Throckmorton poised to buy San Jose hotel tower for student housing

Throckmorton Partners may buy part of a Hilton hotel in Downtown San Jose for student housing.

An affiliate of the Mill Valley-based investor is negotiating a price for the shorter of two towers of the 805-room Signia by Hilton San Jose at 170 South Market Street, the Silicon Valley Business Journal reported, citing a city memo. 

The seller would be San Ramon-based Eagle Canyon Capital, led by Sam Hirbod. The San Jose City Council was set to decide Tuesday, Oct. 17, whether to allow the hotel split.

If the sale goes through, the Signia by Hilton would operate in the north tower, now undergoing a renovation. The university would take the curving, 13-story south tower.

The California State University system, on behalf of San Jose State University, is looking at leasing the 264-room south tower to house students. 

Eagle Canyon listed the south tower, an annex to the 541-room main tower at the former Fairmont San Jose, last spring for an undisclosed price.

The deal with Throckmorton would give the university an option to buy the 264-room wing, according to the memo. Its ground floor now contains a cafe and a Morton’s steakhouse.

The school and university system haven’t reached a final agreement to lease the building, Charlie Faas, SJSU’s vice president for administration and finance, told the Business Journal.

A potential lease of the hotel tower is one answer to the problem of housing for San Jose State,  largely a commuter school. Nearly 42 percent of its students have housing insecurity, according to a 2021 survey.

The university plans to replace its on-campus Washburn Hall dormitory with two new ones with more than 1,000 beds. It also plans to replace an off-campus state office building with a 24-story tower at 100 Paseo de San Antonio with 1,000 homes for faculty, staff and graduate students.

The former Fairmont fell into bankruptcy and closed its doors in March 2021, saying business shutdowns and travel restrictions from the coronavirus pandemic had ruined its bottom line. 

An ownership group led by Hirbod used the bankruptcy to do more than reorganize the hotel’s crumbling finances. It ousted hotel operator Accor Management and replaced it with Signia by Hilton. It reopened in April last year, after a $65 million renovation.

During the pandemic, the Bay Area hotel market was ranked among the worst in the nation. Downtown San Jose, a market for business travel and conventions, was especially hard hit.

“We had one of the best-performing hotel economies in the country (pre-pandemic), and that travel has not come back to the levels we had hoped, and we’re not seeing any indicators in the foreseeable future that we are going to return to those levels,” Ben Roschke, vice president of research and strategic development at Team San Jose, told the city’s Economic Development Committee last month.

— Dana Bartholomew

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