A half-empty Cupertino strip mall could become 35 townhomes

Stand on De Anza Boulevard just north of Prospect Road and look west. A Valero on the corner. A wide, patched parking lot. Behind it, a low gray-roofed strip building with four storefronts, two of them dark. A seafood market and a pharmacy hold the other two on month-to-month leases.

On Tuesday, October 6, the Cupertino City Council is set to decide whether that lot at 1655 S. De Anza Boulevard and 7357 Prospect Road becomes 35 three-story townhomes with rooftop decks. The Planning Commission recommended approval 5-0 on September 8. This is the second time the site has come this far. Council approved a different 34-home plan here in June 2023, and nothing got built.

The new homes would land in one of the most expensive corners of an expensive city. Houseberry data puts the typical Cupertino home at about $2.82 million in early October 2026, and the typical home in Southside Cupertino, the neighborhood Houseberry draws across the city's southern end, at about $3.04 million.

What would replace the strip mall

The applicant is Dividend Homes, which has three other townhome projects on file along Stevens Creek Boulevard. Dahlin Group is the architect. The city staff report describes an L-shaped site of 1.67 acres that touches San Jose to the east and Saratoga to the south.

The plan puts 35 homes where the city's base zoning allows 26. Three very-low-income homes earn the developer a 35 percent state density bonus, which allows up to 36. With the bonus come waivers, 11 of them. The biggest are height, where the General Plan limit is 30 feet and these buildings run close to 45, and floor area, where the plan uses 163 percent of the lot against an 85 percent cap. Dividend says the 85 percent limit alone would cost 17 homes.

Here is how the 2026 plan compares with the one council approved three years ago.

The 2023 numbers come from the city's earlier project page. The staff report says only that the first applicant "did not proceed with development." It does not say why.

The retail is the real trade

The one condition Dividend asked the city to drop outright is the General Plan rule that retail be a "substantial component" here. Its stated reason is that shops "would negatively impact the financial viability" of the project. Commissioners asked about the loss of retail in September, and it is the fairest objection anyone has raised.

We think it is the right trade anyway. Half the building is already empty. The two tenants who remain, KML Pharmacy and Four Seasons Seafood, are on month-to-month leases, and city staff say they are helping both find new space. Retail along this stretch of De Anza competes with Saratoga Plaza across the street and Westgate Center farther east on Prospect. Thirty-five homes for sale in Cupertino are scarcer than a fourth storefront.

The neighbors to the west have a real stake too. Single-family homes on Jamestown Drive back up to the site, and three stories plus a roof deck is a big change from a one-story strip center. The plan answers with an 8-foot sound wall on the commercial edges and 22 new trees on site after 15 come out, mostly Italian cypress and junipers, plus one London plane street tree. Two new street trees replace it.

Traffic, parks and the next lot over

Hexagon's July traffic memo counts 186 fewer daily trips than the existing shopping center, with 5 more in the morning peak and 49 fewer in the evening peak. Homes generate less traffic than a busy strip mall. With half the storefronts empty, the real drop will be smaller than the memo's math.

The money is more certain. Dividend would pay $1,620,000 in park fees, $54,000 for each of 30 market-rate homes, into the same parkland fund Cupertino is tapping the same night to buy land on Finch Avenue. The city's consultant estimates the project would add $4,348 to $16,770 a year to the general fund.

And this may be the smaller of two projects on this block. The plan reserves a future driveway connection to the property to the north at 1601 S. De Anza, where Dollinger Properties filed a preliminary application in July 2025 for 105 townhomes on 6.35 acres.

What these homes would sell into

Cupertino prices have gone flat. The city's typical home price was about $2.82 million in early October, down 0.3 percent from a year earlier, by Houseberry's count. Southside, at about $3.04 million, is up 2.2 percent over the same year. Redfin's August figure for the city, which tracks sales rather than value, was $2.86 million, down 11.1 percent from August 2025.

The spread inside the city is about $740,000. Houseberry's typical price runs from about $2.46 million in Northside to $3.20 million in Westside, the foothill neighborhood that ranks first in the city.

Houseberry scores Southside 4.0 out of 5 overall, second of five Cupertino neighborhoods, with a 5.0 for schools and a 3.2 for safety, according to Houseberry's Cupertino ranking. Dividend has not published prices. New three-story townhomes of 2,100 to 2,700 square feet in this city will not be cheap. They will still sell for a fraction of the $3 million detached homes around them, and that is the whole point of building them.

If council approves on Tuesday, the five below-market homes will go through the city's housing program, and buyers will need to income-qualify. Everyone else will be pricing these against the rest of Cupertino's neighborhoods, so check how the south end stacks up before the first open house.

Sources

• Cupertino City Council staff report, 1655 S. De Anza Blvd, October 6, 2026
• City of Cupertino, 1655 S. De Anza Blvd / Dividend Homes IV project page
• Hexagon Transportation Consultants traffic memo, July 21, 2026
• SF YIMBY, 1601 S. De Anza Boulevard preliminary application
• Redfin, Cupertino housing market