August 7, 2008

The dot.com burst that led to a downtown renaissance

By Kymberli W. Brady
San Jose Silicon Valley Chamber of Commerce
Director of Community Relations and Public Affairs

While media outlets across the country continue to flood newspapers and the airwaves with accounts of a suffering national real estate market, San Jose is bucking the economic trend and emerging as the poster city for how to rise from the ashes and be a leader in overall market health.

In addition to being the largest city in northern California, San Jose has been ranked by Forbes as the number-one city in the nation for home sellers. Coupled with low inventories, a recent increase in bond status to AAA rating and the highest median income level in the nation, it is the healthiest it’s been in a generation—thanks in part to a focus on hi-tech manufacturing and exports, a weak dollar and the most diverse working population in the country.

Much of the credit however, goes to lessons learned from the dot.com burst of 2000-01, which resulted in the loss of 220,000 jobs. City leaders heeded the wake-up call and shifted focus toward long-term economic health, administrative streamlining and personalized attention. As a result, San Jose is now on track to reach a four-year rise in year-over-year job growth, having added nearly 45,000 jobs since 2005.

The decision to embrace more urban settings that would provide a better mix of commercial, residential, retail and transportation offerings has made San Jose one of THE cities to watch going forward. Add to that aggressive steps taken by city officials to improve the permitting process timeline, along with the close proximity of Mineta San Jose International Airport and a $1.5 billion expansion that will offer more options for business travelers, this has become an attractive address for local high-tech corporations looking to expand operations—and others looking to relocate.

Moreover, opening the door to downtown condos brings a new lifestyle element to San Jose, one that has spurred people to explore a truly urban, cosmopolitan lifestyle—one that combines full-service, maintenance-free high-rise living near work with all the entertainment and cultural attractions of San Jose at their doorsteps. The “lock-n-leave” lifestyle has become especially appealing to those looking to simplify so that more time can be spent doing the things they like and less on the things they don’t, such as jetting away for the weekend at a moment’s notice, without worrying about yard work or taking care of a house. It has become a growing trend for urban living that meets the needs of all generations—from young professionals to empty nesters and retirees alike.

A new beginning
In an effort to continue this trend, downtown San Jose has slowly evolved from a dying city center 30 years ago to an emerging metropolis with an identity all its own. This “silent growth spurt”—as first reported in the Almaden Times four years ago—has since become the renaissance of a city in the midst of reinventing itself. Downtown San Jose is now taking its first steps, poised to soon stand on its own two feet.

While some of us prefer suburban living, there’s been a renaissance of activities downtown for those seeking nightlife. The recent openings of museums and other cultural events and the growing popularity of the San Jose Ballet, for example, which recently danced its way through China on a five-week tour, are encouraging more people to go downtown and to stay and play.

Even the government is getting into the act, with the city council voting to offer downtown patrons sidewalk cafés and later nights along with the security of knowing that the police are keeping the streets and city parking lots as safe as possible.

Room with a view
(The following is reprinted from the August issue of the Chamber Advocate, courtesy of the San Jose Chamber of Commerce)
With the development of more than 4,500 residential units in four high-rise towers currently under construction and more in various stages of planning, the downtown core has become the renaissance of a city in the midst of reinventing itself. This urban emergence is making downtown living more than a reality, now it’s a choice.

“I look out my office window and see construction cranes against the downtown skyline,” says San Jose Mayor Chuck Reed. “I’m excited about how these projects and the residents who will inhabit them will strengthen our downtown. I am also pleased that the developers believe in downtown and have the confidence to invest hundreds of millions of dollars in creating these high-rises.” 

According to Reed, local and national retailers have been waiting in the wings for a critical mass of new residents before they commit to locating downtown.

“We are working aggressively with some unique boutique retailers and national players to entice them to land in our vacant storefronts along our major downtown boulevards,” Reed says. “We are also positioning downtown for more office workers who will generate more foot traffic on our streets, during the day and evening hours. Our hope is that these workers will also be downtown residents.” 

Axis: 38
Opening this month, Axis—the 22-story, 228-foot-tall glass and granite structure that includes 329 units, is the result of a partnership between KT Properties and Spring Capital Group. According to Ken Tersini, president of KT Properties—an active San Jose developer for over 20 years—Almaden Tower Venture, LLC developed Axis after recognizing that the high-rise urban living trend in other cities would now appeal to a San Jose audience.

