Development may convert garage into offices
Tower project would add hundreds of homes for the city
The developer of a downtown San Jose housing and office project is pushing ahead with revamped plans that now envision the conversion of a parking garage into an office tower on the prime site.
The proposed development would produce 345 apartments at 323 Terraine Street, according to plans submitted by Westbank, a Canada-based real estate firm with a global reach.
The Terraine project — which has yet to break ground — also would include an option to convert a proposed parking garage on the site into a large office building, according to the revised plans.
The housing portion of the project, located near the corner of Terraine and Bassett streets, would consist of a 17-story housing high-rise, the proposal on file with San Jose city planners shows.
It's not surprising that a big player such as Westbank is keeping its options open with the downtown San Jose project.
“Flexibility is key to development projects during this challenging cycle,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy. “Large developers have spent a significant amount of time and money in planning these projects.”
In 2021, real estate allies Westbank and local developer Gary Dillabough teamed up to buy the site in the North San Pedro district, paying $11.4 million for the property.
The seller was Z&L Properties, a China-based real estate firm whose efforts to develop and land tenants for a series of housing towers in downtown San Jose have largely flopped.
The revamped Westbank proposal for the Terraine project suggests that the first phase of the development would produce a housing tower and a ninestory parking garage with 621 spaces.
At some point, depending on market conditions that presumably would differ greatly from the current murky outlook for the Bay Area office market, the parking garage would be converted into an office building.
That office building would total 232,000 square feet. A precise time frame for the development of the offices wasn't specified.
The housing tower would also feature 11,800 square feet of ground-floor retail space, the plans show.
Westbank has proposed numerous projects for downtown San Jose, including multiple office towers and housing high-rises.
The developer is actively pursuing an effort to convert the historic Bank of Italy office tower at 12 South First Street into a housing high-rise. Most of the 13 floors of that high-rise would be converted into residential units. About 125 to 150 residences would be built inside the tower.
At 409 South Second Street in downtown San Jose, Westbank is hoping to break ground on a housing tower by the middle of the year. This project, located in San Jose's hip and trendy SoFA district, would produce 540 residential units.
Sky-high interest rates, labor costs and expensive materials have made it increasingly difficult for even big developers to land construction financing packages on terms that make a project viable.
“The reality of what can be financed has dramatically changed,” Staedler said.
Even with the trick financing environment, the proposed tower still appears to be a top-notch concept, in Staedler's view.
“The standard and level of architectural quality has not changed from Westbank,” Staedler said.