Hyatt San Jose in talks to be closed - deserves own thread
Aug 9, 2005, 12:15 am
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Hyatt San Jose in talks to be closed - deserves own thread
sdix tagged on an update to the Sainte Claire closing that the San Jose Hyatt was also in talks to be closed. This puts all 3 Hyatts in San Jose closed over the last year. Well they were all sub par anyways but at least something for points and FFNs while staying in San Jose.
I though it deserved its own thread. Again - credits to sdix for initial post.
http://www.bizjournals.com/sanjose/s...01/story1.html
The owner of one of Silicon Valley's largest and most-recognized properties -- the resort-style Hyatt San Jose near the Mineta San Jose International Airport -- is in talks to transform his 16.5-acre holding into a mixed use residential complex that would blend a hotel with as many as six high-rise condominium towers.
At least one of the envisioned towers would soar toward the full permitted height of 305 feet, making the 30-story towers the tallest buildings in San Jose.
Manoucher "Manou" Mobedshahi, who has owned the lushly landscaped Hyatt at North First Street and Old Bayshore Highway since 1997, says no agreement has yet been struck, but brokers working on the deal confirm exclusive negotiations are underway with a buyer.
"We would be handling the hotel business; we don't know about the condo business. That would be handled by someone else," Mr. Mobedshahi says.
Jim Schmidt, vice president at Cornish & Carey Commercial in Santa Clara, declined to identify the front-running bidder but says most of the numerous interested parties, including one now working with Mr. Mobedshahi, evaluated the property on the basis of redeveloping at least a portion of the property for residential use.
"If they can do that, there's no question the financial value is significantly greater than maintaining the property as a hotel," say Tom Callahan, CEO of hotel advisory firm PKF Consulting's West region in San Francisco.
Mr. Schmidt and C&C senior sales associate Mark Russell have been overseeing the property's marketing efforts on behalf of the ownership group known as Manco Partners, which is headed by Mr. Mobedshahi. While Mr. Schmidt won't reveal the top bid, he said Mr. Mobedshahi's original asking price was $100 million.
Mr. Mobedshahi would neither confierm nor deny that price, but says no deal is imminent. He says it would take at least three years to get the necessary permits together once a deal is struck to begin construction.
"It's all market-driven," Mr. Mobedshahi says.
In 2001, Manco Partners submitted plans to the city of San Jose to build an 30-story office complex on an empty four-acre section of the Hyatt property. That plan fell apart when Silicon Valley office vacancy numbers went from 2.5 percent to 16 percent today, according to figures from CB Richard Ellis. Other surveys have put that number at over 20 percent.
At least one of the envisioned towers would soar toward the full permitted height of 305 feet, making the 30-story towers the tallest buildings in San Jose.
Manoucher "Manou" Mobedshahi, who has owned the lushly landscaped Hyatt at North First Street and Old Bayshore Highway since 1997, says no agreement has yet been struck, but brokers working on the deal confirm exclusive negotiations are underway with a buyer.
"We would be handling the hotel business; we don't know about the condo business. That would be handled by someone else," Mr. Mobedshahi says.
Jim Schmidt, vice president at Cornish & Carey Commercial in Santa Clara, declined to identify the front-running bidder but says most of the numerous interested parties, including one now working with Mr. Mobedshahi, evaluated the property on the basis of redeveloping at least a portion of the property for residential use.
"If they can do that, there's no question the financial value is significantly greater than maintaining the property as a hotel," say Tom Callahan, CEO of hotel advisory firm PKF Consulting's West region in San Francisco.
Mr. Schmidt and C&C senior sales associate Mark Russell have been overseeing the property's marketing efforts on behalf of the ownership group known as Manco Partners, which is headed by Mr. Mobedshahi. While Mr. Schmidt won't reveal the top bid, he said Mr. Mobedshahi's original asking price was $100 million.
