San Mateo office tower to become housing

Most recently, a pre-application was submitted to convert a 12-story office building at 2121 S. El Camino Real into 156 apartments. 

Unlike most commercial-to-residential projects, however, the current building won’t be demolished and will instead be reconstructed with the current structure. 

Seattle-based Tourbineau Real Estate Partners has nine projects in the works throughout the country that involve changing the existing use of a building into something else. Converting a property from office space to housing without demolishing the existing building, however, is not as common.

“Newer office buildings that were built for say, Google or Meta, are built with very large floor plates that are square because you want to jam as many workers in as possible, but those plates are extremely difficult to convert to housing because they’re too deep and you’d never have enough light in the middle,” Tourbineau Chief Investment Officer Ben Wong said. 

The El Camino building also has a 600-stall parking garage and efficiently-located elevators, making the conversion to housing easier. 

“It just checks a lot of those boxes,” Wong said. 

Stricter in-office work policies and record-setting investments in artificial intelligence have increased demand for office space over the past year, but vacancy rates still hover around 23% on the Peninsula. AI companies remain highly concentrated in San Francisco, Palo Alto and Menlo Park, and in many cases, they require fewer employees than traditional startups. The life science sector, the county’s other dominant industry, is still sluggishly recovering post-pandemic, with even higher vacancy rates.

With state-level mandates to increase housing, an easing up of the lending market and relaxed zoning policies passed last year, San Mateo has seen some of the highest numbers of new housing development applications in the area. While it could take years to fully build, over the past year, the city has received enough applications to cover over half of its state-mandated housing goals between 2023-31. 

Other Peninsula cities are also seeing more conversions from office and retail to housing. In Menlo Park, the U.S. Geological Survey campus will likely become residential housing after Presidio Bay Ventures bought the property earlier this year. In Daly City, construction of a large apartment development is underway, replacing a former Burlington Coat Factory. 

After purchasing the building in June, Wong said the firm had some time to decide whether it would pursue housing or keep it as an office building, ultimately choosing the former. 

“If the office market got that much better and there was more return-to-office, that would probably mean there would be more people living here too,” he said. 

alyse@smdailyjournal.com

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