Silicon Valley 2014 economic forecast: Talent crunch, M&A uptick, development sprawl

Christy Wyatt, CEO of Good Technology Inc., said at the Business Journal's 2014 Economic Forecast that recruiting and retaining talent is her company's top challenge for the year ahead.

With her mobile device management company heading toward a long-rumored IPO, Good Technology CEO Chisty Wyatthas one key potential roadblock on her mind:

“Talent, talent, talent. It’s the lifeblood of what we do,” Wyatt said on Wednesday at the Business Journal’s annual economic forecast.

Good Technology already employs more than 1,000 people, but Wyatt said the 18-year-old company views recruiting as an issue that requires more than high salaries. The company mapped transit options in various Silicon Valley cities and put down roots in Sunnyvale in hopes that they wouldn’t “miss out” on tech talent that has plenty of employment options — some of which include incentives like private charter buses, housing subsidies, free food and other over-the-top perks.

“Silicon Valley is unusual,” she said. “What motivates the key talent in the Valley is never their paycheck.”

Competition for talent prospects was one of several employer issues at the event that reflect side effects of a rapidly improving regional economy. While most economic indicators point to continued growth in 2014, the region is also at an inflection point for managing that growth.

“California seriously is the place to be,” said City National Bank Director of Taxable Fixed Income Paul Single. He highlighted Los Angeles and the Bay Area as state’s economic drivers.

While the last year was the best for IPOs since 2007, speakers said this year shows promise for the mergers and acquisitions market.

On the ground, economic growth will likely manifest with another busy year for real estate developers. As perennial strongholds like Palo Alto and Mountain View look to maintain momentum, developers are also circling lesser-known cities like Santa Clara and Redwood City for dense mixed-use projects.

The real estate boom could also push some existing companies out of the Peninsula and pricier South Bay markets. San Jose neighbor Milpitas and Fremont are two potential candidates to cash in on higher prices in better-known employment hubs, said Cushman & Wakefield Regional Research Director Petra Durnin.

Steve Eimer, executive vice president at real estate developer Related California, outlined his company’s hopes for a 230-acre development site across the street from the San Francisco 49ers’ new $1.3 billion Santa Clara stadium. Related is still studying the site, but Eimer said a proposed entertainment district could include up to 1,000 housing units.

“We’re in it for the long term,” Eimer said. “If all goes well, we would like to be under construction in late 2015, early 2016.”

With all the activity going on in neighboring Santa Clara, San Jose City Manager Ed Shikadasaid he sees “opportunities for synergy” between Santa Clara, downtown San Jose and the tech office-heavy North San Jose area.

Read more about today’s Economic Forecast in an upcoming print publication of the Silicon Valley Business Journal.

Palo Alto’s College Terrace to start construction amid development headwinds


2100 El Camino


Palo Alto might have a tough-on-development reputation, but that hasn’t stopped some new projects from rolling forward.

Last week, Canyon Capital Realty Advisors said it had provided debt financing for College Terrace, a 66,000-square-foot mixed-use building at 2100 El Camino Real that was approved back in 2009, in a deal that will get the project under construction this year.

Meanwhile, Thoits Bros. Inc. late last year received all approvals for a 26,800-square-foot office building at 500 University Ave. in downtown.

That followed a green light in November of a 74,122-square-foot mixed-use building at 3159 El Camino Real from Tarleton Properties.

“It’s not rocket science why people want to invest there,” said Marti Page, a director at Canyon Capital, which provided a $49.5 million construction loan for College Terrace.

The Peninsula city has been Ground Zero for rising rents during the current market recovery. Average asking rents for office space were $5.49 a foot in the fourth quarter, according to Colliers International. That’s the highest in Silicon Valley, according to the brokerage.

The hot market has led to a development rush, but that has led in turn to some resident pushback. A successful initiative that many observers saw as a proxy for anti-development sentiment derailed a 60-unit senior housing project in November. The next month, Jay Paul Co. pulled a redevelopment proposal for 395 Page Mill Road after stiff opposition. A major project from John Arrillaga at 27 University Ave. is also on hiatus.

