“Entertainment district” in north San Jose could land big new hotel

SAN JOSE — A new hotel with hundreds of rooms has been proposed for a north San Jose “entertainment district” that also would include a Top Golf high-tech recreational complex.

The 200-room hotel is expected to be a Shilla Stay and would be located near 4701 N. First St. in San Jose’s Alviso district, according to documents on file with city planners. Shilla Stay is one of the brands of Shilla Hotels & Resorts, a unit of Samsung Group.

“There is definitely a lot of activity in that north San Jose, Alviso, Highway 237 corridor with corporate campuses expanding, companies moving into that area,” said Dharmesh Patel, executive managing director of hotels with Colliers International, a commercial realty brokerage. “Demand for hotel rooms still outweighs the current supply in that area.”

An array of tech companies have been expanding their operations, or actively laying plans to do so, in north San Jose.

On Oct. 30, Google paid $154.5 million for two big office buildings on North First Street, just a few blocks away from where the hotel would potentially rise. Apple has assembled land and buildings for a huge campus in north San Jose. Samsung has established a major campus on North First Street. Micron Technology is shifting employees to three large office buildings near State Route 327. Smaller players such as Bloom Energy are also moving into north San Jose.

“You still have a tremendous amount of tech companies in growth mode in San Jose and other parts of Silicon Valley,” Patel said.

The proposed hotel would be next to a Topgolf entertainment venue in north San Jose.

Topgolf operates high-tech driving ranges that allow people to hit golf balls equipped with microchips that record distance and accuracy. The venues typically also include dining and drinking establishments. The company says it hopes to break ground soon and open sometime in 2019.

“The whole development is an entertainment district,” said Morgan Schaaf, a spokeswoman for Topgolf.

The Shilla Stay hotel could prosper if it manages to open sometime in the next few years because the economy remains robust. And, in turn, that means the outlook for room rates and occupancy levels could remain favorable.

“Occupancy rates and room rates, while not increasing at the same level as recent years, will still improve in Silicon Valley,” Patel said. “We see increases in the low single digits for occupancy and rates in 2019.”

Plus, the ongoing tech growth in the region, which has added jobs at a rapid pace, also bodes well for hotels in San Jose and other parts of the South Bay.

“The growth mode will continue to generate business travel throughout Silicon Valley, which means more demand for hotel rooms,” Patel said.

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