Barry Swenson Builder on Tuesday won city of San Jose permission to convert a high-density for-sale housing project adjacent to Tamien Station into apartments.
A spokesperson said the move is due to the slow pace of housing sales and the fall in housing prices.
The city had to bless the conversion, which is expected to be temporary, because of an existing agreement between Swenson and San Jose to allocate 24 units in the development to affordable for-sale housing. The plan calls for those units to become affordable apartments, at least for now.
“It’s basically a hope for another day,” said long-time Swenson Project Manager Jessie Thielen. “We are preserving the asset for a better sales market.”
Swenson opened a sales office at the complex this spring for three months, but never took buyer deposits and never actively pushed sales, she said.
Swenson’s equity partner on the project is San Francisco-based Pacific Coast Capital Partners LLC. Its lender is iStar Financial Inc., which inherited the loan when it acquired Fremont Investment & Loan. Fremont was also the initial lender on Swenson’s City Heights high-rise condo development in downtown San Jose. City Heights continues to be marketed for sale.
The 11-story Tamien development, dubbed Skyline at Tamien, is on the site of the former Alma Bowl on the cusp between Willow Glen and downtown San Jose. It fronts state Highway 87. The building is adjacent to the Tamien train station, an intermodal passenger transportation station served by the Santa Clara Valley Transportation Authority light rail system, two bus routes, and the Caltrain commuter rail line. It is perhaps the perfect embodiment of “transit-oriented development,” both because of its location and high-density.
Plans call for two towers to be built on the site with a total of 242 units. So far, however, only one tower has been built with 115 condominiums and six town homes.
Construction on the first tower was substantially complete in April. Work has not begun on the second tower.
The conversion to apartments is the third in central San Jose this year. The Globe development in downtown made the switch on 76 units it couldn't sell. Another Swenson project, The Lofts on The Alameda, is renting out 11 of its 42 units after they didn't sell.
In Summary, land cost of 180,000 per unit now reduced to 70,000 per unit land value. ISTAR bought the paper at .67 on the 1.00. ISTAR still takes it in the ass for 50% of the value. Guess what? Everything they are involved will liquidate at a 50% loss. How do they survive?