South Tower of the Signia by Hilton hotel at 170 South Market Street in downtown San Jose. (George Avalos/Bay Area News Group)
SAN JOSE — A downtown San Jose hotel tower could become a housing highrise, depending on the outcome of a real estate deal that’s headed into its latter stages, according to the property’s principal owner.
The owner of the landmark Signia by Hilton San Jose, an 805-room hotel, is actively seeking a buyer for one of the two towers of the lodging complex.
Up for sale is the 264-room south tower, which would be converted to a new use. The 541-room north tower would remain a conventional hotel, said Sam Hirbod, the principal owner of the double-tower hotel complex.
Long-term lodging stays or a housing complex are among the potential future uses of a repurposed and redeveloped south tower under a new owner, according to a marketing brochure that’s being circulated by JLL, a commercial real estate firm that’s seeking buyers for the highrise.
But the notion of extended lodging stays in the southern tower is encountering opposition from a coalition headed up by labor leaders, community groups, arts organizations and City Councilmember Omar Torres.
The coalition, which includes the Silicon Valley Rising organization, has raised concerns that the San Jose economy could suffer if the southern tower is converted to uses such as long-term lodging stays. A conventional hotel operation features short-term stays.
“Extended-stay guests are more likely to cook their meals in their room and spend their leisure time in the hotel’s amenities,” the coalition stated in an email it sent to this news organization. “This means that they are less likely to explore the local area and spend money in local businesses.”
The coalition leaders say they are concerned about the 200 union jobs at the Signia by Hilton, located at 170 South Market Street in San Jose.
“Jobs represent the backbone of a healthy downtown economy, and they should be put front and center in this discussion,” said Jean Cohen, executive officer of the South Bay Labor Council.
However, it appears that an extended-stay hotel operation is now off the table, according to Hirbod.
“We are working with a buyer that will convert the south tower to housing,” Hirbod said. “We made a pivot away from extended stays.”
Conversion of the southern tower to housing could bring several hundred permanent residents into downtown San Jose. Plus, the Bay Area and Silicon Valley alike suffer from significant shortages of residences.
The shift in business strategies in the sales efforts arose in the wake of notable opposition to the notion of a long-term lodging operation.
The big problem facing the Signia by Hilton, which formerly was the San Jose Fairmont, is the relatively low occupancy in the 805-room hotel, in Hirbod’s view.
The hotel typically is 30% full, Hirbod estimated. That works out to 242 rooms. And it also means that if all of these 242 stays were concentrated solely in the 541-room northern tower, the hotel still wouldn’t be sold out.
All of the primary amenities in the hotel — the lobby, restaurants, cocktail lounge, fitness center, swimming pool, and large and small meeting spaces — are all in the northern tower that will remain a conventional hotel. Plus, these are largely renovated and upgraded, along with the rooms.
“We spent $65 million to upgrade and reposition the hotel,” Hirbod said. “We now have one of the nicest hotels in the western United States. We have a world-class operator in Hilton.”
Hirbod believes the hotel would function in a more optimal fashion if it were smaller than its current 805 rooms.
“Iif this deal goes through, the hotel will be rightly sized and rightly positioned to serve the San Jose community, business travelers and leisure travelers for decades to come,” Hirbod said. “I’m very optimistic about the future of the hotel.”
Originally published at George Avalos