Downtown San Jose apartment complex lands construction loan

"An apartment project, slated to rise at the corner of West San Carlos Street and Josefa Street in downtown San Jose, has obtained a construction loan totaling $112.5 million, according to documents filed on Aug. 26 at the Santa Clara County Recorder's Office. Aquino, as the 278-unit apartment hub is known, is being developed by an affiliate of San Jose-based real estate firm Urban Catalyst. It is set to break ground on Sept. 3."

"The project's total cost is expected to be $135 million, including the construction financing, said Erik Hayden, founder and managing partner with Urban Catalyst. Interest rates are still high, but the construction financing market is starting to come back, Hayden said. It is not all the way back yet, but things are improving. Overall development expenses, including materials, labor and money costs, remain elevated, Hayden said. Construction costs are 10% higher than usual, he said."

"We may be at the start of the next cycle of apartment development. If interest rates drop, we'll see a huge run in new development. A lot of projects are shovel-ready right now. You'll see more people jump in with projects. Urban Catalyst is active in the South Bay and has proposed several projects in downtown San Jose. In April, it opened a 176-room Marriott TownePlace Suites a short distance away from the Aquino site."

Aquino is a 278-unit, eight-story apartment complex planned at 486 through 498 West San Carlos Street and Josefa Street in downtown San Jose. The project secured a $112.5 million construction loan filed Aug. 26 at the Santa Clara County Recorder's Office and is scheduled to break ground on Sept. 3. Swenson is the general contractor and the development affiliate of Urban Catalyst anticipates total costs of about $135 million including financing. Interest rates remain high but construction financing activity is beginning to recover. Overall development expenses and construction costs are elevated, roughly 10% above usual. Nearby activity includes a newly opened 176-room Marriott TownePlace Suites and other proposed residential projects such as a planned 258-unit Santana Row development.

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