Some day not long from now, San Jose State students could be sleeping where they once ordered Big Macs and Chicken McNuggets.
Late last week, the partnership of Barry Swenson Builder and Amcal acquired the shuttered McDonald’s at 90 E. San Carlos St., paying approximately $12.6 million for the 16,868-square-foot parcel, according to public records.
That’s a pretty penny for a site that’s less than a half acre, but the site will play an important role in the construction of what is already in the hopper: A residential tower targeted at college students that was originally planned for only the TechShop site next door.
Adding the McDonald’s to the previously announced project lets the developers increase amenity spaces and — crucially — bring the parking above ground, rather than dig expensive underground parking, said Joshua Burroughs of Barry Swenson Builder.
The construction cost savings will end up being a wash because of the cost spent on the land, but the deal will shorten the project timeline, Burroughs said. The partners paid $13 million for the 1.1 acre TechShop building at 300 S. Second St. in March; TechShop is moving a few blocks away, to the old Zanotto’s space.
“We can stage the construction on site, and start going up on the tower, and then once the tower is topped out, chase it with the parking,” he said. The alternative was to spend months first digging and shoring for the underground parking before going vertical on the tower.
The seller of the restaurant was McDonald’s Corp. McDonald’s rarely close, and it’s unclear what led to the company’s decision to shutter the restaurant, but it was reportedly not one of the chain’s best performers and it lacked a drive-through.
The addition of the property won’t add more residential units: It’s still going to be in the 850 to 950 bed range, and a tower just under 200 feet tall with 17 floors of housing on top of a double-high ground floor. The amount of retail space has also increased to about 10,000 square feet. “By pulling the parking out from under the building, it made it so there’s more commercial,” Burroughs said.
The tower is a bit of an outlier in the downtown’s booming rental pipeline because most planned projects are targeting high-end tech workers to fill luxury units. But amid signs of potential weakness as a flood of new supply hits the market, student housing could be less subject to ups and downs.
Amcal, based in Agoura Hills, develops market-rate, student and affordable housing across California, but this is its first project in the South Bay. Barry Swenson Builder is one of the region’s most storied local developers and builders. It also is considered a pioneer in building relatively tall buildings downtown. In recent years it has partnered with larger developers to get plans off the ground. It’s currently finishing up Century Court Towers, a 376-unit, two-tower apartment complex with partner Essex Property Trust.
The project would have about 235 units, with four bedrooms per unit, each with a separate bath, arranged around a central kitchen and common area. While the project would welcome all comers, it’s decidedly targeted at students, who could pay $1,000 a month — considerably less than a one-bedroom market-rate unit in an apartment complex off campus. Such projects also include student-friendly amenities and programming.
The project is being developed as another major student housing project reaches completion. Symphony Development is finishing work on 27 North, a 119-unit mid-rise project across from City Hall that’s also targeted at San Jose State students.