SAN JOSE — Three housing towers that could produce well over 1,000 residential units might sprout in a lively section of San Jose, fresh evidence of a Bay Area development shift from offices to homes.
The residential highrises are slated to be developed on what’s known as the Valley Title site near the corner of South First Street and East San Carlos Street, in the heart of the hip and bustling SoFA district of downtown San Jose.
Westbank, a Canada-based developer with international reach, has proposed three housing highrises, a new plan that replaces the real estate titan’s prior vision for office and retail towers on the site. The development site’s addresses are 300 South First Street and 345 South Second Street.
“Our focus is developing projects to help combat our housing crisis while increasing vibrancy in the SoFA district,” said Andrew Jacobson, principal executive for Westbank’s U.S. operations. “We are encouraged by the opportunity to submit an application for our Valley Title site.”
The project would produce 1,147 housing units on the Valley Title property, according to documents on file with San Jose city planners.
The Valley Title lot is deemed one of the best locations in downtown San Jose for high-density development.
Why? The housing project site is in SoFA, a hub for nightlife, entertainment, theaters, live performances, clubs, restaurants, drinking establishments unique venues such as Urban Putt, a South Bay-themed miniature golf course.
“This part of downtown San Jose has seen a steady stream of development over the last ten years and we are enthusiastic to be part of this evolution,” Jacobson said.
The towers are each slated to be 30 stories high, the city documents state.
The development is expected to be a mixed-use project, which might point to retail or restaurant components on the ground floor.
Westbank, which is a major property owner in downtown San Jose, has made it clear the developer wants to push forward with large projects in the city’s urban core. Westbank’s local real estate allies are Urban Community, led by Gary Dillabough and Jeff Arrillaga; and Terrascape Ventures, headed up by Tony Arreola and Mark Lazzarini.
In 2021, Westbank proposed several major projects in downtown San Jose. Most of the anticipated projects consisted of eye-catching office or residential towers.
But over the last year or two, the Bay Area office market has wilted in the wake of the coronavirus and the associated business shutdowns.
Employees haven’t returned to the workplace in the same numbers as when government mandates shoved people out of their offices.
The result of these unexpected economic trends is that more businesses, primarily tech companies, have greatly reduced their appetites for office space. That, in turn, has sent office vacancy levels to record highs.
Depressed office markets such as San Francisco are especially hard hit, with well over one-third of the office space empty in that city. The office vacancy woes extend to downtown San Jose and downtown Oakland.
As a result, developers have halted their quest to build new office buildings without the assurance that a tenant will occupy the space.
At the same time, demand for housing appears to be as heated as ever. A growing number of developers have scuttled their plans for office projects in favor of new housing developments in sites where such switches are feasible.
Westbank has also pivoted away from office projects in downtown San Jose, opting in recent weeks to float multiple proposals for big residential developments at some sites.
The housing development that Westbank has pitched for the Valley Title site in the SoFA district would sprout on a property that is deemed to be one of the best locations in the city’s utban core.
“Our project will be in the middle of an exciting confluence of the Convention Center, San Jose State University, and an arts and culture district,” said Jacobson, the Westbank executive.