Booming business in the Silicon Valley and a thriving sports scene are fueling growth in this Bay Area city.
The largest city in the Bay Area, San Jose has been a beneficiary of the economic boom surrounding the technology and software development companies of California’s Silicon Valley since the mid 1990s. With this sector of the economy still experiencing rapid growth, and real estate options all but exhausted in neighboring Santa Clara and Sunnyvale, San Jose is now in the position to become home to a slew of new companies, which is causing demand to skyrocket. According to Mukesh Mowji, cofounder and CEO of Pracrea, a company that facilitates commercial real estate transactions in the Silicon Valley, “The Silicon Valley is at an all-time high in terms of RevPAR growth, and nothing indicates a slowdown.”
Beyond the vast growth of tech startups and social media behemoth’s like Facebook, there are other factors driving the sharp uptick in San Jose’s lodging demand. One is the city’s active sports scene. San Jose is home to teams in both the National Hockey League and Major League Soccer—the Sharks at the SAP Center and the Earthquakes at Avaya Stadium, respectively. Also, only a few miles away in Santa Clara is Levi’s Stadium, home to the San Francisco 49ers, event venue, and, next year, host of Super Bowl 50.
Many of San Jose’s new hotel projects are on the higher end of the select-service spectrum and act as a complement to the city’s burgeoning downtown scene. Mark Fraioli, a vice president with the investment sales team of Jones Lang LaSalle’s Hotels & Hospitality Group, says, “The Silicon Valley worker is seeking cultural experiences, and these hotels are very interested in being a part of an urban mix where there is diversity and vitality.”
Presently among the big lodging projects in motion in San Jose are a 210-room AC Hotel and a Skyport Marriott SpringHill Suites & Residence Inn less than a mile from the San Jose airport.
To see our market overview, click here.
STRAIGHT TALK ON SAN JOSE
Tarun Patel, cofounder and CFO of Pracrea, says that events at San Jose-area venues, as well as expanded office facilities, are going to fill San Jose hotel rooms for the foreseeable future. He explains how these facilities and venues will affect not only the hotel scene, but also the San Jose economy at large.
- San Jose is a high-entry market right now, and as such the downtown area is projected to see a lot of infrastructure growth. Especially worth noting is that there are plans of expanding the Bay Area’s BART rapid transit system to San Jose’s downtown.
- Beyond travelers looking to watch football, events held at Levi’s Stadium bring many travelers to San Jose. In March of this year, WrestleMania took place at Levi’s Stadium for the first time, and lodging in the whole city of San Jose was sold out. There were half a million people who traveled to see the event, and reportedly $100 million was infused into the Bay Area economy.
- A developer is currently building 2 million square feet of office space within a stone’s throw of the San Jose airport, which will drive huge demand on weeknights that might not get a boost from the event venues.
