By Janice Bitters – Commercial Real Estate Reporter, Silicon Valley Business Journal
Feb 11, 2019
A site slated to be San Jose’s first downtown co-living development has officially traded hands for $18 million, marking a milestone for the ballyhooed 800-bedroom proposal by housing startup Starcity.
San Francisco-based Starcity on Friday closed on the 0.77-acre site at 199 Bassett St. via a limited liability company called 199 Bassett Owner LLC. The property sits about a mile from where Google Inc. is working on developing a proposal for a massive new mixed-use tech campus.
The co-living startup, known for making “dorm living for adults” in San Francisco and in Southern California, has been expected to purchase the site from Cupertino-based developer KT Urban since last year, but until now a timeline and price hadn’t been revealed. The site was previously eyed by KT Urban for a traditional multifamily tower called Aviato, but in recent months has taken on a new life as Bassett, San Jose’s first co-living development proposal.
“It’s the culmination of 18 months of work,” Shawn Milligan, partner at KT Urban, said of the sale in an interview with the Business Journal on Monday.
The company has spent the past year and a half “targeting co-living operators around the United States and telling them about what San Jose has to offer for co-living and what co-living can offer downtown San Jose,” he added.
KT Urban will continue being an adviser to Starcity throughout the process. The Cupertino developer, which is currently highly active in downtown San Jose with several project proposals, was represented by Erik Hallgrimson and Dave Schley of Cushman & Wakefield on the recent sale.
Currently, the development groups are working with the city of San Jose to see co-living added to San Jose’s downtown zoning code. That would allow for the proposed 18-story tower to rise with somewhere between 700 and 800 bedrooms above ground-level retail that includes a “compact urban market,” according to Starcity’s plans.
Both Starcity and KT Urban representatives said city officials have been supportive of the concept. Milligan praised city officials for “moving at the speed of business,” to make room for such a project in the city’s development framework.
Co-living, a relatively new housing concept in the area, offers flexible, short-term leases for private bedrooms adjacent to shared common spaces, a model that allows for more residents in a building than a typical multifamily development. Many co-living buildings also offer a bevy of amenities, host resident activities or mixers and include the cost of shared household supplies in a fixed monthly rent cost.
“It provides an alternative for downtown high-rise living that is more economically feasible than apartments and or condos are right now,” Hallgrimson said in an interview.
Indeed, the concept seems to be an enticing one for KT Urban, which earlier this month confirmed to the Business Journal it was considering proposing a second, 27-story co-living tower in downtown on a site where it had previously proposed a traditional residential project.
That project, known as Garden Gate, is not yet approved by the city, but KT urban is working on the required environmental study to gain those approvals.
In the meantime, the recent sale of the Bassett project is significant for a site that Starcity says could see a groundbreaking this year. “It’s a huge milestone, not only for the company, but for the project itself,” Starcity spokesperson Erin First said in an interview. “This is the largest land acquisition Starcity has done to date and we are really excited to have control of that land.”