SAN JOSE — A wobbly economy might force the developers of a big mixed-use village in San Jose to shift gears for the project, according to the property’s owner and official city documents.
The Stevens Creek Promenade project, located a short distance from the Westfield Valley Fair commercial hub and the Santana Row mixed-use neighborhood, is the proposed development that’s slated to undergo a re-thinking.
The prospect that changes loom for Stevens Creek Promenade, a high-profile proposed village in west San Jose, was disclosed in reports that a lobbyist filed with the city of San Jose. Chappie Jones, former San Jose City Council member and a director with consulting firm Lighthouse Public Affairs, is the lobbyist who met with the city officials.
“Changing market dynamics” have prompted the project’s developers to “explore alternatives to their proposed Stevens Creek Promenade project,” according to the lobbyist’s report that was posted on a San Jose city government website.
The original version of the project envisioned offices, apartments, retail, restaurant spaces and a hotel at 4300 Stevens Creek Boulevard in San Jose.
A later version of the proposal scrapped all of the office space and whittled down the retail — but added affordable housing to the mix for the first time. A 250-room hotel was also proposed in the second version of the project. The project would also include 10,800 square feet of retail.
Santa Monica-based Miramar Capital Group and Machine Investment, acting through affiliate MPG Stevens Creek Owner, is developing the property, which the real estate alliance also owns.
Miramar Capital and Machine Investment didn’t detail the specific changes they might be contemplating.
“Our goal is to build a great project that benefits the community and the city,” the development alliance stated in an email that Jones sent to this news organization.
A forbidding economic landscape has emerged for the Bay Area office market. Empty spaces, tech layoffs and feeble rents haunt office buildings.
Vacancy rates have soared to record-high levels and are particularly brutal in the fading San Francisco market, whose office spaces are well over one-third empty. Downtown San Jose and downtown Oakland also suffer from grim levels of office vacancies.
Plus, brutally high interest rates and skyrocketing inflation have coalesced to crimp the construction of new apartment buildings. Why? Construction and labor are costly. Borrowing money is expensive.
“Re-evaluating our development program to align with changing market conditions is essential at this time,” the development alliance behind Stevens Creek Promenade stated in the email.
The project’s developers are also attempting to build the project in phases. A recent version of the project floated the concept of affordable housing to kick off the development.
In 2020, Miramar Capital Group and Machine Investment, the affiliate, paid $54.5 million for the site. The property is located on the south side of Stevens Creek Boulevard between Kiely Boulevard and Palace Road.
Jones, the Lighthouse Public Affairs lobbyist, scheduled three meetings in late July with four different San Jose city officials.
“We are having important discussions on different development concepts with key stakeholders in the city of San Jose to inform our re-evaluation process,” the development alliance stated in the email Jones sent to this news organization.
