Happy New Year Everyone! Enjoy our special guest blog post below by Jeff Current, President of the AIA Santa Clara Valley (American Institute of Architects). This is an excellent synopsis of real estate opportunities in the Bay Area 2012!
San Francisco – The City by the Bay! Beautiful & stately it stands as a metropolis that lives, breathes and expresses its unique personality to the world. SF is a fantastic place surrounded by sparkling bay and majestic sea: a metropolis that superimposed an urban grid right over the tops of its hills and valleys as if it were the flat expanse of the LA basin. It is, and will continue to be a hub for culture and creativity in the Bay Area.
…But San Francisco has a cousin down the peninsula; the Santa Clara Valley, that continues to expand and grow and attract a life, culture and energy of its own. The business epicenter of northern California has shifted from the Financial District to Sand Hill Road and from the docks of Fort Mason to the disc drives of Silicon Valley.
Along with this shift in business comes a shift in population. A few years back San Jose passed San Francisco as the 10th largest city in the USA & 3rd largest city in California (behind LA & San Diego). In a new era of sustainability and gasoline prices approaching $5/gal, more people are choosing to live and work and play within a smaller circumference. This is building up the demand for ‘smart growth’ communities and the South Bay is home to quite a few of them. Looking ahead to Santa Clara Valley’s future is both exciting and dizzying.
We could have 3 brand new Sports Stadiums built in the next 5 years with 49ers Football, Earthquakes Soccer and Athletics Baseball venues. These new projects attract hotels, restaurants and retail. Pro sports franchises put their host cities on a world stage as media covers ALL THE ACTION, LIVE!
Our business and social lives continue to be shaped by products conceived and born in our valley. Huge new campuses are being designed by World Class architects for Apple Computer in Cupertino, Facebook in Menlo Park and Google in Mountain View. Apple’s Net Zero Energy “Spaceship” design by Foster + Partners of London will house up to 15,000 employees in a glazed donut ring set in a serene orchard. Google is creating a “LEED Platinum Campus” that not only provides office space for 2,500 to 3,000 employees, but will include housing, retail and entertainment to offer its workforce a home and activities close by.
Transportation is getting a huge makeover as BART presses south into Santa Clara County with a station in Milpitas (Great Mall), 3 stations in San Jose (Berryessa Swap Meet site, Five Wounds neighborhood and Downtown SJ) and Santa Clara (FMC site near Santa Clara University). California High Speed Rail is in the planning stages to provide 2 hour and 7 minute rail service between San Jose’s Diridon Station and LA’s Union Station.
Besides all this, Silicon Valley is attracting major auto-makers like Ford and GM with design and research facilities to connect them to the technologies that drive the future of transportation. The Silicon Valley Chamber of Commerce has been working with the City of San Jose on ideas for a port in Alviso to allow for ferry service to once again connect Oakland and San Francisco with the South Bay. This plan could also include a marina with housing and hospitality uses, a Fisherman’s Wharf and restaurants, and recreation activities amidst the restored saltwater marshlands.
Alviso is linked to downtown San Jose by the Guadalupe River which plays host to pedestrian and bike trails and could even bring water taxi service from the Ferry Terminal to downtown (a la San Antonio’s Riverwalk). The Guadalupe River Park is one of the largest urban parks in the United States with opportunity to attract thousands for nature, recreation and sports activities.
This is OUR VALLEY! These projects are in our neighborhoods and districts. As architects and designers in this thriving expanse of humanity and creativity, we need to plug in and get involved in some of these activities. Many of these organizations and projects are searching for visionary individuals to provide leadership for the process of growth and development. I encourage each of you to get involved to whatever degree you can commit.
- Jeff Current, AIA
>Click HERE for more information on AIA Santa Clara Valley!
The online mecca for residential real estate data, Zillow, produces a list of the Best Cities to Trick or Treat. This year, San Francisco is #1 in the country trailed by San Jose at #6 - Bay Area, you should be proud.
Zillow has produced the list for three years now and for three years straight San Francisco has prevailed. It makes sense though, based on Zillow’s methodology, San Francisco has it all when it comes to best places on All Hallow’s Eve to hit the candy jackpot. San Francisco has the least amount of walking (key for those trying to hit as many houses as humanly possible like most people under the age of 10) and with the least safety risks (key to the parents of the candy-ravenous ghosts and goblins) .
