After decades of politics and practice that fueled its notorious suburban sprawl, San Jose has managed to change course and turn its urban core into the ninth-fastest growing pocket in the country in apartment rentals.
That’s according to a new RentCafe report, which found that between 2017 and 2021 in downtown San Jose – south of Interstate 880, north of Interstate 280, east of Highway 101, and west of Menker and Dana Avenues – about 3500 new apartments were built. units, or almost 60% of the total number of apartments of all sizes in the city.
The City’s Economic Development Authority has confirmed these figures, calculating that at least 3,840 market-price apartments have been built in the area over the past five years as part of larger projects.
RentCafe, an online listing service, analyzed construction data for new apartments in the 50 largest cities in the United States. He focused exclusively on data related to apartments containing at least 50 units built between 2017 and 2021. Of other California cities, downtown Los Angeles topped the list, with East Village San Diego ranked 20th in terms of apartment production.
Councilor Raul Perales, representing the city center, attributed the boom to his efforts and the efforts of other city leaders to work with developers and builders to prioritize density in and around the city center.
“I am proud to have helped create the biggest downtown housing boom in decades, which has propelled us into the top 10 districts in the country,” he said in a statement. “In the midst of the housing crisis, this boom is creating housing for all income levels, primarily hundreds of low-income permanent auxiliary housing units.”
But despite the study’s acceptance, San Jose still lags well behind its overall plans for housing production. Mayor Sam Liccardo unveiled an ambitious goal at the end of 2017 to build 25,000 housing units by 2023, including 10,000 affordable homes. As of Friday, only 11,814 homes have been completed or are under construction, according to the city.
To address the gap, the council voted unanimously this week to end a decades-old requirement that affordable housing developers must include commercial space in their projects. The policy was aimed at spurring job growth and creating more pedestrian-friendly and attractive street landscapes, but housing advocates argued that it simply acted as another obstacle to the construction of desperately needed affordable housing.
Moving forward, the city will look for ways to encourage – but not demand – the use of some ground floor space for public amenities.
“We’re so far away from our affordable housing goals that we want to make sure we don’t make it harder to build the affordable housing we need,” said Councilor David Cohen.
This is not the only significant policy shift the city has made in recent years in an effort to increase the city’s housing stock.
At the end of 2019, the council voted 6-5 to extend the controversial payment waivers for apartment blocks in the city center. Proponents such as Liccardo argued that the elimination of building fees, lower parking fees and the elimination of payments for affordable housing until 2023 would boost housing construction by allowing developers to obtain funding from prudent investors.
At the time, city officials and business representatives said that developers indicated that several downtown housing projects might not be built unless the exemptions were extended because they would have trouble getting funding for a project with diminished margins.
Anil Babbar of the California Housing Association said the city’s move to waive fees was instrumental in the downtown construction squall.
“This is a model that other cities need to replicate to tackle housing affordability in a sustainable manner, not through price controls and increased bureaucracy,” Babbar said in an email.
While the pandemic has temporarily halted much of the construction work, San Jose’s urban core continues to generate a lot of interest from developers.
Google recently unveiled plans to locate 500 high-rise apartment buildings above Diridon BART as part of its future transit-oriented village, Downtown West, on the western edge of downtown. And just a couple of blocks from 280 McEvoy St. near West San Carlos Street, First Community Housing has teamed up with development giant Lendlease to build a large two-tower residential project with 365 affordable units. In addition, urban planners recently approved plans from developer Roygbiv Real Estate to build a 29-story high-rise residential tower in the SoFA area of the city center with up to 345 residential units.
“Silicon Valley is home to good jobs and well-paying jobs, and so you’ll see it continue to attract workers – and attract housing,” said Doug Ressler, business intelligence manager at Yardi Matrix, who provides data for RentCafe reports. “We think this is really the beginning of a comeback period for San Jose, South Bay and East Bay.”