SAN JOSE — One of downtown San Jose’s landmark properties is on the sales block, a real estate endeavor that could provide some clues about the strength — or weakness — of the region’s economy.
Hotel De Anza is being offered for sale at an unknown price point, according to a marketing brochure and a sales packet obtained by this news organization.
“This is a rare opportunity to acquire an operationally flexible, historic asset with considerable upside,” the sales brochure states.
Newmark, a commercial real estate firm, is leading the sales effort through the company’s lodging capital markets group, which is based in New York City’s Manhattan borough.
The sellers are seeking as much as $30 million for the 100-room hotel, which works out to roughly $300,000 a room, according to individuals with direct knowledge of the offering.
It wasn’t immediately clear what the reception on the part of prospective buyers might be regarding this reported price point.
In 2015, the current owner, an affiliate controlled by Los Angeles-based real estate firm Lowe Enterprises, bought the hotel for $20.4 million, according to a property database. In mid-2022, the hotel’s property value was $22.5 million, documents on file with the Santa Clara County Assessor’s Office show.
According to the sales brochure, the last significant upgrade to the hotel occurred in 2015.
“The San Jose market continues to experience new development tailwinds and substantial growth induced by the expanding presence of the world’s leading tech companies,” the marketing papers stated.
A few blocks to the west is the footprint of a mixed-use neighborhood that Google has proposed, where the search giant could employ up to 25,000 people. Google aims to develop office buildings, homes, shops, restaurants, hotel facilities and entertainment hubs near the Diridon train station and the SAP Center.
Just down the street from the hotel, Adobe has completed the construction of a new office highrise on West San Fernando Street that will dramatically expand the size of its existing three-building headquarters.
At present, Adobe employs about 3,800 people in downtown San Jose. The new highrise will accommodate about 3,000 people, according to Adobe. The expansion to the North Tower will enable the company’s downtown headcount to total 6,800, an increase of about 79% in the number of employees in San Jose’s urban core.
The 10-story De Anza hotel, which opened nine decades ago during the Great Depression, was added to the National Register of Historic Places in 1982 and is one of the few Zig Zag Moderne, or art deco, buildings in San Jose.
“The iconic art deco property is currently positioned as the only boutique lifestyle asset in the market,” Newmark stated in its marketing brochure.
However, Hotel De Anza is being put up for sale at a time when plenty of uncertainty exists in the lodging and travel sectors due to the economic blows spawned by the coronavirus.
“We just went through a two-and-a-half-year plague and you couldn’t pick a worse property asset class than hotels,” said Mark Ritchie, president of Ritchie Commercial, a real estate firm. “But the value of hotels can only go up.”
While some industries have rebounded nicely in the wake of the coronavirus outbreak, the lodging and travel industries continue to struggle.
“Hospitality is going to take a little longer to get closer to what it was before the pandemic,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use and planning consultancy.
The economic effects of the coronavirus have hobbled markets such as downtown San Jose and San Francisco, which depend heavily on business travel and convention gatherings.
Still, the Hotel De Anza could be poised to enjoy a rebound under the right ownership, in the view of property experts.
“It’s a beautiful building and positioned well,” Staedler said. “It will be a great buy for anyone who wants a long-term asset.”
Around 1929, architect H.H. Weeks designed a 144-room hotel that was built at the site by legendary construction executive Carl Swenson. The hotel opened in 1931, and from the 1930s through the 1960s, the Hotel De Anza was considered one of the Bay Area’s most popular venues and a cool joint to see and at which to be seen.
By the 1970s, though, Hotel De Anza fell into disrepair and it took the now-defunct San Jose Redevelopment Agency to rescue the tower from the wrecking ball by spearheading the building’s reconstruction. In 1989, the city awarded Barry Swenson, grandson of Carl Swenson, the task of renovating the hotel.
“The hotel had a strong life in an earlier time and it will have a strong life in a future time,” Ritchie said. “It’s a beautiful property.”
