New World-Class Tower Proposed for Downtown San Jose!!!
A local development firm, operating with Chinese backing, has been selected to acquire a key, city-owned parcel in downtown San Jose — a deal that could lead to a soaring modern tower that combines homes, offices, a hotel and new expansion space for the Tech Museum of Innovation.
City officials chose Insight Realty Co. for the development deal at 180 Park Ave., better known as Parkside Hall, officials confirmed on Thursday. The firm headed by real estate veteran Dennis Randall beat out three other hopefuls for the site, located near one of downtown’s best corners at Park Avenue and Almaden Boulevard.
Insight would still need to come to financial terms with the city, a process that could take six months and would require city council approval. If a deal is ultimately inked, it could lead to an iconic new element in the city’s skyline — a 270-foot tower punctuated by landscaped outdoor terrace steps wrapped in an undulating glass skin. The project — dubbed Museum Place — would include:
- 60,000 square feet of expansion space for the Tech Museum on the ground floor;
- 210,000 square feet of “creative office” on five stories above the Tech space;
- Twelve stories of condos;
- Three stories at the top for a “upscale nationally branded boutique hotel, with luxury penthouse residences on the highest floor,” according to a copy of Insight’s proposal.
City officials have been trying to find a developer to replace Parkside Hall for several years, but previous efforts fell flat. The goal is two-fold: Provide a new home to replace the aging exhibit space for The Tech, while adding another tower to San Jose’s modest crop of high-rises.
“We’re excited,” said Nanci Klein of the city’s Office of Economic Development, which spearheaded the request for proposals for the site back in January. “The proposal that they put forward is very supportive and complementary to the Tech, which is a critical partner to us. It would be a fabulous re-use of the land to accomplish a mixed-use facility that benefits the Tech greatly and puts an exciting gateway area into San Jose.”
The proposal submitted by Insight is just a concept and is likely to change in reaction to city and community feedback. But it is notable for a few reasons: While most high-rise proposals downtown have been residential in nature, the Insight concept includes office and hotel as well as housing. The downtown core has seen no new office space since 2010’s Riverpark II, and is just now seeing its first new hotel rooms added with an AC Hotel under construction Highway 87 and Santa Clara Street. Such towers that mix multiple asset classes have become popular in cities like New York and San Francisco, but have not been seen in Silicon Valley.
“We spent a lot of time coming up with the mix,” Randall said in an interview on Thursday. “It all starts with The Tech. It’s an iconic space and we want to lever off of that. We thought, it’s all about innovation, so why not have innovative companies right there? It’s kind of a no-brainer.”
The residential and hotel components would play off each other, too, with residents able to access amenities from the hotel, Randall said.
The project also continues a theme of rising Chinese investment in Silicon Valley real estate development. The project’s lead investor is China New Era, a global real estate investor, which is committing more than $250 million to the project, according to a project description. Insight is partnered with the development firm King Wah Development, China New Era’s North American development partner. Insight was introduced to the firm through Silicon Valley Synergy, a San Jose-based real estate consultancy headed by Bob Staedler that works with overseas investors, Randall said. China Construction America, a China New Era affiliate, will be the general contractor. John Luk, senior managing director with GD Commercial, is also working on the venture.
“They were looking for projects, and we were also always looking for partners,” Randall said.
The project is not without risk. Its size and mix of asset classes makes it a pricey proposition in a market that has not seen anything quite like it. And the proposal does not include the building at the corner of Park Avenue and Almaden Boulevard, a privately owned boarded up former bank. (Including that corner building would make the site easier to develop on.)
But Mark Ritchie, a veteran downtown expert with Ritchie Commercial, said he thinks Museum Place could do well. While residential is a sure bet, he thinks the office component also has strong attraction points.
“If someone can get out in front and build it, a tenant will come,” Ritchie said. “Whoever’s first will get lots of action. We don’t have any large space to offer a tenant downtown. I think the fuse is lit. And Park Avenue is just such a great address. It has a great cachet to it.
“And having the Tech as a built-in interesting ground-floor use, in downtown San Jose, is worth a lot.”
For The Tech, the upshot is the replacement of an aging facility — Parkside Hall, which is attached to the nonprofit at 201 S. Market St. The Museum Place project is being designed by the architecture firm Steinberg, which also designed The Tech.
“The truth is, Parkside Hall has to be repaired and replaced,” Tim Ritchie, president and CEO of The Tech, told me in a phone call late Thursday. “It’s crumbling. So it just came together as a perfect opportunity where Parkside has to be replaced — completely redone — and the economics favor development downtown.”
The new space would come as the Tech is in the middle of a $70 million capital campaign that aims to renovate nearly every part of the Tech’s existing facility “and this will add momentum to that,” Ritchie said. “Hopefully this development will focus at least in part on creativity per square foot. So the development itself will take advantage of the Tech and vice versa, to add life to many things.”
This would be the second major project for Insight in and around the downtown core. In July, I profiled Insight's plans for a former Union Pacific site near SAP Center. Insight, headed by Randall, includes real estate veterans John Pringle and Matthew Love, with entrepreneur Vincent Woo.
The City Council will vote on entering into an exclusive negotiating agreement with Insight at its Oct. 6 meeting. The negotiation phase is expected to last about six months, “But we’ll try, if at all possible, to squeeze that into a shorter time frame to get that going so they can get building,” Klein said.
Source: Silicon Valley Business Journal, Nathan Donoto-Weinstein
http://www.bizjournals.com/sanjose/news/2015/08/20/exclusive-san-jose-picks-mixed-use-tower-proposal.html
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