Downtown San Jose Evolution: The struggling hotel industry in the Bay Area is making people want office and retail space even less. As a result, more property owners are considering turning their commercial properties into apartments. This is a big trend that will change the look of downtown San Jose in a big way.
Even property owners are considering turning entire office buildings and high-rise hotels into apartments. Other owners are also considering putting apartments above ground-floor stores. Behind these changes are the ongoing housing crisis and the difficulties downtowns are still having recovering from the COVID-19 pandemic. These issues have cast a shadow over the business real estate sector.
“It’s an economic need,” says Nick Goddard, Senior Vice President at the business real estate company Colliers, to summarise the reason. People are not looking for working space, but they are looking for homes. It makes sense to convert if it can be done in a way that doesn’t hurt the economy.
Several new projects in this direction have been taking place in the western parts of downtown San Jose, mainly near the SAP Center and the Diridon train station. Since renting shop spaces on the first floor of residential complexes is hard, some ideas include turning store spaces in existing residential buildings into apartments.
Here are some local projects and efforts to convert that are worth mentioning:
The Hanover Diridon apartment building, which has 249 units, wants to turn about 26,500 square feet of store space on the ground floor into 19 residential units.
Vespaio is a mixed-use building with 162 residential units, some currently rented, and 32,600 square feet of business space. Many office and retail areas will be turned into 13 apartments, some of which will have live-work spaces.
Bank of Italy Tower: This unique building at 12 South First Street has been an office for a long time, but it may soon be a home.
Fourteen ideas are being considered for the old Bank of the West office building at 2 West Santa Clara Street. These include 65 apartments, 73 co-living residences, and a “micro-hotel” with 147 rooms, all of which would have shops on the ground floor.
ALSO READ: San Jose Real Estate: A Vibrant Market of Change and Opportunity
Signia Hilton Hotel: The southern tower of the Signia Hilton Hotel at 170 South Market Street, which used to be the Fairmont, could be sold and turned into student housing because it is so close to San Jose State University.
The owner of Bishop Ranch in San Ramon, Sunset Development, wants to completely change the look of the Chevron office building in the East Bay. The plan is to build 2,250 homes, such as condos, apartments, and houses for sale, along with mixed-use retail and entertainment areas.
After the COVID-19 outbreak in March 2020 and the resulting business closures and economic problems, it has become harder for property owners in major U.S. cities to get retail and office tenants to move in.
Since downtown economies in many Bay Area cities have been hit hard, adding more homes in downtown San Jose could help the city’s central business district recover. A city office building with no people is worse for the owner and the area than one with many people living in it. Goddard says that adding more homes could make downtown livelier.
The ground-floor areas would stay empty for a long time if no work was done to turn them into something else. This could lead to more open spaces and crime in downtown San Jose.