Mr. Mobedshahi would neither confierm nor deny that price, but says no deal is imminent. He says it would take at least three years to get the necessary permits together once a deal is struck to begin construction.
"It's all market-driven," Mr. Mobedshahi says.
In 2001, Manco Partners submitted plans to the city of San Jose to build an 30-story office complex on an empty four-acre section of the Hyatt property. That plan fell apart when Silicon Valley office vacancy numbers went from 2.5 percent to 16 percent today, according to figures from CB Richard Ellis. Other surveys have put that number at over 20 percent.
At 305 feet, the development would become the city's tallest. San Jose's new City Hall was initially planned for 320 feet but was reduced to 288 feet due to restrictions imposed by Mineta's air traffic patterns. The Hyatt site is not within an airport approach overlay zone.
"The views would be spectacular," Mr. Schmidt says.
The combined residential-hotel complex could be a model for city efforts to redevelopment the North First Street area known as the Golden Triangle, Mr. Mobedshahi says.
"We hope to be in the forefront of the makeover of North First Street," he says.
The two, three and four-story buildings along First Street are outdated and are not giving their owners full value of the property, Mr. Mobedshahi says.
The hotel property could be developed in several different ways, depending on who the developer is and the market at the time the deal is struck, Mr. Mobedshahi says.
Ideally, a new condo tower hotel would be built on the empty four-acre parcel located at the back of the property, Mr. Mobedshahi says. Then, a portion of the existing 512-room hotel complex that consist of nine free-standing buildings would be razed to build a new hotel tower and one or more condo towers. As those new buildings come on line, the rest of the existing hotel would be torn down and new condo buildings built as the market dictates, Mr. Mobedshahi says.
Mr. Mobedshahi says he would like to keep at least 200 hotel rooms in operation at all times during construction.
"In the long run, it will happen. I think it is true for all of First Street," he says.
The hotel, which served as a corporate training facility for Chicago's Hyatt Corp., had already undergone a $21 million improvement program since Mr. Mobedshahi acquired it in 1997.
The Hyatt property appears to boast numerous attractions as a residential high-rise site. It's adjacent to a light-rail stop, and residents would have quick and easy access by bus to the airport, Mr. Schmidt says. It's also easily accessible from much of the North San Jose area the city recently decided to up-zone in order to accommodate more than 80,000 expected new jobs.
Silicon Valley's hospitality market has been in a slump since the dot-com bubble burst in 2001, but is recovering. Hotel-room occupancy rate in San Jose was nearly 52 percent in June, up from 43.65 percent a year earlier but still far off the 80 percent vicinity seen back in the 1999-2000 period. The Hyatt's room rates range from $89 to $109 on weekends, $129 to $149 weekdays.
Meanwhile single-family and condo prices have continued to skyrocket, due in part to attractive mortgage rates, even amid a slow general economic rebound. Dataquick reports that Santa Clara County's median condo price today is in $450,000 vicinity, up a sharp 20 percent from year-ago levels.
When Mr. Mobedshahi purchased the structures and underlying ground from Hyatt Corp. in 1997 -- he'd been leasing the property through a franchise agreement -- Business Journal sources estimated he paid less than $875,000 per acre for the land. If the property fetches the reported $100 million asking price, he would earn about $6 million per acre, which is double the per-acre price many close-in properties entitled for residential development have fetched recently. Mr. Mobedshahi recently sold the 171-room Hyatt Sainte Claire in downtown San Jose for an estimated $19 million to the Madera-based Larkspur Hospitality Co. LLC.
Meanwhile, San Diego's Urban West Associates recently offered $19 million-plus per acre for a strategic 1.48-acre downtown San Jose site the company is eyeing for twin 25-story luxury condo towers.
"Right now, it makes sense to build condos and perhaps some retail," Mr. Mobedshahi says. "Anything we would do there will take years."
Investors have been eyeing Silicon Valley hotels for a while now, Mr. Callahan says.
