What Ohlone’s final phase says about San Jose’s Midtown

San Jose’s approval of the third phase of the Ohlone marks a final step for Pacific Urban Properties and Swenson on their 800-unit apartment project with room for shops and restaurants––but it’s only the latest step toward a new sense of pace and place in the city’s Midtown neighborhood.

The 137-foot-tall project is one of San Jose’s tallest outside of its downtown and is now poised to complete the redevelopment of an entire city block between West San Carlos Street and Auzerais Avenue. The makeover comes on a previously desolate gap on the streetscape of Midtown, a largely industrial district where the city wants to see dense, transit-oriented residential and commercial projects as well as more parks and open public areas.

The project appears set to dovetail with Google’s proposal for a development dubbed Downtown West, which is planned around the Diridon Station transit center about a mile away, and envisions offices for 25,000 of the search giant’s employees along with residential developments, shops and restaurants.

The Ohlone looks to be aimed at the sort of young professionals that make up a significant part of Google’s workforce and flock to venues such as the SAP Center, where the San Jose Sharks professional hockey team plays. The final phase of the apartment complex will see one-bedroom apartments account for more than 60 percent of its 263 units, including some with dens. There will be 19 “junior” units, which have a locked-off bedroom, unlike studios, but are smaller than typical one-bed apartments, Swenson said. The rest of the project’s units will include two-bedrooms and studios.

The ground floor of the Ohlone, meantime, will have room for up to 13,000 square feet of shops and restaurants in five commercial tenant spaces. And a public plaza at the southwestern corner of West San Carlos and Sunol streets is incorporated into its open space plan, a welcome addition to the surrounding area for those who have long wanted to see more neighborhood-serving amenities there.

The project follows other changes in San Jose’s Midtown over the past decade, as developers such as Fairfield Residential and The Danco Group have built or gotten approvals for hundreds of apartments and room for shops, office tenants and restaurants in the immediate area. To one side of Ohlone is a 315-unit apartment complex with almost 23,000 square feet of office and retail that Fairfield developed and sold to Northwestern Mutual for $184 million in 2020. Danco, meantime, got city approval for a 154-unit apartment building in March that’s kitty-corner to the site of Ohlone’s third phase. That followed an approval that allowed the company to begin building an 80-unit below-market-rate apartment project in February across the street from its larger approved one.

The Ohlone’s approval earlier this month on a revised proposal for its 263-unit third phase didn’t come without the sort of adjustments that have marked the project from its beginning.The application called for lowering its height to 12 stories from 14 while keeping its unit count unchanged. It’s increasing its podium structure at the site’s southern portion to six stories from four, and making its parking design more efficient.

The changes were intended to cut construction costs and make the project more attractive to prospective renters, Republic’s Michael Van Every told the Mercury News in April 2021. In addition, the developers “brought the basement out of the ground, added height and density to the wood-frame units … and maintained the prominent corner restaurant/patio area to make the project’s approval process much smoother,” Swenson president Case Swenson told The Real Deal in a May 17 email.

Swenson said the plan is to break ground as soon building permits are obtained, with construction on Ohlone’s last phase expected to take 24 months, meaning the project is slated for completion in late 2024 or early 2025, barring any delays. Its developers will determine apartment rental rates once it’s almost finished.

That will bring Ohlone to the end of a winding path that goes back to 2003, when the Santa Clara Valley Transportation Authority (VTA) sought project proposals for 8.3 acres of undeveloped land it was using as a bus lot at the corner of Auzerais Avenue and Sunol Street. The authority chose the Swenson-Republic venture’s plans for 800 apartments in three buildings, which the city approved in 2010.

Since then, Ohlone has been hampered by changing market conditions, rising construction costs and disagreements between its developers and the city over proposed changes to its approved design. It almost died in 2013 after Swenson and Republic asked the city if it could reduce the first phase’s height to 70 feet from upwards of 100 feet, a move Republic’s Van Every said was necessary for it to pencil out. The city agreed to the height decrease after originally opposing the change. Then a dispute over the developers’ required transfer of four acres near the project site to the city for a future park led Swenson and Republic to withdraw their proposal. The developers later fell out of contract with the VTA to acquire a majority of the project site, putting the development in further jeopardy.

Work resumed in 2015 after the city and the developers hashed out a deal over the height reduction and the planned park site. VTA then got back into contract with Republic and Swenson and eventually sold them its 3.6-acre chunk of the total project site.

Swenson and Republic stayed busy on another project in the area throughout the Ohlone’s ups and downs. The completed a 218-unit apartment complex with 14,000 square feet of retail half a mile away in 2014, selling it to Essex Property Trust for $104 million four years later.

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