Historic downtown San Jose building scooped up by busy developer

SAN JOSE — An increasingly busy developer has bought a historic 19th-century building in downtown San Jose that will become part of a new office and restaurant development, a project that will feature a huge rooftop bar.

Urban Catalyst, an up-and-coming real estate investment and development firm, has bought the Knox-Goodrich building, a downtown San Jose structure that sprouted in 1889 at 36 S. First St.

“This is the last parcel that we need for the mixed-use project we’re planning,” said Erik Hayden, president of Urban Catalyst, which was formed to create funds that can capitalize on tax advantages provided by opportunity zones in places such as Oakland and downtown San Jose.

Acting through an affiliate, Urban Catalyst bought a narrow lot on First Street just south of East Santa Clara Street and the Bank of Italy office tower, according to documents filed with Santa Clara County officials on Nov. 15.

UC Fountain Alley, the affiliate, paid $2.1 million for the parcel, the county documents show.

Swenson, a stalwart real estate development firm, was the seller. UC Fountain Alley also obtained $4.8 million in financing from Presidio Mortgage Holdings to bankroll the purchase, according to property records.

Urban Catalyst now owns three parcels that are adjacent to each other with addresses of 26, 30 and 36 S. First St.

The properties involved are a surface parking lot, site of the now-shuttered Lido nightclub, and the Knox-Goodrich building. The historic Knox-Goodrich building will be preserved amid the redevelopment efforts.

Urban Catalyst intends to construct a six-story office building that would use the existing Knox-Goodrich entry for the modern building. In addition, a swank new restaurant is being planned for the ground floor space.

However, perhaps the most notable feature of the development is a 5,000-square-foot bar planned for the top of the building, an establishment that’s expected to be the largest rooftop lounge in Silicon Valley.

“The idea is to activate this whole section of South First Street and Fountain Alley,” Hayden said.

Next door, developer Gary Dillabough is leading an effort to conduct a wide-ranging redevelopment of the Bank of Italy tower and to create new retail spaces on the ground floor that fronts on First Street and Fountain Alley.

The office building is expected to total roughly 50,000 square feet to 55,000 square feet. The ground floor retail should be 11,000 to 13,000 square feet in size, Hayden estimated. The restaurant itself should take up 3,000 to 5,000 square feet.

The project has yet to receive final approval from city planners. However, Urban Catalyst was confident enough about its chances to win the municipality’s formal endorsement, based on discussions with city officials, that it decided to proceed with the property purchase.

If the final approvals occur as hoped, Urban Catalyst believes it can begin construction sometime in the first quarter of 2021.

“We are really seeing a lot more activity in this part of the downtown and on First Street,” Hayden said. “We are going to be adding to that revitalization.”

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