Key facts
- Silicon Valley cities like Sunnyvale, San Mateo, and Menlo Park are seeing an increase in office demolitions.
- Developers are converting obsolete office sites into new apartment communities.
- Favorable zoning changes and rising rents are making these projects financially viable.
- Projects include demolishing existing structures to build new mid-rise apartment buildings.
- Some developers are also converting existing office towers into residential units.
- San Mateo has seen applications for over 5,000 new housing units.
Silicon Valley cities are witnessing a significant increase in office demolitions as developers pivot to constructing new apartment units on these sites. This trend is driven by a combination of state-mandated housing goals, favorable upzoning regulations, and a robust demand for rental housing, particularly in Sunnyvale, San Mateo, and Menlo Park.
Rising rents and a scarcity of new construction starts are making these demolition-to-multifamily projects financially viable. Developers like Beam Reach are planning to raze obsolete office buildings to erect mid-rise apartment communities, incorporating affordable housing units to meet local requirements. The challenges associated with converting older office buildings, such as restrictive floor plates and unfavorable layouts, make full demolition a more appealing option for many.
Cities such as Sunnyvale and San Mateo have implemented new rules to streamline housing development, supported by state legislation like Senate Bill 79, which encourages density near transit hubs. San Mateo, for instance, has received entitlement applications for over 5,000 new housing units.
While demolition is becoming more prevalent, some developers are still pursuing conversion strategies. Tourbineau Real Estate Partners is converting a 12-story office building in San Mateo into apartments, citing the building's favorable floor plates and ample natural light as key factors for success. However, the company acknowledges the inherent risks and complexities of conversion projects compared to traditional new builds.