At a recent Cornish & Carey Commercial Newmark Knight Frank forecast event, partner Phil Mahoney called the ability to get approvals “a big story in 2014.”

One upshot: Projects with all their entitlements suddenly look a lot more attractive.

“What was compelling is, you’re dealing with a full city block, which is unique in Palo Alto, and it’s got this unique zoning, which over time has become increasingly coveted,” Page said of the project.

Canyon also liked that the project was not on a ground lease, unlike many of the properties in the area, which are on Stanford University-owned land.

“Really, it’s the location — you’re bound on one side by the university, and on the other by the Research Park,” she said.

The 1.4-acre project will include 45,000 square feet of office, 9,000 square feet slated for a grocery, 7,000 square feet of additional retail space and eight below-market-rate housing units. Construction is slated to begin in spring 2014 with completion set for August 2015. Blach Construction is the general contractor. Carrasco & Associates is the architect.

The project’s efficiency cred includes a green roof, solar panels, rainwater collection and efficient building systems. Blach says it’s designed to meet LEED Silver criteria and is striving for the more stringent LEED Platinum.

Other developers are not being dissuaded by the shifting development winds. This week, the Minkoff Group closed on 385 Sherman Ave., a .64-acre site, according to county records. The seller, Sand Hill Property Co., dropped its own development plans there in 2009. Minkoff has submitted a preliminary proposal for a 55,566-square-foot mixed-use building there. The developer declined to comment this week.

Sand Hill Property isn’t sitting still, either. The company bought the former Facebook Inc. headquarters at 1050 Page Mill late last year, and has turned in plans to replace the old R&D buildings on the site with 284,000 square feet of new Class A office space. That is the same footprint as the existing buildings, according to city documents.

Tips for Homeowners Looking to Score During Big Game

 Homeowners and renters looking to make extra money by renting out their homes to visitors in town to watch the Broncos play the Seahawks in Super Bowl XLVIII are urged to first contact their insurer, according to the Insurance Information Institute.

“Before renting out all or part of your home, tell your insurer about your plans to make sure you’re covered if your property is damaged or if someone is injured,” said Jeanne M. Salvatore, senior vice president, chief communications officer and author of the I.I.I.’s Fine Print Blog.

This is the first time the Super Bowl is being held in the New York City metro area. As a result, the market for rental properties near the game’s venue, Met Life Stadium in East Rutherford, New Jersey—just eight miles west of mid-town Manhattan—is red-hot. Peer-to-peer rental websites such as Airbnb are letting consumers tap into this demand, potentially earning a “postseason bonus” by making their homes available to the thousands of football fans and visiting Seattle and Denver faithful.

Some insurance companies may allow policyholders to use their property as a rental for a one-time, special occasion like the Super Bowl, as long as the insurer is informed about it ahead of time. Other insurers, while allowing this type of arrangement, may insist on other criteria being met, such as the homeowner acquiring additional insurance coverage.

Keep in mind that there are some insurers who will consider any rental of your home to be a business venture, requiring the purchase of a business policy—specifically either a hotel or a bed and breakfast policy—because a standard homeowners insurance policy excludes losses arising from the operation of a business.

“Technological advances have allowed for the growth of the sharing economy” said Salvatore. “But, if you participate, it is your responsibility to make sure you’re adequately insured. And, if you are a renter also talk to your landlord or look at your lease to make sure you are allowed to rent out your home.


Property Ownership and Property Management Outlook 2014


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The year 2013 will go down in the record books as a good year for both owners and managers of residential income properties.

As I wrote recently in an article titled, It’s Tough to Afford to be a Renter These Days, “Housing affordability doesn’t look too promising as 2014 begins. If you listen to the National Association of Realtors the opportunity to be a homeowner hasn’t been this affordable in a long time.”

If you’re looking to sell a home, 2014 may be a good year though probably not as good as 2013. But if you’re looking to buy, 2014 will likely be a better year than 2013.

