Another delay for Block 21: Mixed-use proposal in downtown San Mateo still faces financing hurdles

Typically, entitlements are valid for about two years, however, the developer, Mecah Ventures, owned by Mike Field, was granted its first two-year extension set to expire this June. During a Planning Commission meeting May 12, the second extension was unanimously granted, giving the project two more years to begin construction. The city could potentially grant a third two-year extension if the project doesn’t break ground by 2028. 

Office vacancy rates have improved over the last couple years, a trend often attributed to more in-office mandates and an artificial intelligence boom that’s ushered in a massive amount of venture funding to the region. 

“Sixty cents of every dollar spent worldwide on AI venture is landing here in the Bay Area,” Field said during the commission meeting. “We are seeing a lot of strong companies that are growing their balance sheets tremendously, and they’re hiring a lot of people. It’s different, because they’re occupying less space but they’re demanding highly amenitized buildings.”

Because of that, lenders are more apt to start financing large office and mixed-use projects, he added. 

“There is a real shift in the lenders’ appetite, not nationwide or all over the Bay Area but for these downtown office buildings,” Field said. 

The developer is also overseeing the nearby Block 20 project, a proposed seven-story mixed-use building located at 500 E. Fourth Ave.

Despite the multiyear lending slowdown, the city’s overall development pipeline has remained strong, surging after the passage of Measure T, which increased height and density limits in certain areas of the city. While it remains to be seen how many of the proposed projects will break ground in the next couple years, the number of proposed units is almost equal to the state’s mandated housing goals, or Regional Housing Needs Allocation, for the 2023-31 cycle.