$330 million financial boost emerges for troubled towers in downtown San Jose

SAN JOSE — Two housing towers perched alongside downtown San Jose’s bustling San Pedro Square appear to have reversed their prior misfortunes by landing hundreds of millions of dollars in financing to complete construction of the gleaming high rises, the developer said Wednesday.

188 West St. James, which consists of two residential towers and ground-floor retail, has been hounded by an array of setbacks and sluggish progress, but the development now appears to be back on track with a cascade of financing boosts that culminated in a $330 million construction loan from Mack Real Estate Group.

The funding was provided to Full Power Properties, the developer and owner of the site, and an affiliate of Z&L Properties, a China-based developer whose Bay Area offices are in Foster City.

“This is great news for the project,” said Gary Pike, a spokesperson for Z&L Properties. “This allows for the completion of the development.”

At present, the project is slated to be completed by sometime during the first three months of 2021.

“It will be great to see a major project like this up and finished with credible financing,” said Mark Ritchie, principal executive with Ritchie Commercial, a real estate firm.

The development is located at the corner of West St. James Street and North San Pedro Street.

188 West St. James, when finished, would consist of 640 residential units and 20,000 square feet of ground-floor retail, according to Z&L Properties.

“We can’t wait to see the construction fences come down from around that project across from San Pedro Square Market,” said Scott Knies, executive director with the San Jose Downtown Association. “This project has been underway going on five years now.”

The two towers have sprouted next to San Pedro Square, a hip hub of dining, nightlife, cocktail lounges, and entertainment that is arguably downtown San Jose’s busiest spot, during the day, in the evening, and on weekends.

“Just about everyone would be happy about living next to an area like San Pedro Square that is so vibrant,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy.

Construction delays that included the wrong glass panels for the windows, along with a suicide at the site, have contributed to a bumpy road for the project.

However, when it is finished, the project would likely be able to capitalize on other development efforts underway in the urban core of San Jose.

On the western edges of the downtown, Google has proposed a transit-oriented community of office buildings, hotel spaces, homes, shops, restaurants, cultural amenities, entertainment hubs, and open spaces where the search giant would employ 25,000 people near the Diridon train station and SAP Center.

A few blocks away, Adobe is constructing a new office tower that would greatly expand the size of the cloud services giant’s downtown San Jose headquarters campus that now consists of three buildings.

Plus, stalwart developers Jay Paul Co., Sobrato Organization, and Boston Properties have all begun construction of, or have actively begun planning for, huge office complexes designed to attract technology firms and other companies to downtown San Jose.

At present, Z&L plans to offer the homes on a for-sale basis in the first tower of the two that will be completed. The first tower that’s expected to be finished is the westernmost of the two high rises.

The current game plan calls for Z&L Properties to begin taken appointments from prospective homeowners by sometime in December and to actually begin sales of the residential units in early 2020, according to the developer.

“Completion of this part of the San Jose skyline adds to the overall mojo of the downtown,” Staedler said.

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