These are just some of the expectations that Jonathan Miller president and CEO of Miller Samuel, a real estate appraisal and consulting firm, shared with The Daily Ticker at

“Take home prices, which have been rising at a rate of 10%-12% — depending on which data you use, for example.” Miller says home prices will rise half as much in 2014 because more supply will come on to the market. “Inventory is now below the usual six-month average, credit remains tight and unemployment and underemployment will remain high even if they’ve declined over the past year.

“How can we have price growth that we didn’t see in decades? It doesn’t make any sense,” Miller explains in the video above. About 40% of Americans have low or negative equity in their homes, says Miller. “They can’t trade up, make a lateral move [or} downsize, so they sit.”

And those who have the resources and good credit to buy will find that mortgage rates are higher. This is mostly due to the Fed’s recent decision to reduce its purchases of Treasuries and mortgage-backed- securities (MBS). As I’ve stated many time before, qualifying for a new loan is and will continue be harder than in recent years.

“Under the Dodd-Frank financial reform law, lenders are required to meet new underwriting standards for “qualified mortgages” (QM) if they want greater protection from lawsuits. A QM loan must have a regular schedule for payment of principal and interest and fees paid by the borrower can’t exceed 3% of the loan amount and monthly payments can’t exceed 43% of the borrower’s gross income” Miller explained.

The new rules “will continue to slow the momentum of improvement” in the housing market, says Miller. They will “bog things down for the first half of the year…an adjustment period [for rules] that is “probably a necessary evil.” The hope, of course, is that the new regulations will help protect the financial system from a crisis like the one in 2007-2008.

“These new rules will also impact Fannie Mae (FNMA) and Freddie Mac (FMCC) — the government sponsored enterprises that are still the backbone of the mortgage market. They buy about two-thirds of new mortgages and bundle them into mortgage-backed securities for sale in the secondary market. Fannie & Freddie will buy only mortgages that meet most of the QM criteria.

In addition, Fannie and Freddie are raising the fees they charge mortgage lenders in exchange for guaranteeing new loans. The increase will make Fannie & Freddie-backed loans more expensive, which will create more opportunities for private companies to compete in the same mortgage market, says Miller. That’s “taking our medicine,” says Miller. To read the rest of this insightful interview and watch the video click here.

So 2014 looks like a more challenging year for both property owners and managers, but don’t let that worry you. The flip side and the silver-lining is that owners who have invested in areas where vacancy rates are low will still find plenty of desperate renters wanting to become residents.

For property managers, whether your region has an abundance of potential renters or a deficit, if you’re a smart competitor with the latest and best technology, software and marketing strategies, you’ll outshine your competition.

Being a big proponent of cooperation versus competition, I’d recommend that property managers network with their peers to learn what’s working and how to cooperate your way to success. If you help your competition by referring business to them they’ll do the same for you. Why? Sooner or later you’ll find a prospect who wants to rent in an area where you have nothing available.

When the opposite is true, you’ll find your property management competitor will refer prospect to you. Start 2014 with a winning, cooperative attitude and it could be one of your best years yet.

Lennar’s first Hitachi homes get ready to hit the market

One of the townhome communities from Lennar at the Hitachi Global Storage Technologies site.

One of the townhome communities from Lennar at the Hitachi Global Storage Technologies site.

Eighteen months after acquiring a 40-acre development site in South San Jose,Lennar Corp. is coming out of the ground with its first models and anticipates opening its sales office within weeks.

The construction on Lennar’s master-planned community, now called Avenue One, represents a significant milestone for the redevelopment of the huge, 330-acre campus formerly owned by Hitachi Global Storage Technologies. The chunk of land — the largest infill site in the region— is entitled for nearly 3,000 units and 320,000 square feet of retail. Located at Cottle Road and Highway 85, it’s near the Blossom Hill Caltrain station and Santa Teresa light-rail station.

“We’ve got five different neighborhoods planned, and we’re coming out this year with four of them,” said Gordon Jones, Lennar Northern California Division President. “It’s truly a master-planned community with amenity features you just don’t find here. It’s very unique.”