"The market isn't there but the vision is there for the future," says Mr. Callahan, who estimates it may be three years before Silicon Valley hotels return to profitability.
I though it deserved its own thread. Again - credits to sdix for initial post.
http://www.bizjournals.com/sanjose/s...01/story1.html
The owner of one of Silicon Valley's largest and most-recognized properties -- the resort-style Hyatt San Jose near the Mineta San Jose International Airport -- is in talks to transform his 16.5-acre holding into a mixed use residential complex that would blend a hotel with as many as six high-rise condominium towers.
At least one of the envisioned towers would soar toward the full permitted height of 305 feet, making the 30-story towers the tallest buildings in San Jose.
Manoucher "Manou" Mobedshahi, who has owned the lushly landscaped Hyatt at North First Street and Old Bayshore Highway since 1997, says no agreement has yet been struck, but brokers working on the deal confirm exclusive negotiations are underway with a buyer.
"We would be handling the hotel business; we don't know about the condo business. That would be handled by someone else," Mr. Mobedshahi says.
Jim Schmidt, vice president at Cornish & Carey Commercial in Santa Clara, declined to identify the front-running bidder but says most of the numerous interested parties, including one now working with Mr. Mobedshahi, evaluated the property on the basis of redeveloping at least a portion of the property for residential use.
"If they can do that, there's no question the financial value is significantly greater than maintaining the property as a hotel," say Tom Callahan, CEO of hotel advisory firm PKF Consulting's West region in San Francisco.
Mr. Schmidt and C&C senior sales associate Mark Russell have been overseeing the property's marketing efforts on behalf of the ownership group known as Manco Partners, which is headed by Mr. Mobedshahi. While Mr. Schmidt won't reveal the top bid, he said Mr. Mobedshahi's original asking price was $100 million.
Mr. Mobedshahi would neither confierm nor deny that price, but says no deal is imminent. He says it would take at least three years to get the necessary permits together once a deal is struck to begin construction.
"It's all market-driven," Mr. Mobedshahi says.
In 2001, Manco Partners submitted plans to the city of San Jose to build an 30-story office complex on an empty four-acre section of the Hyatt property. That plan fell apart when Silicon Valley office vacancy numbers went from 2.5 percent to 16 percent today, according to figures from CB Richard Ellis. Other surveys have put that number at over 20 percent.
At least one of the envisioned towers would soar toward the full permitted height of 305 feet, making the 30-story towers the tallest buildings in San Jose.
Manoucher "Manou" Mobedshahi, who has owned the lushly landscaped Hyatt at North First Street and Old Bayshore Highway since 1997, says no agreement has yet been struck, but brokers working on the deal confirm exclusive negotiations are underway with a buyer.
"We would be handling the hotel business; we don't know about the condo business. That would be handled by someone else," Mr. Mobedshahi says.
Jim Schmidt, vice president at Cornish & Carey Commercial in Santa Clara, declined to identify the front-running bidder but says most of the numerous interested parties, including one now working with Mr. Mobedshahi, evaluated the property on the basis of redeveloping at least a portion of the property for residential use.
"If they can do that, there's no question the financial value is significantly greater than maintaining the property as a hotel," say Tom Callahan, CEO of hotel advisory firm PKF Consulting's West region in San Francisco.
Mr. Schmidt and C&C senior sales associate Mark Russell have been overseeing the property's marketing efforts on behalf of the ownership group known as Manco Partners, which is headed by Mr. Mobedshahi. While Mr. Schmidt won't reveal the top bid, he said Mr. Mobedshahi's original asking price was $100 million.
Mr. Mobedshahi would neither confierm nor deny that price, but says no deal is imminent. He says it would take at least three years to get the necessary permits together once a deal is struck to begin construction.
"It's all market-driven," Mr. Mobedshahi says.
In 2001, Manco Partners submitted plans to the city of San Jose to build an 30-story office complex on an empty four-acre section of the Hyatt property. That plan fell apart when Silicon Valley office vacancy numbers went from 2.5 percent to 16 percent today, according to figures from CB Richard Ellis. Other surveys have put that number at over 20 percent.
