A planned 277-unit residential building in downtown San Jose has shifted its focus from senior housing to market-rate apartments, a move the developer says is driven by current financial market conditions. The eight-story project, located at 313 Gifford Avenue, will now aim to serve the general rental market instead of a specialized demographic.
Developer Urban Catalyst cited challenges in securing financing for specialized housing types as the primary reason for the change. This pivot reflects broader trends in the development sector, where financing for standard multifamily apartment projects is often more accessible than for niche concepts like senior or student housing.
Key Takeaways
- A 277-unit residential project in downtown San Jose is changing from senior housing to market-rate apartments.
- The developer, Urban Catalyst, points to financing difficulties for specialized housing as the reason for the pivot.
- The eight-story building is located at 313 Gifford Avenue, near the proposed Google transit village.
- This change highlights a market preference for financing conventional multifamily developments over niche projects.
Developer Cites Financing Realities
The decision to redesign the Gifford Avenue project was a practical one, according to Erik Hayden, founder and managing partner of Urban Catalyst. He explained that the current lending environment makes it significantly more difficult for developers to secure funding for senior, student, or even fully affordable housing projects.
"The type of housing that is viable for getting financing is primarily market-rate multifamily apartments," Hayden stated.
This reality has prompted the firm to adjust its strategy to ensure the project moves forward. By converting the plan to market-rate units, Urban Catalyst aims to secure a construction loan more readily and begin development without prolonged delays.
"It would be better for the community and our investors to build something sooner rather than later," Hayden added, emphasizing the goal of bringing new housing supply to the downtown area in a timely manner.
A Strategic Shift in a Growing Area
The project at 313 Gifford Avenue is situated in a key area of downtown San Jose, near the footprint of Google's proposed transit-oriented village. The shift to market-rate apartments aligns the development with many other new residential projects in the city's core, catering to a broad range of professionals and residents drawn to the urban center.
Urban Catalyst's Recent San Jose Activity
The Gifford Avenue development is one of several projects Urban Catalyst is advancing in downtown San Jose. The firm has recently demonstrated success in moving other large-scale developments from concept to reality, indicating a strong momentum despite broader economic headwinds.
Securing Major Financing
In August, an affiliate of the company secured a significant $112.5 million construction loan. This financing is for another large apartment complex located at the corner of West San Carlos Street and Josefa Street, which will feature 278 units.
Project Snapshot: 313 Gifford Avenue
- Total Units: 277 apartments
- Building Height: 8 stories
- Unit Type: Market-rate rentals
- Developer: Urban Catalyst
- Status: Plans revised and filed with the city
Completed Hospitality Project
Earlier this year, Urban Catalyst also completed and opened a new hotel, adding to the city's hospitality options. The 176-room, eight-story Marriott TownePlace Suites at 495 West San Carlos Street opened its doors in the spring, marking a notable milestone for the developer and the downtown area.
These projects collectively represent a substantial investment in the urban core of San Jose. The developer's ability to secure a major construction loan for one apartment project while moving forward with another underscores the viability Hayden mentioned for market-rate multifamily housing.
The Broader Housing Market Context
The pivot at the Gifford Avenue site is not happening in a vacuum. It speaks to a wider challenge in the real estate development industry where the cost of capital and lender risk assessment heavily favor conventional projects. Specialized housing, while often in high demand, can be perceived as carrying higher financial risk, making lenders more cautious.
Developers across the country often face a similar calculus. The path to financing is a critical gatekeeper for any new construction, and projects that align with what lenders are most comfortable funding have a distinct advantage. For San Jose, this means that while the need for diverse housing types like senior and affordable options remains, the market is currently structured to deliver more conventional apartments.
As Urban Catalyst moves forward with its revised plans, the project will add nearly 300 new market-rate homes to a downtown area poised for significant growth, contributing to the city's overall housing stock even as its original focus has changed.
