Westbank, Urban Community Begin Bank of Italy Conversion

A long-vacant downtown San Jose office building is finally getting a second life as apartments.

Westbank and Urban Community have broken ground on converting the historic Bank of Italy building into 109 housing units, advancing one of the city’s more closely watched office-to-residential plays, the Silicon Valley Business Journal reported. The 14-story property at 12 South First Street has sat empty since about 2017, a casualty of shifting office demand that’s hit Silicon Valley’s urban core particularly hard.

The project underscores both the promise and the friction of adaptive reuse. Westbank president of U.S. development Andrew Jacobson said the deal took years of technical problem-solving and coordination with city officials to make it happen. Smaller floor plates in the 1925-built tower made the conversion more feasible than bulkier modern offices.

The City of San Jose sweetened the pot. The development taps into incentive programs that shaved more than $3 million off costs, aided by the City Council’s vote in January to expand its Downtown Residential High-Rise Incentive Program to include office conversions. That change opened the door to fee reductions and tax breaks in a sector where high construction costs and uncertain rents have stalled many similar efforts in the Bay Area and beyond.

“We recognize that converting offices to housing, especially in a historic building like this isn’t easy,” San Jose Mayor and California gubernatorial candidate Matt Mahan said, per the Business Journal. “The costs are higher, the risks are real and for too long, the math just didn’t pencil out. So, we changed the formula.”

The project start comes as downtown San Jose’s office vacancy hit 30 percent at the end of 2025, far underperforming the broader Silicon Valley rate of 19.4 percent, according to Cushman & Wakefield data cited by the Business Journal.

At the same time, the city continues to face a housing shortage as it works to meet its state-mandated housing goal of planning for 62,200 new units by 2031. The Bank of Italy project is part of a broader residential push by Westbank in the area, signaling continued institutional interest in San Jose’s urban core despite soft office fundamentals.

The first units are expected to be delivered within 12 to 14 months, Jacobson said.

— Chris Malone Méndez