KT Properties has acquired nearly a full city block in a prime downtown San Jose location. The company is planning a project that would literally reshape the city’s skyline, adding two residential towers with more than 600 units to the central core.
The 1.7-acre property — bounded by West St. James Street, North San Pedro Street, West St. John Street and Terraine Street — is located between the existing City Heights condo tower and the San Pedro Square Market. KT closed on the deal this week, said Mark Tersini, a principal with the Cupertino-based developer. He declined to release the purchase price. The seller was the Boccardo family, according to county records.
“It’s a beautifully located site, adjacent to San Pedro Square, with excellent freeway access and proximity to the restaurants and offices,” he told me. “It’s the perfect location for residential.”
The pickup is yet another example of renewed developer interest in building dense residential in downtown San Jose after a several-years lull. As we reported Aug. 2, hundreds of units are on the drawing boards as the central city finally gets a taste of the residential development that has swept through suburban areas.
In that respect, KT’s calling card is significant: The company, led by brothers Mark and Ken Tersini, developed and built the existing Axis condo tower during the last real estate cycle. KT also developed One South Market, a 312-unit luxury apartment project, then sold the project to Essex Property Trust shortly before construction commenced this summer. (A KT-affiliated company remains the construction manager on the project.)
“We’re bullish on Downtown San Jose,” Tersini said. “We believe it’s an untapped market for residential development, whether for-sale or for-rent product. It’s a perfect market in which to be developing these projects.”
New Project Taking Shape
An income-generating parking lot currently covers most of the property. It is also home to the historic Fallon House along West St. John Street, but that city-owned property, as well as a small private residence on Terraine Street, were not part of the sale. The transaction was arranged by Erik Hallgrimson and Maryanna McSwain of Cassidy Turley.
Tersini said the company will submit plans to the city in the coming weeks for two residential towers along with a significant amount of ground-floor retail.
The parcel is larger than those of either of the two towers KT has developed so far, allowing the opportunity to build a bigger project, said Kevin Sauser, a principal with C2K Architecture Inc. in Portland who is working on the design. The firm also designed Axis and One South Market.
KT Properties declined to release conceptual drawings of the proposal while they are still being refined, but Sauser described a sleek, modern aesthetic. He said the two towers “will have a similar design, but be seen as siblings rather than twins.”
“We could have done one big building, but rather than do a single massive structure we’ve broken it up into tow towers to add more texture to the skyline,” he said.
The towers will be oriented on the northeast corner and northwest corner of the block along West St. James Street, with retail extending along North San Pedro Street.
The layout accomplishes two key objectives, Sauser said: it places most of the building mass away from the historic structure, while continuing the retail dynamic that has thrived along North San Pedro Street.
“We want to make sure we’re conscientious and respectful of the historic pieces, while utilizing the opportunity for the retail synergy that’s starting to build with San Pedro Square Market,” Sauser said. “We’ll have lower-scale retail that’s closer to the southeast corner of the Fallon House. The towers are closer to City Heights.”
Sauser said the project will include a resort-style terrace-level swimming pool and likely a bocce court, plus a full suite of luxury amenities. Parking will be above grade in a podium structure as well as below grade, not in a separate structure.
Attracting more dense residential development downtown has been a major focus of city councilman Sam Liccardo, who represents the area. He has pushed for a slate of developer incentives, including fast-track permitting and fee breaks, to make the area more attractive.
“These towers represent one more reason to believe in the revitalization of downtown,” Councilman Sam Liccardo, who represents the area, told me. “It’s a magnificent thing to see a development of this size and prominence coming into the market at a time when we are finally seeing thousands of residents on downtown streets.”
San Jose Planning Director Joe Horwedel told me the city has seen the project in concept and is strongly supportive.
“The project would receive similar permitting assistance from the city as we provided for the One South Market project,” he said.
Tersini declined to speculate on when the project could break ground, but he said it would ideally receive all city approvals by the first quarter of 2014.