With new owner, downtown San Diego office tower will be converted to low-income housing

A developer new to San Diego has purchased an empty, downtown skyscraper and is fast preparing to refashion the building with 200 residential units for low- and very-low-income households.

On Tuesday, a limited liability company affiliated with affordable housing developer Vintage Housing purchased the 18-story skyscraper at 707 Broadway for $21 million, according to property records. The company, which is partnered with global real estate investment firm Kennedy Wilson, took out a $12.6 million loan from Citibank to finance the transaction, records show.

The seller, Regent Properties, paid $35 million for the property in June 2021. At the time, the Los Angeles-based firm took out a $260 million loan to finance its $420 million purchase of a five-property portfolio downtown. The other four assets — 1 Columbia Place, 701 B St., 2 Columbia Place, and the 6th & A Parking Garage — are currently being marketed for sale.

Vintage Housing will next week submit plans to the city of San Diego to convert its newly acquired asset into one- and two-bedroom units that are deed restricted for families making 80% or less of the area median income, or what’s known as affordable housing, Ryan Patterson, president of Vintage Housing, told the Union-Tribune.

“This is our first foray into San Diego. I’ve been a longtime San Diego resident, but I’ve been unable to make a deal work until now. So we’re very excited,” Patterson said. “We think there’s a great opportunity to provide affordable housing in the downtown core, which we think needs it to help revive some of the energy there by bringing people (to the area).”

Opened in 1962 as the Home Tower, 707 Broadway was the longtime headquarters of Home Federal Savings and Loan Association and a notable addition to downtown San Diego’s skyline. The tower was later home to Washington Mutual and then Chase Bank, which still has its name emblazoned atop the building despite departing the property around a year ago.

Today, the 186,803-square-foot office tower, which stands 272 feet tall and sits on a little more than 1 acre of land at Broadway and Seventh Avenue, is completely vacant, awaiting its next chapter. By contrast, the property’s 12-story structured parking garage, which has 795 spaces, brings in $1.5 million in revenue each year, according to marketing materials prepared by CBRE, the seller’s representative.

“It’s a great asset,” said Matthew Carlson, an executive at CBRE. “You step off the elevators and you have panoramic — on the south end of that building — views of the ocean, the bay, Petco Park. When you get above the eighth floor, you have 180-degree views (that are) unobstructed.”

Newport Beach-based Vintage Housing is a 30-year-old firm that specializes in using low-income housing tax credits to build new-construction projects in California, Nevada, Oregon, Washington and Idaho. The 707 Broadway acquisition not only marks the company’s first project in San Diego but its first attempt at converting office space to residential units.

The developer is putting the finishing touches on plans to turn the building into 200 residential units, with 142 one-bedroom units and 58 two-bedroom units for low- and very-low-income families. Vintage Housing is also considering putting live-work, artist lofts on the ground floor alongside potential space for after-school programs, Patterson said. There will be a fitness center, game room, meeting room and bike storage.

“We’re trying to get younger couples and even, hopefully, some families,” Patterson said.

The project cost is a little more than $100 million, Patterson said, meaning the developer’s cost per unit is roughly $500,000. To finance the project, Vintage Housing is using federal affordable housing subsidies in the form of tax-exempt bonds and low-income housing tax credits, which were awarded last week by the California Debt Limit Allocation Committee.

707 Broadway adds to the small but growing list of downtown office buildings that are slated for conversion. Tower 180 at 180 Broadway is being remade into a Hyatt hotel, the new owner of 530 B St. plans to redo the office building with residential units, and the city has agreed to lease its 101 Ash St. office tower to a development team that has promised low-income housing.

The 707 Broadway property, Carlson said, lends itself to residential conversion because of the size and depth of the building’s 10,000-square-foot floors, whereas most of downtown’s office towers would be too pricey to convert.

“There are still a couple of buildings in downtown that could convert to residential, but for the most part, the office buildings will stay office,” Carlson said.

The in-progress conversion projects could provide a much-needed lift to a depressed downtown office market, which has floundered amid record vacancy rates, muted interest from tenants and an oversupply of space.

“The reposition of 707 Broadway to residential … will remove 186,000 square feet of vacant office space from the overall office inventory. Coupled with 530 B St., there will be a total of 436,181 square feet of office space removed from the office inventory for residential conversion, which brings a little relief to the glut of inventory to the B Street corridor,” said Derek Hulse, an executive with Cushman & Wakefield who leads the brokerage’s office division.

Vintage Housing expects to start construction in March and estimates the project will take 18 months to complete.