Ken and Mark Tersini, two brothers who together head the Cupertino-based development firm KT Properties, have done as much as anyone to shape downtown San Jose’s skyline.
In 2008, their 22-story, glass-and-granite Axis condo tower at 38 N. Almaden Blvd. opened for occupancy, one of the city’s first residential high rises. That same year, they acquired a key corner a few blocks away at Santa Clara and Market streets.
It took a while, but that site is now a hotbed of construction — topped out at 23 stories, buttoned up in distinctive blue glass cladding.
“I wish I had a good answer, but I really don’t,” Ken Tersini said, when asked why the family bothers with high-rise, which is a much more complicated type of building project to bring to market than mid-rise. “We’re just very strong believers in the San Jose market and we’re very strong believers in the high-rise market.”
KT took a different route to bring One South Market to fruition than it did for Axis. Rather than take out a construction loan and build it themselves, the firm sold the project to Palo Alto-based Essex Property Trust last summer. They remain as construction managers.
Still, getting here wasn’t easy.
“Between the period when we acquired and when we developed it, we had a huge economic upheaval and that put a lot of projects on the sidelines,” Tersini said. “One South was no different.”
Essex came into the picture as KT was going through the entitlement process, but getting a deal done required shaving costs. The broader apartment market also had to continue improving.
“We had to get to a point where you had a strong enough end-user market and you could get the economies and efficiencies to match the price,” Tersini said.
It is hard to overstate the significance of Essex’s signing onto the project in 2012. The publicly traded real estate investment trust’s stellar track record makes its development moves closely watched. Its acquisition of One South Market was seen as a seal of approval by a major builder that downtown is ready for significant investment. Since then, other high-rise projects have also gotten closer to reality and one is under construction.
“We’ve never really understood why, in all West Coast cities, San Jose’s urban core hasn’t taken off, because it should,” said John Eudy, Essex’s executive vice president of development.
Even so, Eudy added that the deal did represent a major undertaking, and the decision to go high rise wasn’t something done lightly.
“It wasn’t an easy deal to do,” he said. “There was a lot of discussion because, No. 1, high-rise construction is more expensive. What helped mitigate that is the city recognized it, and the mayor and (Councilman Sam Liccardo) pushed through some fee waivers to make it work.”
Observers say One South, which also includes about 7,000 square feet of retail, is helping propel downtown’s renaissance by providing the kind of luxury rentals that today’s tech workers demand. That could help create a “virtuous cycle” by attracting more office tenants, which in turn will bring more residents.
KT now has another project underway. It just sold a nearby development site, slated for more than 600 units, to a deep-pocketed Chinese real estate firm that plans to go vertical next year.
“Since we’ve been here, and watch the market mature, we felt the time was right to start building up,” Tersini said. “We still have a tremendous amount of growth to accommodate and there’s not a lot of available land.”