SAN JOSE -- An iconic hotel in downtown San Jose, the Marriott next to the city's convention center, has been bought by CBRE Global Investors.
CBRE paid $83 million for the 506-room San Jose Marriott Hotel, according to industry sources familiar with the deal terms. CBRE executives wouldn't discuss the purchase price. The 28-story hotel is located on South Market Street and West San Carlos streets next to the city's convention center, now undergoing a major expansion and renovation.
"The current health and likely future prosperity of Silicon Valley play very strongly into this investment," said John Sauter, managing principal with CBRE Investors. "The market is very strong. The convention center looks like it will be a very good demand generator."
The San Jose Marriott was put on the market with an asking price of $80 million to $85 million. The seller was Prudential Real Estate Investors.
"There is tremendous buyer and developer interest in the Silicon Valley hotel market," said Alan Reay, principal analyst and president of Atlas Hospitality Group. "In Northern California, the Silicon Valley hotel market is second only to San Francisco."
Developers are planning to construct at least 650 new rooms in San Jose to capture some of that strong business in the South Bay.
—The Silicon Valley lodging market is fed by strong corporate demand from the significant concentration of high-tech companies in the region," said Vance Maddocks, president of CBRE Strategic Partners U.S.
The convention space at the convention center is being expanded by 29 percent and a new grand ballroom of 35,000 square feet is being added. The convention space now totals 425,000 square feet, and 125,000 square feet is being added ,which would bring the total space to 550,000 square feet.
"High tech is a big growth business in the United States, and Silicon Valley has come back very strongly," Reay said.
The new owners of the Marriott are planning to upgrade the hotel in several ways.
"There is a value-added story for this hotel," Sauter said. "We will make some improvements in the lobbies and meeting spaces. We also will improve the rooms and the corridors at some point."
Contact George Avalos at 408-373-3556 or 925-977-8477. Follow him at twitter.com/george_avalos.