At 305 feet, the development would become the city's tallest. San Jose's new City Hall was initially planned for 320 feet but was reduced to 288 feet due to restrictions imposed by Mineta's air traffic patterns. The Hyatt site is not within an airport approach overlay zone.
"The views would be spectacular," Mr. Schmidt says.
The combined residential-hotel complex could be a model for city efforts to redevelopment the North First Street area known as the Golden Triangle, Mr. Mobedshahi says.
"We hope to be in the forefront of the makeover of North First Street," he says.
The two, three and four-story buildings along First Street are outdated and are not giving their owners full value of the property, Mr. Mobedshahi says.
The hotel property could be developed in several different ways, depending on who the developer is and the market at the time the deal is struck, Mr. Mobedshahi says.
Ideally, a new condo tower hotel would be built on the empty four-acre parcel located at the back of the property, Mr. Mobedshahi says. Then, a portion of the existing 512-room hotel complex that consist of nine free-standing buildings would be razed to build a new hotel tower and one or more condo towers. As those new buildings come on line, the rest of the existing hotel would be torn down and new condo buildings built as the market dictates, Mr. Mobedshahi says.
Mr. Mobedshahi says he would like to keep at least 200 hotel rooms in operation at all times during construction.
"In the long run, it will happen. I think it is true for all of First Street," he says.
The hotel, which served as a corporate training facility for Chicago's Hyatt Corp., had already undergone a $21 million improvement program since Mr. Mobedshahi acquired it in 1997.
The Hyatt property appears to boast numerous attractions as a residential high-rise site. It's adjacent to a light-rail stop, and residents would have quick and easy access by bus to the airport, Mr. Schmidt says. It's also easily accessible from much of the North San Jose area the city recently decided to up-zone in order to accommodate more than 80,000 expected new jobs.
Silicon Valley's hospitality market has been in a slump since the dot-com bubble burst in 2001, but is recovering. Hotel-room occupancy rate in San Jose was nearly 52 percent in June, up from 43.65 percent a year earlier but still far off the 80 percent vicinity seen back in the 1999-2000 period. The Hyatt's room rates range from $89 to $109 on weekends, $129 to $149 weekdays.
Meanwhile single-family and condo prices have continued to skyrocket, due in part to attractive mortgage rates, even amid a slow general economic rebound. Dataquick reports that Santa Clara County's median condo price today is in $450,000 vicinity, up a sharp 20 percent from year-ago levels.
When Mr. Mobedshahi purchased the structures and underlying ground from Hyatt Corp. in 1997 -- he'd been leasing the property through a franchise agreement -- Business Journal sources estimated he paid less than $875,000 per acre for the land. If the property fetches the reported $100 million asking price, he would earn about $6 million per acre, which is double the per-acre price many close-in properties entitled for residential development have fetched recently. Mr. Mobedshahi recently sold the 171-room Hyatt Sainte Claire in downtown San Jose for an estimated $19 million to the Madera-based Larkspur Hospitality Co. LLC.
Meanwhile, San Diego's Urban West Associates recently offered $19 million-plus per acre for a strategic 1.48-acre downtown San Jose site the company is eyeing for twin 25-story luxury condo towers.
"Right now, it makes sense to build condos and perhaps some retail," Mr. Mobedshahi says. "Anything we would do there will take years."
Investors have been eyeing Silicon Valley hotels for a while now, Mr. Callahan says.
"The market isn't there but the vision is there for the future," says Mr. Callahan, who estimates it may be three years before Silicon Valley hotels return to profitability.
Aug 9, 2005, 1:29 am
#2
Join Date: Apr 2005
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I'm not familiar with the SJC runway layout but I recall the hotel being pretty close to the airport. Too close for a 305' building?
Answering my own question:
"The Hyatt site is not within an airport approach overlay zone."
