Typically, such an amount includes the construction loan, equity investments, the property purchase amount, building materials, labor and other expenses and government fees.
Construction crews began demolition work recently to clear away structures on the project site, Urban Catalyst stated.
Urban Catalyst has bought numerous properties in downtown San Jose and has landed city approval for multiple developments.
Until now, the real estate company's most visible project is its transformation of the old Camera 12 movie theater site into a mixed-use office, retail and restaurant building on South Second Street.
The redevelopment of the longshuttered downtown cinema complex is in its latter stages.
The Keystone hotel project marks the first time that Urban Catalyst has launched a full-fledged construction project from the ground up to an eventual brand-new structure.
Urban Catalyst has decided to launch the hotel despite the economic ailments that the coronavirus unleashed, including a collapse of the worldwide travel and hotel industries.
The lodging sector has yet to fully recuperate from its maladies. Even so, leisure travel and hotels in vacation, resort and destination spots are rebounding.
Corporate travel and business-oriented hotels have yet to successfully recover and are suffering complications from tech industry cutbacks.
Despite these uncertainties, Hayden is convinced the new hotel will be in good shape, since Adobe is about to move into a new office tower nearby.
The new Adobe high-rise will dramatically expand the footprint of the company's current three-building headquarters campus and will enable the tech titan to greatly increase its head count in downtown San Jose.
Plus though Google is now reassessing the timeline and pace for its proposed downtown San Jose transit village, the search giant says it still is committed to both the project and its investment in the Bay Area's largest city.
Even if Google pushes back the pace of its Downtown West mixeduse neighborhood, where the company could employ up to 25,000 tech workers, the anticipated completion time frame for the hotel still might enable it to benefit from an increased Google presence in San Jose's urban core.
The vertical construction of the hotel is due to begin during the Aprilthrough-june quarter of this year. It is scheduled to be completed sometime during the first three months of 2025.
Hayden also is convinced that extended-stay hotels such as the Keystone could do well even with the murky outlook for downtown San Jose and the lodging and travel sectors.
“Even in the face of tough economic times, like right now, we're still able to move forward,” Hayden said.