SAN JOSE — A big apartment complex in downtown San Jose might be able to break ground this summer if the project’s developer can land construction financing for the housing.
The 272-unit apartment development is slated to sprout at the corner of West San Carlos Street and Josefa Street in San Jose.
Urban Catalyst, an active real estate developer in downtown San Jose, has proposed the eight-story apartment project, which is called Aquino.
The real estate firm is in talks with multiple lenders to craft a deal to land construction financing for the proposed apartments, according to Erik Hayden, Urban Catalyst’s founder and managing partner.
The Aquino apartment building is located near the southern footprint of a proposed – but stalled – mixed-use neighborhood called Downtown West that search giant Google is planning near the Diridon train station and the SAP Center.
Hayden says San Jose’s decision to waive an array of development fees has eased Urban Catalyst’s quest to land construction financing for the apartment complex.
The city waived the fees in hopes of spurring downtown construction.
“The fee waivers are a huge factor in getting financing and a benefit,” Hayden said. “The lower fees reduce the project costs, which can make it easier to get financing.”
Construction financing, even for projects that are very much in demand, such as housing developments, has become tricky to land at a time of elevated interest rates.
“Every million dollars makes a difference,” Hayden said.
With the fee waivers in place, Hayden estimates the total project cost for Aquino is slated to be $125 million. Without the waivers, the costs for the apartment complex would be $130 million.
“San Jose needs housing and has been trying to figure out ways to get more housing completed,” Hayden said. “The idea is the lower fees can incentivize housing development.”
Hayden is confident enough in his financing prospects that the project could be months from breaking ground.
“We would love to break ground by mid-May but definitely by July,” Hayden said.