Here are the stats:
Median Home Value: $660,494
Walk Score: 84.9
The Bay Area can continue its bragging by heading South to San Jose. Coming into sixth place, San Jose holds it own. A high medium home value and decent walk score helped set it squarely at the top of the list of 20 cities. Unfortunately though, in 2010 San Jose actually ranked #4. The downward bump was most likely due to the spike in crime the city has experienced this year as well as a contributing factor of declining values in real estate.
Here are the stats:
Median Home Value: $493,721
Walk Score: 54.5
So all you Trick or Treaters out there, get those goodies bags ready and hit the streets. Here is the breakdown by neighborhood for San Francisco and San Jose.
If you haven't caught it in the news yet, PG&E has had their hands full lately. Earlier this month, another gas pipe sparked a fire, this time close to home in the Bay Area, at a Cupertino Condo complex. This particular instance was a leaky plastic gas pipe, part of a 1231 Mile plastic pipeline spread across California. Below are some notes I picked up:
- PG&E will start replacement of these pipes in November in Cupertino and Roseville (where another pipe burst)
- Total 1200 Mile Job will cost at least $1 Billion and will be completed over the next few years (maybe 10 years).
- Plastic pipes were produced prior to 1973 and are pre-disposed to cracking
- PG&E will ask for a rate increase for consumers to pay for the cost!
- PG&E is not required to replace these lines
- PG&E will be the 1st in the nation to replace aged pipelines
So, the question I have for our readers is this: Should the California Tax payers be liable for incurring the cost to replace these lines? I'm not sure what the lifespan of gas lines are, but it seems that we paid for them once to be installed, so should part of the monies be covered by the manufacturer or PG&E? Will developers be required to participate in a line-replacement fund surrounding new projects?
As these re-construction projects echo through California, I'd be curious to see how it affects our local real estate in the Bay Area. Will the California Utilities Commission think of other ways to pay for this?
I think we all can agree that fixing these pipelines is a lasting solution for the future generations, but at what cost does it become burdensome to the California Tax Payer?
Your thoughts and comments are always appreciated. In a future article, we will look at the land and building impacts of the potential BART line drilling through Downtown San Jose (underground).
Can San Jose support design?Until now this blog has been a sounding board for real estate in San Jose, spotlighting new projects, sustainable initiatives, leasing deals and construction techniques. I am sure you are aware of our Green Spotlight Much of which has had strong feedback from you, the reader (thank you!). However, there has been something missing. Something that is vital to the real estate industry in San Jose - design. Both literally and figuratively, design is an area I hope to focus on for our Design Spotlight section of the Bay Area Real Estate Blog.Design Spotlight posts should be a dialogue and not an informative series of journalism, because lets face it, this is a blog and my background is in architecture, not writing. We would like to welcome readers to take advantage of the comments section to voice your opinions about topics design related; past, present and future. All three of which I will touch on today.This is hard to put into words but I believe San Jose’s design community is untapped, yet ready for a revolution.
AK Live/Work- Venice, CA - Sant ArchitectsSan Jose has long been a suburban city, but large enough to support the urban citizens in its core. The urban dwellers tend to lean toward a design oriented community, but San Jose has no center of design. Where do I go to get that mid century piece of furniture to accent my new downtown condo? Palo Alto? Artisan bread for a dinner party? Los Gatos? Hand made crafts by local vendors for a unique gift? Probably have to travel to San Francisco to pick something up. Of course I am exaggerating, I know some of these places exist in San Jose, however most metropolis cities have communities to support the arts and I can not seem to put my finger on where that is specifically in San Jose. Why is that? Why no “arts district”, or where did it go?
Ode to Roses - Portland, OR - TENPOD
There are very few true lofts in San Jose, not enough art studios, and not enough support for new creative communities. A city rich in history can blossom into the future by supporting such a community which lends itself to innovation, but I’m not sure of the factors keeping it from happening.
I know the community is out there, but can San Jose support design? Can an architecturally
significant development which is centered around the design community be successful in San Jose? Are these people leaving for San Francisco and Los Angeles? Again, your thoughts and opinions are welcome, as always.
ADAM MAYBERRY, Assoc. AIA
Abstract: Over the next few months, you and I (Yes, beloved reader this means active participation!) will explore the "Master Plan" of the industrial real estate market in San Jose. This expose is a multi-part series of thought discussion and analysis focused on the past, present and future of industrial commerce within Silicon Valley.
Is Urban Industrial Property a dying asset?
After cruising south on 10th street, I engaged in a thought discussion regarding the classic economics fundamantal of supply and demand. Is the value of San Jose industrial real estate ramping down due to low user demand & high supply OR elevating due to a lower supply & higher demand by developers?
