It looks like the former San Jose Entrepreneur Center on Santa Clara and 3rd is going to be transformed into boutique hotel called the Hotel Clariana. The five-story building was originally built for dorms but has been used for Class B/C office space over the last several years. After the conversion, there will be a new lobby and 44 hotel rooms on the upper four floors. Unlike the original dorms, each room will have its own bathroom (in case you were wondering).
There is no official ETA for opening, but one of the sleuths from the San Jose Development Forum learned that they are hoping open by the Super Bowl. A hotel on this corner could really help improve the block, which is neither Downtown's cleanest nor safest today. While it is always tough to lose office space, something that is open seven days a week is likely the best use for this corner.
Source: SJSharks DowntownGuy and Robertee from the San Jose Development Forum