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Bay Area developers look to demolish obsolete offices for apartments
In Sunnyvale and Menlo Park, one developer plans two demolitions, totaling 472 new apartment units, including 61 affordable homes.
Bisnow reports that a wave of upzoning across the San Francisco Peninsula is enabling multifamily developers to target outdated office properties in cities including Sunnyvale, San Mateo and Menlo Park for hundreds of new apartment units. The shift is being driven by Housing Element requirements tied to state pressure, along with strong apartment demand and a smaller pool of viable office stock.
According to the article, apartment rents in the Bay Area have rebounded quickly, supported by tight inventory. San Jose’s vacancy has fallen below 3.5%, while rents rose 4.4% year over year, and in San Francisco and San Mateo County, average rents increased 5.2% with vacancy in the mid-3% range.
The article says Beam Reach has two projects underway that would replace single-story concrete buildings with five-story apartment communities. Beam Reach plans to demolish properties at 1215 Bordeaux Drive in Sunnyvale and 155 Jefferson Drive in Menlo Park and build a combined 472 new doors, including 61 affordable housing units.
Beam Reach partner Tom Holt, as quoted by Bisnow, attributed deal viability to upzoning that allows multifamily use and higher density, along with rent growth and favorable podium-structure economics. The article also notes that full teardowns can avoid conversion difficulties such as floor plate limits, parking constraints and unfavorable interior layouts.