Developers Pull Building Permits for San Jose Apartments
Submitted January 19, 2011, 5:33 PM
Developers pulled building permits for nearly 1,800 multifamily housing units in the city of San Jose in the final two months of 2010, with the overwhelming majority proposed for a 5,000-acre city redevelopment area around the North First Street corridor.
Ten housing projects with a combined construction value of $257 million received city blessing in November and December, according to data from Chief Building Official Ed Tolentino. More than 1,600 of the units are apartments, most of them proposed by Southern California’s Irvine Co. Irvine developed and owns the North Park Apartment Village on North First.
Fairfield now plans to start construction in April on its 498-unit Northpointe project in North San Jose at Zanker Road and East Tasman Drive, said Brendan Hayes, a vice president in the San Diego office for Fairfield. The project should be completed in the fall of 2013. The complex will also have 21,000 square feet of retail space. The city has assigned a construction value of nearly $68 million for the project.
Hayes said the company hopes to exploit current marketplace conditions, including a dearth of new construction in North San Jose and proximity to the major employers that have offices nearby. Cisco Systems Inc., for instance, the largest employer in Silicon Valley, has its corporate headquarters at 170 W. Tasman Dr., a short ride away on the existing light rail line from the Fairfield project.
Northpointe is also close to state Highway 237, U.S. 101 and Interstate 880, Hayes noted. “Our project should allow renters to have a shorter commute to work than they have had in the past,” Hayes said.
Fairfield owns another parcel adjacent to the Northpointe site with enough land to support development of another 206 units. The timetable on this project is not yet known, Hayes said.
Fairfield is constructing both projects for a joint venture that the developer has with The California State Teachers’ Retirement System, the Fairfield California Housing Fund. This relationship last received a new shot of equity in the last quarter of 2007 with a $350 million investment by the pension fund. Overall, CalSTRS has invested $1.1 billion of equity going back to 2002 when the relationship was first formed.
Meanwhile, the Irvine Co., which is based in Irvine, Calif., has pulled building permits to start the first three phases of a proposed five-phase development, the Crescent Park Project. The 1,750-unit development is at Zanker Road and River Oaks Parkway. Together the first three phases have 1,107 units and a total construction value of nearly $160 million.
Irvine has begun grading at all three sites. The 380-unit Crescent Village 1, the largest of the three developments, recently broke ground and should be completed sometime in 2012.
San Jose has sought since the aftermath of the dot-com bust to remake its North First Street corridor. Besides Cisco, the area is home to some of Silicon Valley’s most important technology companies and community employers. Property tax revenue generated by sites in North San Jose has been channeled by city officials for years to finance hundreds of millions of dollars in redevelopment projects, often in the city’s downtown. After the dot-com bust, however, the area suffered from inordinately high workplace vacancy rates, cutting into redevelopment funding.
In mid-2005, the city adopted a plan to renew the area by pushing development away from its suburban industrial park past to a more self-sufficient community model, with much higher development densities. Under the new plan, the city hopes to see more than 26 million square feet of new office and research and development space, 32,000 new high-density housing units and 1.7 million square feet of retail.
Meanwhile, Mill Valley-based Thompson/Dorfman Urban Residential Development has not yet pulled a building permit for its proposed apartment development on North First. But company principal Bruce Dorfman says they, too, plan to break ground this fall on an initial phase of the 1,900-unit Riverview project on North First Street, also near Tasman.
“We clearly think that there is going to be significant demand for our project,” Dorfman said. “There hasn’t been much happening in the market for new construction recently. Another positive factor is that our site is right at a [light] rail stop.”
The developer believes that as the economy in the region improves, tech companies will hire, too, and their workers will be drawn to live nearby, he said.
Thompson Dorfman expects to target young professionals for its tenants.
The initial phase of the Riverview project is expected to be 233 units and to cost $75 million. The developer has already lined up a financial partner for this phase but would not comment on who this partner is.
