Downtown SD Office Conversion: 707 Broadway Impact

Vintage Housing purchased the empty skyscraper at 707 Broadway with plans to begin construction on the office-to-residential conversion project in March 2025. The building, located in the heart of Downtown San Diego, has been marketed as being delivered free and clear of debt and unencumbered by tenant leases, providing ultimate flexibility for the new owner to redevelop it into a residential tower.

The 18-story structure represents one of the most visible office-to-residential conversion projects in downtown's recent history. Built in 1962, the building sits at a prominent Broadway location, making its transformation particularly significant for surrounding property owners in the immediate vicinity and throughout the greater downtown core.

While specific unit counts and affordability tiers have not yet been publicly disclosed, the designation as "low-income housing" means the project will likely utilize federal Low-Income Housing Tax Credit (LIHTC) financing, which requires that a percentage of units be reserved for households earning below area median income thresholds. This financing mechanism has been used for numerous affordable housing developments throughout San Diego County and comes with specific income restrictions and rent limitations.

The conversion timeline positions 707 Broadway as one of several downtown office buildings pursuing residential redevelopment. At 530 B Street, another developer intends to convert vacant floors into residential units, targeting between 130 and 180 total units, with the entire building likely converting to residential over time. These projects reflect a broader trend of office building owners recognizing that the path forward for aging, partially vacant office towers may lie in residential rather than commercial use.

For property owners in Little Italy, located immediately northwest of 707 Broadway, and East Village to the southeast, the conversion represents the most substantial change in the immediate area's housing stock in years. The addition of potentially hundreds of residential units in a previously office-dominated corridor could shift foot traffic patterns, retail demand, and the overall character of the neighborhood blocks surrounding the Broadway corridor.

Downtown San Diego's office market has reached a critical inflection point, with the vacancy rate climbing to nearly 36% as of late 2025. This figure stands in stark contrast to the overall San Diego County office vacancy rate of just over 14%, highlighting how concentrated the downtown office crisis has become.

According to market data from September 2025, the downtown submarket had 27.5% of its 11.6 million square feet of office space vacant, with 31.2% available for rent when including sublease space. These numbers have continued climbing throughout 2025, and commercial real estate analysts predict that in the coming years, downtown San Diego could see vacancy rates exceed 40% as new construction continues and businesses continue downsizing their office footprints.

Several factors have converged to create this vacancy crisis. The shift to remote and hybrid work arrangements following the pandemic permanently reduced office space demand, with many companies discovering they could operate effectively with smaller physical footprints. At the same time, businesses that do maintain downtown offices have been migrating from older B Street buildings to newer, more amenity-rich spaces on the west side of downtown, leaving older office towers with higher vacancy rates.

The financial implications for office building owners have been severe. Rapidly falling prices of obsolete office buildings have made traditional office operations uneconomical for many properties. Building valuations have dropped significantly, creating distressed situations where owners face difficult choices: continue operating at a loss, sell at depressed valuations, or pursue alternative uses like residential conversion.

This office vacancy crisis creates both challenges and opportunities for nearby residential property owners. On one hand, high office vacancies reduce foot traffic, impact retail viability, and can create a less vibrant street-level environment. On the other hand, office-to-residential conversions add residents to previously office-dominated areas, potentially improving the live-work-play balance that makes urban neighborhoods desirable.

For Downtown San Diego property owners, the key question becomes: will my property value increase or decrease as office buildings around me convert to residential use? The answer depends on several factors, including the quality of conversions, the income levels they serve, and the overall trajectory of downtown's residential market.

The impact of office-to-residential conversions on surrounding property values is complex and depends significantly on execution quality, neighborhood income levels, and the type of residential development created. Recent research provides important insights for Downtown San Diego property owners trying to understand how the 707 Broadway conversion and similar projects might affect their property values.

A comprehensive Chicago study published in 2024 examined 508 developments financed through the federal Low-Income Housing Tax Credit program built in the Chicago area from 1997 to 2016, analyzing their influence on more than 600,000 nearby residential sales. The research concluded that building multiple publicly subsidized low-income housing developments in a neighborhood doesn't lower the value of other homes in the area and can even increase their worth.

However, the research also revealed important nuances. A November 2025 study from Hawaii found that Low Income Housing Tax Credit housing developments generate local price appreciation in lower-income neighborhoods but trigger local price declines in higher-income neighborhoods. This income-dependent effect suggests that the impact of the 707 Broadway conversion on surrounding property values may vary depending on the specific micromarket.

For East Village, where median condo prices range from $450,000 to $700,000, research suggests the 707 Broadway conversion could have a neutral to slightly positive impact on property values. East Village has been characterized as an emerging area with newer developments, making it more similar to the lower-to-moderate income neighborhoods where affordable housing research has found positive spillover effects.

For Little Italy, where median prices range from $700,000 to $1.1 million, the impact becomes more uncertain. Little Italy represents a more established, higher-income neighborhood, fitting the profile of areas where Hawaii research found potential negative effects from concentrated affordable housing development. However, Little Italy's strong identity, authentic cultural character, and harbor proximity may insulate it from negative impacts, particularly since 707 Broadway sits on the periphery rather than the core of Little Italy.

Beyond the affordable housing research, the simple addition of residential density to a previously office-dominated corridor can create positive externalities. More residents support street-level retail, improve public safety through "eyes on the street," and create the vibrancy that makes urban living attractive. Downtown condominiums have experienced steady value appreciation, often outperforming suburban single-family homes in percentage terms, suggesting that the market values urban density and walkability.

