San Jose Market Report

09/01/2008 California Construction

Despite high-profile luxury condo projects on the horizon, building permits for residential projects drop considerably from fiscal 2006-2007
By David Silva



Even as workers put the finishing touches on one major San Jose condominium project and close in on finishing another, city officials say they aren�t enough to offset what so far has been a very, very bad time for residential construction.

�San Jose has most definitely been impacted by the housing slowdown,� says city of San Jose senior planner Michael Bills. �In fiscal year 2006-07, we issued 3,214 permits for new residential units. In fiscal year 2007-08, which we�ve just completed, we issued 1,545.

�We�ve seen a significant slowdown, and it�s hard to tell at this point whether we�re going to slow down even more. Historically, our weakest year was 1982, during the low point of the recession, when we did 1,534 units. If it gets any slower, we�re going to break that record.�

On the bright side, Bills cites two projects -- the 88 mixed-use high-rise downtown and the Skyline San Jose at Tamien Station -- as evidence that new high-density construction may help bring the city�s housing drought to an end.

The San Jose Redevelopment Agency has pumped about $1.7 billion into downtown public improvements and has teamed up with numerous private firms to promote high-density residential construction in the downtown area. The effort has thus far generated at least 10 downtown high-rise projects. Among them: the Three Sixty Residences and Axis condominium developments.

Three Sixty Residences -- a 23-story, 503,498-sq-ft building at 360 S. Market St. -- is on schedule for an April 2009 completion date despite brief delays caused by a building inspectors strike and the discovery of soil liquefaction on the site.

To address the soil problem, architect Solomon Cordwell Buenz of San Francisco removed the underground portion of the project and reapportioned the building�s vertical loads.

�Things have been moving ahead pretty smoothly since then,� says Peter Noone, a senior architect with Solomon Cordwell Buenz. �We�re basically on time, and on schedule. When you step back and look at the big picture, it�s been a pretty smooth project.�

Three Sixty Residences includes 213 luxury units ranging from one-, two- and three-bedroom floor plans, and six penthouses on the 22nd and 23rd floors. Residents will also have access to concierge and doorman service, a heated outdoor pool, and a landscaped courtyard.

Construction began in February 2007. Mesa Development LLC of San Jose is project developer, with Bovis Lend Lease of San Francisco serving as general contractor.

Major construction ended in June on Axis -- a 22-story, 786,000-sq-ft luxury condominium tower at 38 Almaden Blvd. Residents were expected to begin moving into the tower in July.

Designed by Ankrom Moisan Associated Architects of Portland, Axis features 329 luxury residential units. Floor plans range from 655-sq-ft studios to 1,843-sq-ft, three-bedroom penthouses.

A third-floor outdoor common area includes a pool, barbecue area and spa, and a fitness center overlooks the lobby. Marketing material for Axis places considerable emphasis on the building�s downtown location, near the historic Hotel De Anza and numerous restaurant and shopping venues.

Construction began in February on the project, which is owned by Almaden Tower Venture LLC of San Jose. Webcor Builders of San Mateo is the general contractor.

�This is probably one of the better projects of my career, as far as the collaboration with the owner and architect,� says Webcor project director Pat McGoff. �The owner�s representative was in construction for several years before going over to the owner�s side, so it was a very pleasant experience. We had a few issues with excavation, but other than that, it was smooth sailing.�

McGoff also noted the depressing effect of the housing slump on San Jose, but suggested at least some of the problem is political, rather than economic.

�It�s the nature of the politics of a presidential election cycle that everyone is just holding off until the outcome,� he says. �I still think it�s a very good market in San Jose, but it�s at a time and a place where people are hedging their bets.�


Three Sixty Residences Project Team :

Owner: Mesa Development LLC, San Jose
General Contractor: Bovis Lend Lease, San Francisco
Architect: Solomon Cordwell Buenz, San Francisco
Concrete Subcontractor: Webcor Concrete, San Francisco
Design/Build Subcontractor: CMI, Menlo Park

Axis Project Team :

Owner: Almaden Tower Venture LLC, San Jose
General Contractor: Webcor Builders, San Mateo
Architect: Ankrom Moisan Associated Architects, Portland
Structural Engineer: Magnusson Klemencic Associates, Seattle

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