On a vacant site near Topgolf San Jose that was previously targeted for a hotel, a Los Angeles developer is now proposing a major housing development.
Earlier this month, Genesis Commercial Capital submitted a preliminary application to city planners to build 804 new homes in San Jose’s Alviso District. Tapping the so-called builder’s remedy, Genesis, which provides financing for real estate investments, is proposing to construct eight residential buildings on the 3.2-acre site.
It was not immediately clear from the pre-application how tall the buildings would be, or what kind of housing Genesis intends to build.
Genesis representatives did not immediately respond to a request for comment.
The firm’s proposal comes about six months after Pine Tree Investment & Management bought the lot, which is located at 7 Topgolf Dr., for $27.6 million at the end of a foreclosure proceeding, The Mercury News previously reported. Pine Tree is an affiliate of South Korea’s KEB Hana Bank, which had loaned money to the property’s previous owner, Mirae Asset Global Investments. Mirae’s loan went into default in October last year, the Mercury News reported.
Representatives of Pine Tree also didn’t immediately respond to a request for comment.
Genesis proposed its housing development under the builder’s remedy, a provision of state law that streamlines the approval process for certain housing developments in localities that are out of compliance with state housing regulations. San Jose is in that spot because it has yet to get state sign-off on its plan for reaching its housing construction targets for the next eight years.
To take advantage of the builder’s remedy, developers have to set aside at least 20% of the homes in a residential development for affordable housing. It’s unclear what percentage of homes in its proposed development near Topgolf Genesis would reserve for lower-income residents.
The development would be a big change from prior plans. Developers once envisioned an entertainment district in the area around Topgolf San Jose, which opened in 2021.
Mirae, also of South Korea, acquired its property near the driving range in 2019 for $22.5 million according to county records reviewed by The Mercury News. As part of that deal, it obtained a $26.4 million loan from KEB Hana to develop a four-story, 200-room hotel, The Mercury News reported.
It purchased the property from Milpitas-based Terra Ventures LLC, which had planned to build its own hotel on the same spot as part of its master plan for a 40-acre site around Top Golf. After selling the hotel site to Mirae, Terra started working on a plan for a five-story, 214-room hotel of its own on its remaining portion of the Top Golf site.
But Terra and Mirae’s developed their plans soon before the onset of the Covid-19 pandemic, which led to widespread remote work and a severe curtailing of business travel. Although the pandemic has abated, business travel remains depressed, particularly in Silicon Valley, weighing on the hospitality sector.
Mirae’s property went into foreclose before the developer even began construction on its planned hotel.
Meanwhile, after getting the city’s approval for its master plan for the area in 2019 and its hotel project three years later, Terra moved away from those plans. It recently pitched a data center facility instead for its Alviso property, citing the lack of demand for hospitality and retail.
With office vacancies sky-high in Silicon Valley and interest rates elevated, the foreclosure on the Mirae property likely won’t be the last. Real estate industry insiders expect more loans to slip into default in coming years as property owners struggle to attract tenants or complete projects.