The critical factor appears to be quality. Well-executed conversions that add high-quality residential units to downtown strengthen the neighborhood. Poorly executed conversions or concentrations of troubled properties can create challenges. For property owners in Downtown San Diego, monitoring the quality and pace of conversions becomes as important as tracking the number of conversions occurring.

The office-to-residential conversion trend has created a unique window of uncertainty for Downtown San Diego property owners, and many are turning to cash buyers to navigate this transitional period. Several factors make cash sales particularly attractive in the current downtown market environment.

First, uncertainty about future neighborhood character creates hesitation among traditional buyers. When potential buyers see office buildings converting to residential use, they often pause to wait and see how conversions affect the area's character, amenities, and property values. This "wait and see" mentality can reduce the pool of qualified buyers for downtown condos and investment properties, extending time on market and potentially reducing sale prices for sellers using traditional listing methods.

Cash buyers, by contrast, specialize in quickly evaluating properties in transitioning markets. We understand that downtown is evolving from an office-dominated core to a more balanced live-work neighborhood, and we price properties based on current conditions rather than waiting for the market to stabilize. This allows us to make competitive offers even during periods of market uncertainty.

Second, closing speed provides certainty. Traditional financing for downtown condos can be complicated by HOA questionnaire reviews, master insurance updates, and lender concerns about neighborhoods in transition. These factors can add 2-3 weeks to closing timelines and introduce financing contingency risks. Cash buyers in San Diego can close within 7-21 days, with some transactions completing in as few as 7 days, eliminating financing contingencies entirely.

For a Little Italy condo owner who sees office buildings converting nearby and wants to exit before more conversions occur, a 10-day cash close provides certainty that a 60-day traditional sale cannot match. Recent data shows cash buyers represent 68% of San Diego's luxury market, demonstrating that sophisticated investors recognize the value of speed and certainty in dynamic markets.

Third, cash offers eliminate appraisal risks. In neighborhoods experiencing transition, appraisers may struggle to find comparable sales that accurately reflect current values. If an appraiser uses sales from before recent conversion announcements, the appraisal may not support the contract price, requiring renegotiation or deal cancellation. Cash sales bypass the appraisal contingency entirely, providing price certainty from contract to close.

Fourth, as-is sales reduce preparation costs. Many downtown condo owners who decide to sell during this transitional period prefer not to invest heavily in updates or repairs before listing. Cash buyers typically purchase properties as-is, allowing owners to avoid update costs and sell in current condition. This proves particularly valuable for investment property owners who want to exit without capital expenditures.

For Downtown San Diego property owners, the decision to sell now versus waiting for the office conversion trend to stabilize depends on individual circumstances. Those who believe conversions will ultimately strengthen downtown's residential market may choose to hold. Those who prefer certainty and want to capitalize on current equity before potential near-term volatility often find cash buyers provide the speed, certainty, and simplicity they need.

The 707 Broadway conversion represents the beginning, not the end, of downtown's office-to-residential transformation. With vacancy rates approaching 36% and predictions of 40%+ vacancy in coming years, significantly more office buildings will likely pursue residential conversion in the next 24-36 months. This creates a timing consideration for current downtown property owners.

Market research suggests that only 15% to 25% of office buildings are structurally suitable for residential conversion due to floor plate depth, window placement, and infrastructure requirements. However, with 11.6 million square feet of downtown office space and current vacancy rates, even conservative conversion estimates suggest thousands of new residential units could enter the downtown market over the next 3-5 years.

The challenge for existing residential property owners lies in the potential for oversupply in specific micro-markets. If multiple large office buildings near Little Italy convert to residential use simultaneously, the sudden influx of units could temporarily depress resale values for existing condos as buyers choose new construction over resales. This oversupply risk is highest in submarkets immediately adjacent to clusters of vacant office buildings.

At the same time, the City of San Diego has actively encouraged office-to-residential conversions through regulatory streamlining and incentive programs. The City's Office to Residential Conversion Program provides fee waivers, expedited processing, and flexibility on certain development standards specifically to accelerate conversions. This policy environment suggests that conversion activity will increase, not decrease, in coming years.

For property owners in East Village and Little Italy, the timing opportunity exists now, before the next wave of conversion announcements. Current downtown condo prices show East Village median prices of $450,000-$700,000 and Little Italy median prices of $700,000-$1.1 million. These valuations reflect current market conditions but may face downward pressure if substantial new residential inventory enters the market simultaneously.

Cash buyers provide a mechanism to capture current equity without waiting to see how multiple conversions affect supply-demand dynamics. We make offers based on current market conditions and can close before additional conversion announcements create market uncertainty. For owners who have accumulated substantial equity in downtown properties over recent years, selling to a cash buyer now preserves that equity with certainty.

The alternative is to hold through the conversion cycle, betting that the ultimate outcome—a more balanced, vibrant downtown with better live-work-play amenities—will support property values long-term. This strategy can work for owners with long time horizons and strong conviction about downtown's future. For owners who prefer to take equity off the table now and avoid potential near-term volatility, cash buyers offer a straightforward exit.

We have been actively purchasing downtown properties from owners who recognize this timing opportunity. Our underwriting accounts for the conversion trend, allowing us to make competitive offers even as other buyers hesitate. If you own property in Downtown San Diego, Little Italy, East Village, or surrounding neighborhoods and want to understand your cash sale options before more office conversions accelerate, we provide no-obligation valuations typically within 24-48 hours.