KT Urban to Build 176-Room Boutique Hotel in San Jose

KT Urban got a green light to build a 176-room boutique hotel across from Santana Row in San Jose.

The Cupertino-based developer led by Ken and Mark Tersini received special use permits from the city’s planning director to build the seven-story hotel at 425 South Winchester Boulevard, the San Jose Mercury News reported. It would replace a gasoline station and restaurant.

Plans for the controversial project known as The Olin Hotel include an 85-foot tall building with 176 rooms, with six of its seven floors having up to 30 suites. The slate blue and white hotel, designed by Lowney Architecture, contains banks of vertical windows without balconies, according to rendering.

KT Urban estimates that the project a few blocks from Westfield Valley Fair would take 21 months to complete. The city agreed to allow extended building hours on Saturdays to speed construction. It’s not clear when the developer plans to break ground.

Residents have opposed the project over concerns about traffic, privacy and the process that led to a request for amendments to a 2017 urban village plan.

An affiliate of KT Urban bought the site in December 2020 for $7.6 million, while obtaining a $5 million loan from First Republic Bank.

The developer initially planned to build a 65-foot, five-story residential and office building with shops and restaurants.

But the pandemic upended market conditions, impacted by higher interest rates and material costs, forcing KT Urban to shift to a more feasible project.

Mark Tersini told the Mercury News that for the project to generate a return on investment, the proposed hotel needed to be 20 feet higher than the mixed-use development plans, which required the approval of the City Council.

KT Urban redesigned the building to create a larger setback from adjacent homes. The new plan, however, didn’t satisfy the neighbors.

“There was no community outreach on this project and it was literally rammed down our throats,” resident Dave Duquette told the Mercury News.

Although it had no sway over final approval, the Planning Commission in December had balked at the plan to build a hotel taller than zoning rules allow. The City Council approved modifications to the height allowances, but still required the city’s planning director to decide whether to issue the permits.

While market conditions affected the initial office portion of the project, they’ve also impacted the hospitality industry, forcing the sale of two of San Jose’s most well-known hotels and delays to several approved projects elsewhere in Silicon Valley, according to the Mercury News.

Last year, the City of Santa Clara Planning Commission granted Utah-based Mogul Capital a two-year extension to build its six-story, 396-room hotel south of San Jose’s international airport.

Two upscale Cupertino projects, including Kimco Realty’s five-story, 185-room boutique hotel across from Apple Park, also received three-year extensions.

Last month, Throckmorton Partners opened a student apartment complex in Downtown after Signia by Hilton San Jose sold its 264-room South Tower as part of a partnership with San Jose State University. The university aims to buy the tower at the end of its lease agreement.

At the same time, the historic Hotel De Anza in Downtown San Jose is poised to sell for as little as $10 million, half of what it traded for a decade ago, according to the Mercury News. The potential deal for the 100-room Art Deco landmark at 233 West Santa Clara Street comes as the lodge prepares to reopen after months of closure. The seller and the buyer were not disclosed.

— Dana Bartholomew