April 01– Apr. 1–SAN JOSE — An affiliate of AVR Realty, based in Yonkers, a city about 11 miles from Manhattan, has bought the AC Hotel San Jose, which is a Marriott brand with a European flair that caters to millennial customers.
"This is a very strong hotel market in downtown San Jose that AVR Realty is buying into," said Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the lodging market in California. "Downtown San Jose is a market where demand exceeds supply."
AVR San Jose Downtown Hotel, the AVR affiliate, paid $95.4 million last week to buy the hotel, according to Santa Clara County public records. The county documents show the buying entity is controlled by AVR Realty, a prominent Yonkers, N.Y. real estate development and investment company founded by Allan Rose.
The 210-room AC Hotel San Jose opened in early 2017, becoming at the time the first new hotel to open downtown since 2004.
Located at 350 W. Santa Clara St. between State Route 87 and South Almaden Boulevard, the AC Hotel is still the newest hotel in downtown San Jose.
"The AC Hotels brand caters to millennials and young technology professionals," Reay said.
Developers have proposed some new hotels in downtown San Jose lately, but none have launched construction. Hundreds of hotel rooms are coming online in north San Jose, though.
The AC Hotel San Jose was built by Ohio-based Rockbridge Capital, which specializes in the development of hotels. The firm has more than 225 hotel investments in 38 states worth $6 billion, according to the company's website.
Rockbridge bought the hotel site in 2014 for $3.5 million and obtained a $29.4 million loan to help finance the lodging's construction, county documents show. At the time AVR Realty bought the AC Hotel, the property's assessed value was $38 million, which indicates a big profit for Rockbridge.
"Downtown San Jose has average occupancy rates of 70 percent to 75 percent," Reay said. "That means this is a very robust, very healthy hotel market."
The AC Hotel San Jose is roughly within two blocks of properties that Google has bought for its future transit village downtown.
Google has proposed development of a transit-oriented community of office buildings, homes, shops, restaurants and open spaces where 25,000 would work, including 15,000 to 20,000 of the search giant's employees.
"The AC Hotel has an excellent location with the Google village being so close," Reay said.