Commercial Real Estate Blog

A local investor (Grant Sedgwick) has partnered with Hyatt to work to bring a Classic Residence senior housing project to Los Gatos. The project is located on the current Los Gatos Lodge site, which is located on Highway 9 (Los Gatos-Saratoga Road), just east of Highway 17.

The project is fairly massive, with initial plans including underground parking, six levels above grade, and consisting of 300 1-2br apartments. In addition, the project would feature amenities such as dining areas, fitness center, library, and pool.

Not including the parking, the project comes in at a massive 680,000 square feet! This is a massive project, one which the town of Los Gatos and its residents will likely have trouble supporting in its current form. Though its sits down from the street, and it is mainly senior housing (which is a fairly low impact use), the site would have an impact on the traffic on the already heavy Highway 9 traffic. Another issue is the walkability to/from downtown. It is crucial that there be a safer pedestrian path from the project to town as people walking from the project down Highway 9 currently need to pass through an on-ramp and an off-ramp to get to town.

Nevertheless, the site would benefit from an upgrade and senior housing is a fairly low impact use. The current Los Gatos lodge was built about 60 years ago and consists of about 130 rooms, and sits on nearly 9 acres. It will be interesting to see what happens, but the town of Los Gatos is generally one of the tougher cities with respect to entitlements, particularly near its downtown.

Los Gatos Community Hospital operator Tenet Healthcare has decided not to renew its lease which expires in May 2009. The hospital is somewhat older and in need of capital improvements, but the hospital’s owner HCP Inc. out of Long Beach must now seek out another operator.

Community Hospital in Los Gatos is the largest employer in town.

Most of Silicon Valley has been unscathed by the sub-prime mess with bank-owned homes being a fairly uncommon site (with the exception of East San Jose). Lately however we have been finding more and more bank owned properties in more exclusive neighborhoods. For the past several years finding a bank-owned property in Los Gatos, Saratoga, Palo Alto, or San Francisco would have been very rare. While the number of properties coming on the market that are REO in these markets still remains low, we have noticed a few cracks begin to show in these high end markets.

What we have also noticed is that there is a fair number of NoD (notice of defaults) occurring in some of these higher end markets as well. The numbers are still insignificant in these particular markets to have any material impact as the market remains hot enough to allow people in trouble to get out safely, it is something to keep a close eye on as some good opportunities might be arising very soon.

Some of the sites for the lenders which they list their REO properties on include:

Bank of America REO

Countrywide REO

Wells Fargo REO

5,372 SF Office Space
15575 Los Gatos Blvd.
Los Gatos, CA 95032