Downtown San Jose hotel near Google village gets crucial construction loan
SAN JOSE — A big downtown San Jose hotel slated to sprout near Google’s proposed transit village is pushing forward now that the lodging project has landed a vital construction loan.
Keystone, a Marriott TowneSuites Hotel, which will total 176 rooms, has broken ground a short distance from the footprint of the search giant’s new neighborhood on the western edges of downtown San Jose.
Urban Catalyst, a real estate firm that’s active in downtown San Jose, is developing the all-suites hotel at the corner of West San Carlos Street and Josefa Street.
“It’s great to see that even in a difficult economic environment that a lender is confident in downtown San Jose and our project,” said Erik Hayden, founder and managing partner with Urban Catalyst.
Poppy Bank provided $48 million in construction financing for the hotel project, according to documents filed on Jan. 30 with the Santa Clara County Recorder’s Office.
“The Keystone project is a bellwether for the development future of downtown San Jose,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy. “Obtaining financing for a hospitality project shows the investment and banking community’s faith in Urban Catalyst and 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, Hayden said. Typically this sort of amount includes the construction loan, equity investments, the property purchase amount, building materials, labor and other expenses and government fees.
The hotel is also expect to include a rooftop lounge and bar, according to Hayden.
The project site is also close to the edges of Google’s proposed new neighborhood, known as Downtown West, near the Diridon train station and SAP Center.
“Hotels, especially extended stay hotels, are expected to do very well,” Hayden said, “And we are also just 300 yards away from the Google village.”
Google’s village is slated to include office buildings, homes, shops, restaurants, lodging facilities, open spaces, cultural loops and entertainment hubs. The search giant expects to employ up to 25,000 people in the new neighborhood upon full buildout.
“Poppy Bank feels the same way about the downtown as we do,” Hayden said. “Downtown San Jose is really the only true urban environment in Silicon Valley. It’s the most logical place for infill development.”