That fenced-off dirt patch in downtown San Mateo is not going anywhere fast. The long-planned Block 21 project has been given yet another lifeline, keeping the six-story mixed-use development on paper instead of under construction.
San Mateo’s Planning Commission this week approved a second two-year extension for Block 21, which sits between East Third and East Fourth avenues and South Claremont and South Delaware streets. The project, first approved in 2022, is slated to include about 111 apartments, including 12 very-low-income units, and roughly 179,560 square feet of office space.
At Tuesday's meeting, the commission unanimously approved the extension, citing ongoing lending problems and concerns about timing, as reported by the San Mateo Daily Journal. The City of San Mateo notes the new approval pushes entitlement deadlines to June 19, 2028, and the city could consider a third two-year extension if construction still has not started by then.
Developer Says Lenders Are Thawing, but the Money Is Still Tight
Developer Michael Field told commissioners the broader capital markets remain tough, even as interest in artificial intelligence is making lenders a little less skittish about Bay Area office projects.
Field pointed to the surge in AI funding as a reason for cautious optimism. “Sixty cents of every dollar spent worldwide on AI venture is landing here in the Bay Area,” he said during the meeting, a comment reported by the San Mateo Daily Journal. Even so, securing construction financing has remained a hurdle big enough to keep shovels out of the ground.
Market Backdrop: AI Tenants Help, Vacancies Slip
Recent office market data has given developers some talking points. First-quarter reports from Colliers and Cresa show stronger leasing activity and falling vacancy in San Francisco and Silicon Valley, driven in part by AI and other tech firms snapping up large blocks of space.
Developers like Field argue that those trends suggest lender appetite may be slowly returning. For Block 21, though, getting in line behind other financed deals is not the same as actually closing one.
What’s Next for the Block
The city officially tagged the Block 21 parcel as a vacant lot in December 2023 and required a maintenance plan under its Vacant Lot Maintenance Ordinance, according to the project page. Mecah Ventures, the developer behind the downtown Block projects, is also managing nearby Block 20 at 500 E. Fourth Ave.
Under the new extension, Mecah Ventures has until mid-June 2028 to begin construction on Block 21 or return to request yet another reprieve, according to City of San Mateo project materials and the developer’s listings.
The added time eases immediate pressure on the developer but kicks the can further down the road for new housing and office space downtown. Planning commissioners said they still like the project’s design and its housing mix, including the very-low-income units, but signaled they want to see real movement on financing before they are asked to extend deadlines again.