Initially, the first thought in seeing vacant, industrial incubator condos and for-sale signs posted on building corners triggers the "what can you expect in a recessive economy" response. Starting with an analysis using BSB's industrial assets, findings indicate that most of our urban industrial holdings are being re-zoned for higher and better uses including projects on Auzerais, the Smith&Mckay Building downtown, and the 4th & St. John property, which, when caught up in the tide of verticle expansion in San Jose's central core, makes sense.
Think about the stigma that used to be attached to industrial commerce... Who wants "noisy, dirty, heavy epuipment industrial product" banging and bustling in Downtown San Jose? This included machine shops, printing press buildings, etc.
Yet, these rare and unique assets I define as "Urban Industrial," are on the road to extinction right before our eyes.
In my next article, I'll discuss the current market of local industrial tenants and how their specific industrial products have changed over the years. There has been a slow move over the last few decades of these heavy users moving out of the urban regions, and out of the United States altogether.
Yep, it's true, Google has signed a lease in Moffett Park at the four-building office campus (26.5 acres), Technology Corners. It's the first time Google has ventured outside of Mountain View and what's significant is that it's not just a few thousand square feet of office space - it's over 715,000 square feet the technology giant will be taking.
The new Sunnyvale campus has some nice features besides beautiful buildings. The Jay Paul Company (the owner and developer of the property) made sure to build and develop exceptional outdoor areas around the Technology Corner campus complete with water features, meandering sidewalks, plenty of greenspace and beautiful landscaping. The campus also comes with a state-of-the-art 16,000 square foot gym. So while the Google employees at Technology Corners won't have the same amenities as are found in the Mountain View main campus, the new space won't be too shabby.
The current resident of Technology Corner is a company called Aribia, Inc. Their leases expires in 2013, upon which, Google's term will begin. When Google does tee-up their move, most likely there will be some remodeling that will be done to the space. I've heard one person describe the tenant improvements as "needing to Google-ize the space".
Whether "Google-ize" means installing hair-cutting stations, message rooms and bean-bag chairs throughout the Technology Corners campus is yet to be determined (features found in other Google office buildings), but most likely the tenant improvments will be in line with their general philosophy of creating very comfortable, healthy work space.
For now, we can all sit back and wait for 2013 to roll around. By then, we will most likely see more big real estate moves by Google. We will make sure to continue tracking all the latest Google real estate moves...
One of San Jose’s goals is to attract and retain big companies within its City limits but at what cost is it willing to do so and how will this affect the real estate market? Is San Jose prepared to drift away from planned growth areas, more freely convert zoning and bend whatever development policies it needs to achieve its goals?
A few companies have recently been testing the waters… Here are a few examples:
Netflix has just inked a lease in the North First Street Corridor at 1732 N.First St. bringing with it additional tax dollars. Interesting strategy the Economic Development Department of the City of San Jose negotiated (pending City Council approval). As reported by the Mercury News, San Jose will split the sales tax revenue for the first three years as follows:
Year 1: San Jose= 50% net sales tax revenue
Year 2: San Jose= 60% net sales tax revenue
Year 3: San Jose= 70% net sales tax revenue
It’s a great example of how the City is willing to be creative in order to attract a new company. How does this help the real estate market? In many ways:
- Netflix will be an ideal addition to tenants along the North First St.corridor which helps with the City’s plan of adding growth into this area.
(San Jose’s Class ‘A’ vacancy rate is currently around 15%)
- The new lease helps reduce vacancy rates in the office market.
- Having a high profile tenant such as Netflix will help attract other companies to the North First Street corridor thus strengthening the market.
Cisco has been a long time resident of San Jose and another critical source of precious tax dollars. The company is critical enough that the Planning Commission on July 27th voted 6-0 to approve Cisco’s request to wave the development requirement to build an additional 1M square feet of office space. Then, on August 2nd, the City Council voted and approved the same request.
This action by the Planning Commission and City Council demonstrates yet again how San Jose is being flexible to maintain its relationship with Cisco even though itbdelays development of the rest of their campus.
How does it help the real estate market?
- Had the City not been flexible with Cisco and forced the company to build an additional 1M square feet of office, the result would have been disastrous. Already Cisco is in contraction mode having just cut 6,500 jobs. Who would they put into the new buildings? Probably would have had to lease the space to another company.
But here again is a problem. The North First Street corridor already has huge vacancy and cannot sustain another flood of vacant office space. The Market would have been further weakened.
