Downtown San Jose hotel tower seen as prime real estate is up for sale
A downtown San Jose hotel tower is up for sale, a potential deal that has attracted numerous buyers and could lead to a shift in uses at the property.
SAN JOSE — A landmark downtown San Jose hotel tower is up for sale, a potential deal that has attracted numerous prospective buyers and could lead to a shift in uses at the property, which is deemed to be prime real estate.
One of the two towers of the 805-room Signia by Hilton San Jose, a double-highrise lodging in the city’s downtown district, is being offered for sale, according to Sam Hirbod, the principal owner of the hotel.
The hotel highrise that is being offered for sale is the 264-room southern tower which is a newer annex to the original main tower that totals 541 rooms, Hirbod said.
If the sale goes through, the current hotel operation would be completely focused in the northern tower of the Signia by Hilton San Jose.
“All of the amenities are in the north tower,” Hirbod said. “Restaurants, the lounge, swimming pool, fitness center, the conference center, are all in that tower.”
The north tower, the older of the two highrises, is undergoing a complete top-to-bottom renovation that includes revamps in all 541 rooms, Hirbod said.
Guests who stay in the Signia are being lodged in the newer south tower while crews complete the renovations in the north tower.
“The renovation is about 90% finished,” Hirbod said. “All the rooms in the north tower are being completely redone.”
It’s entirely possible that the southern tower under a new owner would feature a different use than a conventional hotel operation.
“What is being looked at for the south tower that’s up for sale is more of a residence idea, longer-term stays than a typical hotel,” Hirbod said. “People would stay for a month, 180 days, a year. It would be like a corporate apartment concept.”
JLL, a veteran commercial real estate firm, is handling the marketing for the attempt to sell the southern tower.
“We thought we would get about 15 tours looking at the tower, but we got about 60 tours,” Hirbod said. “It looks like we will have north of 50 bidders.”
An approach that differs from a conventional big hotel could work in the south tower, said Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the lodging sector.
“Long-term stays is a business model that held up even during the pandemic,” Reay said. “Longer-stay facilities did very well during COVID.”
Hirbod believes a long-term, quasi-residential concept, could work in the southern tower.
“For long-term stays, there’s a shortage of that kind of facility in San Jose,” Hirbod said. “A lot of that business is going to Mountain View and Palo Alto.”
In another key shift, Signia by Hilton San Jose no longer depends on the San Jose Convention and Visitors Bureau to help bring meetings to the big hotel at 170 South Market Street.
“We are moving to a model where we self-generate almost all of our meeting business,” Hirbod said. “We will bring in maybe 95% of our meeting business ourselves, rather than depend on Team San Jose.”
Signia by Hilton has a conference center that totals 65,000 square feet, Hirbod pointed out.
“It’s like we have our own mini-convention center here,” Hirbod said.
Even with a roughly one-third reduction in the number of conventional hotel rooms, San Jose’s tax revenue won’t suffer. Hirbod believes the north tower at 546 rooms offers enough capacity even on a busy night.
When the hotel begins to accommodate all of its guests in the north tower, that could create a more lively ambiance due to the concentrated nature of the lodging.
Plus, the longer-term stays that might occur in the southern tower following a sale would be poised to bring additional people – and potential patrons for restaurants, stores, night spots, cocktail lounges, theaters and art galleries – into downtown San Jose.
“It’s going to be a win-win for the city,” Hirbod said.