Ten days ago, Derek Allen donned a hard hat and walked through the newly opened models at Axis, San Jose's newest condominium tower under construction in downtown. What he saw persuaded him not to buy a condo on San Francisco's Rincon Hill, but instead to put a $5,000 deposit down on a 19th-floor unit at the Axis, located on Almaden Boulevard next to the De Anza Hotel. A former Los Angeleno who lived in downtown L.A., Allen is accustomed to walking to restaurants, and he's more than willing to leave his house in Santa Clara and pay $800,000 to $1 million for a two-bedroom, 1,600-square-foot "home in the sky."
"The benefits of a downtown high-rise are really bringing the services to the place you live," said the late-twentysomething, who described himself as a business manager. "Every sacrifice you make for a yard or attached garage is more than made up for with restaurants, nearby hotel rooms for your guests, views, easier transportation."
Even in the middle of a housing downturn now wracked by a credit crisis, San Jose's gamble on high-rise living appears to be paying off. Interest is so strong at the 329-unit Axis that Veronica Roberson, sales manager for Pacific Marketing Associates, said her firm's original plan to build momentum and start selling in January has been shelved. "Since we had so many people anxious to purchase right away, we changed the strategy and went to sale immediately," she said.
Over at Three Sixty Residences on South Market Street, where prices range from the low $600,000s to more than $2 million, the 213-unit tower is almost half-sold and it won't even be complete until spring 2009. The 88 on East San Fernando Street reports "enthusiastic" buyer interest, and City Heights on West St. James Street has sold half its 124 units.
City officials are pleased, but not surprised. "From everything we see, these prices and these products are completely underserved in the marketplace," said John Weis, of the city's redevelopment agency. "In terms of residential, this is the first time we've seen this kind of density in downtown. This is a change in how people live."
After years of planning, San Jose is joining the bandwagon of American cities that offer an urban lifestyle for those who are tired of commuting and yearn to walk to work - or at least to a train station. "My gut reaction is with the downtowns becoming so attractive, the traffic congestion got people thinking about living downtown where they can walk to things," said Michael Pawlukiewicz, director of sustainable development for the Urban Land Institute in Washington, D.C. "But new buildings have got to be built where there is stuff happening."
While developers would have picked a more auspicious time to hit the market if they could have, it's tough to time it right when these towers can take five years or more to plan, design and build. "The headlines are certainly bad for single-family residential homes in outlying markets," said Seth Bland, a partner with Wilson Meany Sullivan, which along with CIM Group is building The 88, scheduled to open in mid-2008. "But those headlines do not apply to our buyers. The 88 is a new lifestyle option."
Matt Anderson, a partner in Foresight Analytics, an economics and real estate research firm in Oakland, hedged his bets. It's a tough call, he said, in a city that has never offered this product. "I wouldn't call it a slam-dunk in today's market. The stock market is unsettled. The economy is doing well, but it's not an outright boom," he said. "The big question is whether they hit the demographic the right way. "Affordability is not really an issue. Silicon Valley wages tend to be high, quite a bit higher, by national standards," he said. "You've g
Source: MercuryNews.com