Silicon Valley Cities See Spike in Office-to-Housing Conversions

Cities along the San Francisco Peninsula are experiencing a surge in proposals to demolish aging office buildings and construct new multifamily housing in their place. This trend is a direct result of recent upzoning measures enacted by cities like Sunnyvale, San Mateo, and Menlo Park to comply with California’s aggressive Housing Element requirements.

Developers are capitalizing on the combination of high housing demand, favorable new zoning, and a struggling office market. Razing outdated office structures allows builders to avoid the complex challenges of office-to-residential conversions, such as unsuitable floor plates and inadequate parking. State laws like Senate Bill 79, which encourages density near transit, are further accelerating these projects.

In Sunnyvale, one developer plans to replace single-story buildings with a 472-unit apartment complex. Meanwhile, the city of San Mateo has already received entitlement applications for over 5,000 new housing units spurred by the new regulatory environment. This wave of redevelopment signals a significant shift in land use for the supply-constrained region.