Pedestrians walk along East Santa Clara Street as the Bank of Italy building is seen in the background on Monday, April 6, 2026, in San Jose, Calif. Construction will transform former office space in the Bank of Italy building into a 109 new residential units. (Aric Crabb/Bay Area News Group)
Surrounded by the sounds of light rail bells and the whir of drills, San Jose officials held a ground breaking ceremony Monday at the downtown 14-story Bank of Italy building — the first project to move forward under a city program to convert vacant office space into housing.
The conversion will bring at least 109 market-rate apartments to a building that has sat empty since 2017. Developers expect to deliver the units by next year, though pricing and unit sizes have not yet been announced.
Retail space has been planned for the ground floor, but developers said they will know the exact sizes, units and potential locators in the coming months.
Mayor Matt Mahan, Councilmember Anthony Tordillos, Westbank Vice President of U.S. Development Andrew Jacobson and San Jose Chamber of Commerce CEO Leah Toenisketter were among those on hand for the ceremony.
Mahan, who is running for governor, said there were at least 275 workers on the project “restoring every brick and window” of the century-old building.
“What built San Jose was belief,” Mahan said. “Belief that if you invested in your city, if you took risks, and built something that lasted, the next generation would be better off.”
The building is being developed in partnership between local firm Urban Community, led by Bay Area real estate entrepreneurs Gary Dillabough and Jeff Arrillaga, and Westbank, a Canada-based real estate firm.
“I think we can all agree that it’s been vacant for far too long,” Tordillos said. “That is why I’m so excited to see Westbank stepping up to breathe new life into this iconic building and create 109 new homes in the process.”
Constructed in 1926 in a Renaissance Revival style, the Bank of Italy tower, the city’s first skyscraper, is one of downtown San Jose’s most recognizable landmarks. While the project includes no on-site parking, officials noted the building’s proximity to public transit and existing downtown garages, as well as the rise of emerging transportation technology like Waymo.
“We’re hoping a project like this can highlight where these technologies are taking us,” Dillabough said. “We’ve been working closely with the city to unlock some of these opportunities, which will require new policies and new perspectives.”
The groundbreaking marks the first project to move forward under an incentive program passed by the City Council earlier this year that waives certain fees, taxes and other requirements to encourage developers to pursue conversion projects.
Jacobson said the project demonstrates what is possible when a city and developer work together to solve technical, financial and regulatory hurdles.
“This is where we took on a big ambition and we came to the city and said, here’s what we need to do in order to actually get this thing built,” Jacobson said. “Everybody came together to figure out how do you solve technical issues, how do you solve financial issues, and how do you actually get this project built.”
The project comes with a tradeoff, however.
Under local law, most new apartment buildings are required to set aside a percentage of affordable units — but the city granted a waiver for this project, arguing that requiring affordable units or fees would have made the project financially unviable.
“We’ve had to face the math on this, that when you mandate but don’t fund non-economic uses, or at least uses where the economics don’t match up with the required investment, you actually get less of what you want,” Mahan said. “We want to build housing.”
Mayor Matt Mahan uses a sledge hammer to knock a panel out of a wall at the Bank of Italy building on Monday, April 6, 2026, in San Jose, Calif. Construction will transform former office space in the Bank of Italy building into a 109 new residential units. (Aric Crabb/Bay Area News Group)
Mahan said the city is still pushing for affordable housing in other projects but is balancing that goal against the need to get any housing built.
San Jose is consistently ranked among the most expensive cities in the country. The city must permit and zone more than 60,000 units by 2031, but has not yet met its housing targets.
The conversion also is part of a broader effort to revitalize downtown San Jose, which has grappled with high office vacancies and a slow post-pandemic recovery. The city has seen recent bright spots — packed businesses during the NVIDIA conference and Super Bowl week drew visitors from across the region and country.
Toeniskettern said the project signals something bigger than a building renovation downtown.
“It’s more about restoring the building. It’s about what it unlocks,” Toenisketter said. “It’s new residents, new activity, new energy. They bring the daily life that supports our small businesses and activates the streets.”
Workers walk through the interior of the Bank of Italy building on Monday, April 6, 2026, in San Jose, Calif. Construction will transform former office space in the Bank of Italy building into a 109 new residential units. (Aric Crabb/Bay Area News Group)