Acquity Realty Defaults on $10M Loan for San Jose Project

Acquity Realty has defaulted on a $10 million loan tied to an approved 21-story project that would contain homes, offices and ground-floor shops and restaurants in Downtown San Jose.

An affiliate of the Palo Alto-based developer led by John Pringle was delinquent on the loan linked to the proposed highrise at 51 Notre Dame Avenue, next to Carlysle Street, SiliconValley.com reported.

In 2021, an Acquity Realty affiliate bought the development site for $20 million, which appears to be a vacant lot next to Highway 87 across from a Hyatt hotel, two blocks from Google’s proposed 80-acre mixed-use village around Diridon Station, according to Google Maps.

At the time of purchase, Santa Cruz County Bank provided Acquity with the $10 million loan.

On Aug. 21, Acuity Realty received a notice of default for having missed a payment, according to the website run by the San Jose Mercury News.

Plans for the 21-story, 373,000-square-foot building known as the Carlysle include 290 apartments, 158,000 square feet of offices across five floors and ground-floor shops and restaurants. A four-floor parking garage would serve 350 cars.

The $343 million development was approved by the city in 2021, and was expected to break ground that year, according to a project website.

Acuity never secured a construction loan, according to SiliconValley.com, and has yet to put shovels into dirt.

The Bay Area office market has become so weak that developers have largely lost their appetite for new projects unless they’ve been able to land a tenant before construction.

The office vacancy in Downtown San Jose was 35.6 percent in the first quarter, according to Savills, during a broad shift to remote work, with developers now switching plans for offices to homes.

Acquity Realty, founded in 2018, has developed more than 7 million square feet of mixed-use, office and industrial properties, including more than 55,000 homes, valued at $11 billion, according to its website.

— Dana Bartholomew