San Jose Agrees to Split Signia by Hilton for Student Dorm

The City of San Jose has signed off on splitting the 805-room Signia by Hilton San Jose in two, with one tower in a pending deal for student housing.

The City Council voted to approve a lot split and sale of the south tower at 170 South Market Street to an affiliate of Mill Valley-based Throckmorton Partners, the San Jose Mercury News reported.

The seller would be hotel owner San Ramon-based Eagle Canyon Capital, led by Sam Hirbod.

The pending sale marks a demise of the Downtown San Jose hotel market, with an empty portion of its largest hotel earmarked for college students.

The California State University system, on behalf of San Jose State University, is looking at leasing the 264-room south tower to house students.

If the sale goes through, the Signia by Hilton would operate in the north tower, now undergoing a renovation. The university would take the curving, 13-story south tower.

Eagle Canyon listed the south tower, an annex to the 541-room main tower at the former Fairmont San Jose, last spring for an undisclosed price.

The deal with Throckmorton would give the university an option to buy the 264-room wing. Its ground floor now contains a cafe and a Morton’s steakhouse.

San Jose Mayor Matt Mahan acknowledged that San Jose officials had to confront tough choices in deciding to accommodate the sale of the hotel annex.

“We have to be responsive to market conditions and be able to be flexible and have an evolution over time,” Mahan said in comments prior to the council’s vote. “What we’re seeing is the south tower is largely sitting empty, generating no transient occupancy tax, and being a significant financial drag on the owner of the hotel.

“We want to make sure the hotel is right-sized.”

Unite Here! Local 19, whose members provide an array of services at the hotel, raised concerns about potential job and tax revenue losses if one of the two towers is converted to university housing.

“This deal is bad for San Jose,” said Enrique Fernandez, business manager with Local 19. “We are losing hotel rooms, union jobs, and there is potentially a loss of tax revenue.”

— Dana Bartholomew