A developer has filed plans with the city of San Jose to transform a downtown office complex into housing, a project that ultimately plans to bring 680 new homes to Silicon Valley's largest city.
Jay Paul Co., a prolific Bay Area developer that’s been a force behind some of the region's major tech real estate, officially outlined plans for the first phase of CityView Plaza, which ultimately aims to transform an entire block in the heart of the Bay Area’s largest city with apartments and retail. The project initially plans to convert four existing office buildings at 100 W. San Fernando St. into 320 homes in a residential area called The Village at CityView.
The developer had originally planned to demolish the buildings and replace them with a new state-of-the-art "urban campus" before putting the brakes on that strategy amid failing demand for Bay Area office space in recent years.
The project’s first phase also proposes a 35,000-square-foot retail and restaurant component called the shops at CityView, and the modernization of 150 Almaden, a 15-story office tower at the site.
After the adaptive reuse phase is completed, the developer eventually plans to build a 27-story residential high-rise called The Tower at CityView that will add another 360 new luxury apartments, ranging from studios to three-bedroom penthouses.
San Jose has embarked on a push to draw artificial intelligence startups and other tech outfits to the city’s downtown. Mayor Matt Mahan said the city’s commercial core made a comeback since the pandemic that’s been largely driven by dining, shopping and entertainment, with foot traffic returning to pre-pandemic levels.
“People want to live, work and play in the safest big city in the Bay,” said the mayor in a statement.
Downtown comeback
He said the residential component of the new project would be one of the biggest office-to-residential conversions in the country.
“Jay Paul’s groundbreaking new project will allow us to house and employ more people in our vibrant downtown as we reimagine what the capital of Silicon Valley looks and feels like in the age of AI,” he said.
Jay Paul, the developer’s president, in a statement that "the intersection of Park Avenue and Almaden Boulevard in downtown San Jose is set to be the most dynamic intersection in Silicon Valley.”
“Downtown is evolving into a powerhouse of innovation, culture and commerce,” he added.
The eponymous San Francisco billionaire developer’s original plan was to tear down the nearly 60-year-old office buildings at CityView and redevelop them. In 2018 and 2019, at the peak of the pre-pandemic real estate boom, Jay Paul Co. shelled out nearly $1 billion to buy CityView and select properties around it, with plans to raze everything and erect a shiny new “urban campus” totaling some 5 million square feet of office space that would help lure the region’s tech companies to the area. The towers were expected to open by 2026.
But in 2020, the COVID-10 pandemic transformed the office market overnight. Last year, Jay Paul asked the city for a five-year extension of the project’s entitlements, given the low appetite for office space since tech companies in particular switched to remote or hybrid work policies. On the other hand, San Jose — like all California cities — is badly in need of more housing.
Conversions gaining steam
City officials say they have been working with the developer on the CityView Plaza conversion plans and have granted it incentives such as eliminating the city’s affordable housing requirement for the planned residential tower and reducing other fees and taxes.
Office conversions have caught on nationwide in recent years as developers look to repurpose underutilized office space in the wake of the pandemic, though the higher costs associated with such projects has kept some developers from getting in on the action, according to CoStar research.
In some cases, developers in Bay Area cities have been slow to tackle office conversions because it’s difficult to make such projects pencil, according to John Gillem, director of market analytics at CoStar Group.
Different types of conversions will become common in property development, predicted a 2024 report by Gensler, the world’s largest architecture firm. Financing will become more accessible because of lower interest rates, and new zoning laws and design tools are expected to lead to more conversions.
In addition to “high-end residential interiors,” the buildings will undergo seismic and core system upgrades, including mechanical, electrical, and plumbing improvements, according to the developer. Plans also include shared green spaces, a fitness center and a rooftop pool.