By Janice Bitters  – Commercial Real Estate Reporter, Silicon Valley Business Journal Feb 4, 2019

The developer behind a plan to build a 27-story residential tower in downtown San Jose says the project could turn into the city’s second co-living proposal.

KT Urban first unveiled plans for a 290-unit residential project called Garden Gate at 600 S. First St. in downtown San Jose about a year ago. But in the past couple of months, the Cupertino-based developer has begun to shift its vision for the development from a traditional residential building to a relatively new housing concept known as co-living.

“We are currently evaluating programming alternatives and are looking to build optionality into our entitlements,” Shawn Milligan, partner at KT Urban, told the Business Journal in an email.

Currently, the group is working on getting approvals from the city to build Garden Gate, and as part of that process, KT Urban will study the environmental impacts of development. Milligan says the company will analyze not only the original 290-unit proposal, but also a much denser co-living option in the study.

Co-living, sometimes branded as “dorm living for adults,” 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.  

The Garden Gate project is the second location that KT Urban has envisioned for a potential co-living development in the city.

Last October, KT Urban and Starcity, a San Francisco-based co-living development startup, also unveiled plans to re-entitle an already approved traditional residential project at 199 Bassett St. in downtown San Jose, about a mile from where Google is making plans for a new corporate mega campus.

Starcity co-founder and CEO, Jon Dishotsky, told the Business Journal late last year that he was working to purchase the site from KT Urban. Once the sale is final, the co-living startup intends to work with KT Urban on the development, which could become home to as many as 800 bedrooms, Dishotsky said.

Likewise, Milligan told the Business Journal that KT Urban is invested in the concept of co-living.

“Over the last 18 months, we have been working with a number of co-living operators like Starcity, Common, Ollie, Opendoor and others to find market driven solutions to the housing crisis,” he said.

Milligan said he wasn’t yet in a position to say which of those companies KT Urban would work with on the Garden Gate project, should it become a co-living development.  

The site is in San Jose’s SoFA district, near where the 232-unit The Pierce opened in 2017 and where Core Cos. is wrapping up construction on the 105-unit residential development known as SparQ. Both of those developments have been “catalysts for the immediate neighborhood,” Milligan said.

As KT Urban works out the details of its Garden Gate project, the city of San Jose has started thinking about how to become more welcoming to such developments.

Currently, the city doesn’t have a box that co-living fits into in its zoning code. Earlier this month officials kicked off a process aimed at adding co-living to existing development rules for the downtown.

“We need to insert more flexibility in our rules to allow more innovation to happen,” San Jose Mayor Sam Liccardo said last week during the Silicon Valley Business Journal’s “The Future of Downtown San Jose” event.

He praised KT Urban Principal, Mark Tersini, for the company’s work on both co-living projects, adding: “They need flexibility in the rules and we are pushing to give them that flexibility.”

San Jose Business Journal