Of course it may be the FAA can object regardless of whether the site is within the above-mentioned zone. I think I've heard a few stories of developers getting blindsided by that.
Answering my own question:
"The Hyatt site is not within an airport approach overlay zone."
Of course it may be the FAA can object regardless of whether the site is within the above-mentioned zone. I think I've heard a few stories of developers getting blindsided by that.
Last edited by William2005; Aug 10, 2005 at 10:55 am Reason: answering my own question
Aug 9, 2005, 1:44 am
#3
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Originally Posted by TravelGuy1965
This puts all 3 Hyatts in San Jose closed over the last year.
Originally Posted by TravelGuy1965
Mr. Mobedshahi would neither confierm nor deny that price, but says no deal is imminent. He says it would take at least three years to get the necessary permits together once a deal is struck to begin construction.
Anyone hear anything about Hyatt's future plans for the San Jose Metropolitan area? I assume Hyatt would like to have a hotel somewhere between Monterey and SFO. Then again there's no Hyatt in the East Bay nor anywhere between San Francisco and Sacramento so I guess not every market gets a Hyatt.
Aug 9, 2005, 2:20 am
#4
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And it is not only about occupancy levels, but also about the average room rate.
During the tech bubble the Hi Express went for $ 199 on weekdays, now it is more like 80-90, 40 % of your average room rate while occupancy is also down 50 %....ouch
During the tech bubble the Hi Express went for $ 199 on weekdays, now it is more like 80-90, 40 % of your average room rate while occupancy is also down 50 %....ouch
Aug 9, 2005, 2:26 pm
#5
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Originally Posted by TravelGuy1965
sdix tagged on an update to the Sainte Claire closing that the San Jose Hyatt was also in talks to be closed. This puts all 3 Hyatts in San Jose closed over the last year. Well they were all sub par anyways but at least something for points and FFNs while staying in San Jose.
Maybe the proposed property will be worthy of the Hyatt name. Would be nice to have a hotel in the area that does not rattle when the planes pass over.
Aug 9, 2005, 8:26 pm
#6
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So will the SJC Hyatt stay open throughout or close down at some point?
It may be a dump, but it is a cheap dump near my target business travel.
It may be a dump, but it is a cheap dump near my target business travel.
Aug 10, 2005, 10:52 am
#7
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I'll defer to any real estate pros, and of course anything can happen, but I think the hotel is unlikely to close before the owner has permits in hand, and it sounds like we are no where near that point. Further, unless I am misreading the article, the owner's intentions are to build a condo tower behind the current hotel, and only after that is done, tear down parts of the existing hotel in stage two, and then, in stage three, tear down the rest of the existing hotel:
"Ideally, a new condo tower hotel would be built on the empty four-acre parcel located at the back of the property, Mr. Mobedshahi says. Then, a portion of the existing 512-room hotel complex that consist of nine free-standing buildings would be razed to build a new hotel tower and one or more condo towers. As those new buildings come on line, the rest of the existing hotel would be torn down and new condo buildings built as the market dictates, Mr. Mobedshahi says."
"Mr. Mobedshahi says he would like to keep at least 200 hotel rooms in operation at all times during construction."
"Ideally, a new condo tower hotel would be built on the empty four-acre parcel located at the back of the property, Mr. Mobedshahi says. Then, a portion of the existing 512-room hotel complex that consist of nine free-standing buildings would be razed to build a new hotel tower and one or more condo towers. As those new buildings come on line, the rest of the existing hotel would be torn down and new condo buildings built as the market dictates, Mr. Mobedshahi says."
"Mr. Mobedshahi says he would like to keep at least 200 hotel rooms in operation at all times during construction."
Originally Posted by Wilbur
So will the SJC Hyatt stay open throughout or close down at some point?
It may be a dump, but it is a cheap dump near my target business travel.
It may be a dump, but it is a cheap dump near my target business travel.