Investors grab choice downtown San Jose property near Google village sites

SAN JOSE — An increasingly busy investment company has bought choice properties in downtown San Jose that are near the sites of Google’s proposed transit village and the Diridon train station.

Urban Catalyst, the new owner, purchased the existing Hub Cap City and Custom Apparel By Susan Kay’s properties on West San Carlos Street near Josefa Avenue, according to Santa Clara County public documents.

“We love the Diridon Station Area Plan, we like transit-oriented development, and we like that Google is coming into town,” said Erik Hayden, president of Urban Catalyst, a real estate and investment firm. Urban Catalyst was formed to create an opportunity fund to provide development expertise and cash for selected properties in areas that have been designated as opportunity zones. Downtown San Jose and parts of Oakland are in those zones.

Acting through an affiliate, UC Keystone, Urban Catalyst paid $2.8 million for the property, county records filed on June 28 showed.

The parcels involved in the purchase have addresses of 493, 495, 497, and 499 W. San Carlos St.

In numerous communities in the United States, opportunity zones have been enabled by President Donald Trump’s tax-cut initiative. Investors in properties located in opportunity zones can gain tax benefits if they undertake a substantial redevelopment of a site and then retain ownership of the parcels for a required period of time.

Urban Catalyst said the newly purchased site, which is on a corner of one of San Jose’s busiest streets, has many possibilities.

“We are looking at a variety of things and I can’t pinpoint just yet what we will be doing here,” Hayden said.

Still, plenty of intriguing options come to mind.

“With Google coming in, there’s a bunch of stuff we could do there,” Hayden said. “We’ll look at office development, I’ve done a lot of multifamily residential in that area, there could be a hotel. A variety of uses are possible at that site.”

Mountain View-based Google has proposed a transit-oriented community near the Diridon train station consisting of office buildings, homes, shops, and restaurants where 25,000 people would work, including 15,000 to 20,000 of the search giant’s employees.

“The San Carlos corridor has a lot of opportunities that have been neglected for some time,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land use and planning consultancy. “San Carlos Street probably has one of the greatest upsides considering everything that’s going on with Google and Diridon Station.”

The purchase of the Hub Cap City parcels marks the second acquisition in downtown San Jose by Urban Catalyst.

In May, an Urban Catalyst affiliate paid $6.9 million for 26 and 30 S. First St. in San Jose, parcels that include the old Lido Nightclub site.

Urban Catalyst ultimately would like to purchase and redevelop 10 to 12 downtown San Jose sites, according to Hayden.

“What opportunity zones do is they encourage developers such as myself to focus on certain areas,” Hayden said. “Without opportunity zones, I would still be investing in downtown San Jose, but not as much.”

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