Chinese restaurant leases former Flames space in downtown San Jose

SAN JOSE — A Chinese restaurant has landed a lease to replace the shuttered Flames restaurant site in downtown San Jose, offering a potential economic lift for the struggling urban core of the Bay Area’s largest city.

Home Eat, which operates a Cupertino restaurant that offers Chinese fusion fare, has signed a lease for slightly over five years at 88 South Fourth Street. Home Eat also is in expansion mode beyond the downtown San Jose and Cupertino sites.

The San Jose City Council on Tuesday unanimously approved the Home Eat rental agreement, which has options for one or more extensions.

Home Eat will occupy slightly more than 11,000 square feet on the ground floor of the space near the corner of South Fourth Street and East San Fernando Street. The opening date for Home Eat wasn’t immediately known.

“It is very unfortunate to see Flames go,” City Councilmember Omar Torres said ahead of the vote Tuesday. “But what is being offered is a cuisine for our downtown and for everyone.” Torres represents much of downtown San Jose.

As part of the council’s decision, the city also terminated its prior lease with Flames.

“This space being vacant has been a huge blow to downtown San Jose,” said Bob Staedler, principal executive of Silicon Valley Synergy, a land-use consultancy.

Throughout the term of its various leases with the city and municipal agencies, a term that began in 2003, Flames consistently paid its rent, a city staff report states.

“However, its restaurant business was interrupted due to COVID-19 public safety measures,” city staff wrote in the memo.

In March 2020, at the outset of the coronavirus outbreak, San Jose adopted an eviction moratorium whose provisions included protections for residential renters as well as small businesses such as restaurants. The moratorium, including grace periods to catch up on rent payments, ended in August 2022.

Flames, however, still wasn’t able to catch up with its past-due rent. Eventually, Flames closed its doors in December 2022, according to the city staff report.

“That location has been an eyesore since the pandemic ended,” Torres said.

At the time the restaurant shut its doors a year ago, the delinquent rent totaled about $673,900, city staffers stated.

“Flames attempted to sell the business to a new entity that would assume its lease but was unable to do so, partly due to the debt burden of the business,” the city report said. “In addition to the unpaid rent owed to the city, Flames took out a $500,000 loan from the United States Small Business Administration.”

San Jose officials eventually decided to market the property for lease.

“City staffers received six different offers to lease the space, with the offer from Home Eat being the best and most viable,” the memo stated.

The names of the other restaurant operators weren’t disclosed.

“While I was rooting for a breakfast place going in there, I hope this use works out,” Staedler said.

Home Eat will pay far more than the agreed-upon monthly rent that Flames was paying, according to the city report. Starting in the fourth month of its lease, Home Eat will pay $2.83 a square foot, which is about 89% higher than the Flames monthly rental payment of $1.50 a square foot.

“Established in 2015, Home Eat (aka Fashion Wok) has evolved from original, Taiwanese style, boutique small hot pots, to a large-scale integrated catering restaurant that combines Sichuan, Hunan, Taiwan, and independently developed fusion dishes,” Home Eat states on its website.

Home Eat’s lease is expected to generate slightly under $2 million for the five-year rental agreement. The city agreed to forgive the delinquent rent of nearly $674,000 that Flames owes.

San Jose also will cough up cash to pay an outstanding sanitary sewer bill of $126,300 that Flames owed. That sanitary sewer back payment will be funded by the early months of the Home Eat rental revenue.