For more information on the North First Street corridor office leasing activity, click HERE for a Q1 Office Market overview produced by Colliers International.
You can also contact the Leasing Department at Barry Swenson Builder for additional information. Click -> HERE
The urban center of Downtown San Jose and the historical port of Alviso bookend San Jose's North First Street. Along that corridor, the satallite image from Google Earth reveals everything from dense, high-rise towers to sprawling tech campuses. Running parallel to this same corridor rests the Guadalupe Riverpark, an urban ecosystem that encourages a sustainable, active lifestyle within Downtown.
Adjacent is the San Jose Mineta International Airport. Did I list enough assets?
I asked some clients, both Bay Area natives and out-of-towner's, to give me their impression of the what a North First Street Corridor would look like. Answers were nearly as scattered as the identity of North First Street itself, BUT maybe that diversity is what precisely defines the character of the street? (your tweet inserted here) With light rail dashing down the center divide, the street is a "mixed use transit oriented development" in the making. So, two snapshots to consider for the North First Street transformation are maximizing the established infrastructure surrounding public transportation and potential repositioning of current real estate assets along the street. (or at least some defining)
This is not to suggest that the North First Street transformation evolve into a congested, business emphasized district liken to the Wilshire Corridor in Los Angeles; however, it is to imply that bay area developers and city planners cooperate in order to generate additional commerce and connectivity via this main artery of the city. We have the opportunity to take advantage of the already established infrastructure surrounding VTA light rail.
From a Real Estate perspective, by driving up and down the street it becomes apparent that assets are available and development is needed. What about a section specified for Residential? Expansion of the commercial district? Eco-passes available to business owners and residents? Retail life and energized traffic? Diverse hospitality?
All these components located 2-3 blocks appart from each other streamlining through a main artery into downtown forms an infectious urban planning element.
- Hunter Current, BSB Development
I've been waiting a long time for the press release, and it's finally here. One of our project partners, Republic Urban Properties, is unvailing their Republic Solar Highways LLC which has been formed to create a one-of-a-kind solar pilot project here in Santa Clara County.
It will be the first of its kind in California with the first phase producing up to 15 Megawatts of energy (or the equivalent of powering 3000 Bay Area Single Family Homes). This project utilizes excess unusable land with a green twist - highway interchanges and cloverleafs will now display solar arrays.
Location: US Highway 101 ; 20 mile stretch from Gilroy to San Jose
SIZE: 15 MW on 65 Acres of Property
GREEN FACTS: project will offset over 15,500 metric tons of carbon per year and will offset over two million car miles traveled per year
ENDORSEMENTS: San Jose Mayor Chuck Reed, Morgan Hill Mayor Steve Tate, VTA Board Chair Sam Liccardo, Joint Venture Silicon Valley, Silicon Valley Leadership Group, San Jose SV Chamber of Commerce, Cal Trans, MTC
I'll go on record to say that this might be one of the first visable projects that can show visitors to the area, that they truly have entered "Silicon" Valley.
Congratulations to Republic Solar Highways LLC and key staff Michael Van Every and Erik Hayden in coordinating the public-private partnership with CalTrans and Santa Clara County. We wish them the best in continuing this model throughout California.
For more information and to sign up for their mailing list for e-mail updates >Click Here
photos located at: http://www.cloverleafsolarhighways.com/
If you or someone you know is looking for a design-build team to coordinate a solar installation for your home or business >Click Here to connect with our BSB Green Team
Did you know that there are 25 communities offering homes for sale in Silicon Valley, and approximately 50% of the unsold inventory is concentrated in only four developments? Below is a May 2011 breakdown of this analysis.
Although it seems like there is a lot of inventory on the market with these new communities, the valley needs to keep up its new developments, and bring a constant pipeline of residences to the market because once these units are sold or leased up the market will demand more units.
Speaking of apartments, 360 Residences in Downtown San Jose recently switched to a for lease product, and after only 2 weeks of pre-leasing, it's 6% leased. Everywhere else is almost 100% occupied and rents are up more than ever. As a matter of fact, San Jose is actually stronger than the San Francisco apartment market right now.
Don't be surprised if you hear about developers pulling building permits and breaking ground on new projects. Financing is slowly coming around, and we're hopeful that the valley will continue to be a leader in attracting the brightest minds to the best companies and providing quality housing for these employees.
Thinking about buying a new home? Ever seen the views in a high-rise urban setting? >Click HERE to learn more about City Heights condos - only 18 units left and they are selling fast!