East Bay Cities Could See Most Office Conversions

In the Bay Area, one freeway could become the central artery of a revitalized housing strip.

About 15 percent of the 35 million square feet of offices around the I-680 corridor in the East Bay could be headed for redevelopment into housing or other uses by 2030, the San Francisco Business Times reported, citing a new report from CBRE.

As it stands, 1.3 million square feet of offices in the East Bay have been torn down and replaced with housing or new medical buildings with another 3.9 million square planned for such redevelopment. San Ramon, Walnut Creek and Pleasanton lead the way with the highest concentration of proposals. Other cities along the highway include Danville, Alamo and Dublin.

Considering the high cost of housing construction in dense cities like San Francisco and many tenants’ preference for offices in higher-trafficked areas rather than suburban — and often outdated — office complexes, demolition and redevelopment are popular options, according to the Business Times.

“You have owners that previously had more occupied investments that were creating a great return for them; they’re now having to look at alternative solutions to secure that same sort of return,” CBRE’s Andy Schmitt told the Business Times. “I think owners are evaluating how to maximize the value of their properties — and a lot of times, those are adaptive reuse scenarios, which would result in medical, housing or something different than office space.”

The larger lot sizes along the I-680 corridor could be attractive to developers looking to erect less costly low-rise apartment buildings or townhomes rather than high-rise buildings, per the Business Times.

In San Ramon, for example, several housing developments are planned for Bishop Ranch, a sprawling office park that is seeing longtime tenants like Chevron abandon their large office spaces while developers propose housing projects for abandoned offices.

SummerHill Homes is working on CityVillage, a 404-unit project at Bishop Ranch with a mix of townhomes and detached homes on the former site of a 570,000-square-foot office building. Bishop Ranch owner and developer Sunset Development Company is planning to demolish 761,000 square feet of offices to build 465 housing units across two sites. In April, Sunset sold the former offices of BMO Bank at the property to KB Homes, which plans to demolish 250,000 square feet of offices to build 190 units, the Business Times reported.

About 8,000 housing units are planned for Bishop Ranch by 2040. — Chris Malone Méndez