“We have a unique pulse on the community,” Tersini explains. “The potential for luxury high-rise downtown living was always there. What’s made it a reality was, for the first time, we have a critical mass of new condos coming online, paired with changing lifestyle trends. Now, rising gas prices continue to fuel this trend.”

Tersini is confident that Axis will lead the effort that promises to invigorate downtown San Jose—both day and night—with thousands of new full-time residents.

“We’re creating a cosmopolitan scene befitting the nation’s tenth largest city,” he adds. “We think downtown San Jose is just at the beginning of a bright new era. More companies want in, more people want in, and we are seeing retail taking a much stronger interest. In 10 years, San Jose will be the vibrant urban center it deserves to be and it will be a destination city—no longer in the shadow of San Francisco.”

The 88 (Phase 1)
Nestled in the heart of downtown, The 88 combines 197 units on 22 floors with location, design and extensive amenities—all situated atop amenity retail.

According to Seth Bland, principal of Wilson Meany Sullivan, this is a ground-floor opportunity for high-rise buyers, with prices at levels that will only grow as the city grows and matures. Future projects include an additional 200 units next door.

“We’re thrilled to be in on the first wave and partnering with the Redevelopment Agency as we add another great building to San Jose’s changing skyline,” he says. “We’re excited to be providing luxury housing opportunities for urban pioneers. San Jose is a city on the verge of finally coming into its own, and we’re thrilled to be here watching the change occur.”

“Downtown San Jose has become a very attractive place to live, and even more so, to invest,” adds Harry Mavrogenes, executive director, San Jose Redevelopment Agency. “These high-rise towers are adding an exciting dimension to our city’s skyline, and we are thrilled by the opportunities the future holds.”

City Heights
For Barry Swenson, a third generation San Jose developer, City Heights is just the beginning of the vision he has had of downtown high-rises—one that has taken 20 years to come to fruition, in the form of a 16-story tower with 124 luxury units.

“We have spectacular views, a great location and attainable urban living,” he says. “People are finding that they don’t have enough time on their hands to do the things that they want to do.  They are looking for new and improved ways to live. The lock-and-go lifestyle that City Heights can offer is giving people the option that they have been looking for.  It is about simplifying your life, convenience to everything you want and need to do, and at a price that is affordable.”

With several properties planned for the future, including Park View Towers, a mixed-use facility, as well as North San Pedro, Carlisle and The Works residential projects, Swenson is in it for the long haul.

“San Jose will be a destination,” he says. “All signs are green for a great urban center where businesses and residences will intertwine.”

Three Sixty Residences
Respected Chicago-based Mesa Development, LLC is a major pioneer in the revival of San Jose’s core with Three Sixty Residences. According to Senior Development Director Charles Young, Mesa anticipated an impressive rise in status for San Jose—a city going against the national grain—and has been bullish on the market from the get-go.

The decision to build the 23-story, 213-unit tower stemmed from the economic strength of San Jose, coupled with the investment in light rail, restoration of the California Theatre and the DeAnza Hotel, new restaurants and a sprawling nightlife culture.

“These projects—in concept—start years before we get to where we are today,” Young explains. “We always knew there was potential in San Jose, but it wasn’t until 2005-06 that we started looking here because we saw the Redevelopment Agency start to do the right things to make the downtown emerge. Then we saw low-rise buildings go up, but it lacked high-rise offerings. The sub-prime market, not withstanding, we saw San Jose holding up and see tremendous long-term growth here. Plus, it is such a livable and walkable city. The conveniences are unmatched for this style of turn-key living.”

Sneak a peek
In an effort to promote the lifestyles available through high-rise living and provide insight into the amenities available in downtown San Jose, Axis, City Heights, The 88 and Three Sixty Residences have partnered with San Jose Redevelopment Agency, the San Jose Downtown Association and the Chamber for an open house event, Saturday and Sunday, Sept. 20 - 21, from 11 a.m. - 3 p.m. All four sales centers will open their doors to the public.

For more information on the four-tower open house and other downtown-related events, visit sjdowntown.com.