SAN JOSE — A big office tower that’s proposed for a choice site in San Jose could morph into a housing highrise, the project’s principal developer says, a fresh indicator of Bay Area office woes.
The housing could appear at a downtown San Jose site that’s being developed by Urban Catalyst, a real estate firm that’s active in local real estate.
The changes might materialize on a property at 147 East Santa Clara Street next to North Fourth Street where Urban Catalyst has proposed a modern office tower that’s nicknamed Icon.
Now, the office highrise might be converted into an apartment tower, according to Erik Hayden, founder and managing partner with Urban Catalyst.
“We are thinking about developing 650 multifamily units at Icon,” Hayden said during a presentation and panel discussion at a Silicon Valley Breakfast event on Sept. 6 that was organized by law firm Hoge Fenton.
The current plans call for a 20-story office building that would total 525,000 square feet at the corner of East Santa Clara Street and North Fourth Street.
The office tower would be built next to an Urban Catalyst-proposed 26-story housing highrise with 389 residences at the corner of North Fourth Street and East St. John Street.
Now, if the proposal changes, two housing towers could sprout next to each other. Construction hasn’t started on either of the proposed highrises.
Urban Catalyst must still buy another parcel that would complete a long-running assembly of sites to provide the land for the two towers, according to Hayden. That parcel purchase is slated to soon be completed, he added.
During the panel discussion, Hayden asserted that the wobbly office market influenced Urban Catalyst to ponder the prospect of switching to apartments for the office complex.
“There are no office tenants available right now,” Hayden said.
Hayden pointed to an Urban Catalyst office project on South First Street near East Santa Clara Street that has received final city approval but has yet to break ground.
“This project is fully entitled. It is shovel-ready. And it is on hold,” Hayden said.
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As of the date of this week’s Hoge Fenton event, Hayden said he hadn’t formally begun discussions with San Jose officials regarding the potential of converting the office building to a housing complex.
“We are considering the possibility of a conversion to multifamily housing,” Hayden said in an interview with this news organization following the Hoge Fenton event.
Urban Catalyst was formed to create funds that investors can use to capitalize on tax advantages provided by opportunity zones. Investors can capitalize on the tax advantages for projects that substantially redevelop a property.
“It makes a lot of sense to look at converting the office project to housing,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy. “Given the need for housing, having this in the heart of downtown San Jose means it will fill up very quickly. This is a great project with a great location. “