A shifting economy has led to a surge in developers pursuing housing projects instead of office space in San Jose, Silicon Valley, and East Bay cities like Oakland and Berkeley. The demand for housing and the challenges faced by office buildings, including high vacancy rates and low rents, have prompted property owners to seek approval for residential conversions. Developers are hoping to streamline the project approval process in cities that lack state certification for long-term housing development plans.
The COVID-19 pandemic, remote work trends, and economic uncertainties have further fueled the shift towards housing conversions. The market has seen a rush for conversions as property owners and developers seek to address the housing shortage. However, not all office buildings are suitable for conversion due to factors such as large floor sizes and limited window access.
Several projects have already been proposed or approved for conversion. Urban Catalyst, a South Bay developer, changed its plans for an office tower in downtown San Jose to a 650-unit residential project. A hotel tower in San Jose is set to be converted into housing for San Jose State University students. Developers are also considering converting the historic Bank of Italy tower into a primarily residential high-rise.
While the surge in housing demand is beneficial, not all conversions will be successful. Experts suggest that city officials should prioritize high-density development to maximize the economic benefits. However, concerns have been raised about low-density housing projects near transit hubs, such as the proposed townhomes near the Berryessa Flea Market site.
The shift towards housing conversions could have significant implications for job opportunities and tax revenues in the region. The long-term impact of remote work on the demand for office space remains uncertain, but the trend towards housing conversions is expected to continue.