Lennar is building 450 three-, four- and five-bedroom homes to start, with the first deliveries forecast for mid- to late-summer of this year. Another 190 or so will get started later, within the next 24 months. Lennar is aiming for a more amenity-rich project, with a 12,000-square-foot clubhouse and fitness center, as well as a pool and spa.

Lennar’s project is also notable because it includes two single-family-detached home communities comprising about 100 homes, in addition to two townhome communities that include about 350 homes.

Single-family detached, especially the two-story variety that Lennar is building, is considered the holy grail for homebuilders in the Bay Area for its ability to command high prices. But gaining approvals is difficult given today’s emphasis on density in city planning departments.

“It’s very rare,” Jones said. “Because of our master plan, we were able to push density to certain places where it makes sense in the area, to enable other places to have lower density.”

Pricing has not been determined, but new Bay Area townhomes are going from the high-$600,000s to mid-$700,000s. New single-family detached homes, meanwhile, are selling in the low-$800,000s up to the $1 million mark in some cases.

Lennar also has entitlements for 200 more residential units, which it will convey to an affordable housing developer to satisfy affordable requirements.

Lennar is not the only project moving dirt. Sacramento-based St. Anton Partners is doing a 275-unit apartment complex as well. Cupertino-based Hunter Properties is under construction on the retail component, a center called Village Oaks. And Orange County-based City Ventures has recently begun the entitlement process for a 550-unit project on 13 acres.

Lennar is also active throughout the region, with projects in San Jose, Los Altos and Fremont.

The homebuilder, which is the second-largest nationally by revenue, reported net income of $164.1 million in December, compared with $124.3 million a year earlier, thanks in part to rising home prices.

$35M hotel project coming to San Jose’s North First Street


Two new hotels are headed for the old Piercey Toyota lot on San Jose’s North First Street, not far from San Jose Mineta International Airport.

San Diego-based Kalthia Group Hotels has proposed a 145-room Hampton Inn and Suites, and a 140-room Home2 Suites for the four-acre site at 2116 N. First St., developers told me. It will be the first appearance in Silicon Valley for Kalthia and the Home2 brand.

The $35 million project represents yet more hospitality development after years of virtually nothing getting built in the San Jose airport submarket. Today, several properties — including a 175-room Residence Inn and 146-room SpringHill Suites — are under construction in the area, and others are upgrading their facilities.

“For a long long time, no new hotel was built in the San Jose airport area,” saidJayvant Shah of Kalthia. “So we started looking a long time ago for a project to do in the San Jose area. We looked at a couple of sites and found this one.”

Tim L. Edgar, a senior vice president at Irvine-based Atlas Hospitality Group, which closely tracks the region, said the area is among the most attractive in the state for new development. The reason? All the new office under construction and on the boards. The Kalthia site is spitting distance from the proposed 10-building office campus being developed down the street at Brokaw Road by Peery-Arrillaga.

“The thing is, there’s a lot going on in terms of additional demand generators, which developers are looking at,” Edgar said. “The average daily rate right now in San Jose, any midweek day, is just insane quite frankly. It’s hard to get a room. You’re paying over $100 to stay at Motel 6.”

Holey moley! Architecture’s trend for cutting holes in buildings

Lucky coins, a Tetris stack and a ferris wheel 500m up in the air … take a look at the buildings around the world with holes right through them.

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Lucky hole … the Guanzhou Circle symbolises jade discs, lucky numbers and an ancient dynastic insignia.
Lucky hole … the Guanzhou Circle symbolises jade discs, lucky numbers and an ancient dynastic insignia. Photograph: Joseph di Pasquale/AM Project

The lucky golden hole

As if a giant cable reel had rolled into town and come to rest on the banks of the Pearl River, the newly completed Guangzhou Circle towers 138m above southern China’s largest city like a great copper spool. Housing the world’s largest stock exchange for raw plastic material, it is the work of Italian architect Joseph di Pasquale, who says the form “will be immediately perceived as a native Chinese landmark.” Because it’s big and brash and dressed in a spangly Christmas jumper? Maybe, but also because it is “inspired by the strong iconic value of jade discs and numerological tradition of feng shui.” How so? Because not only does the 50m-wide hole punched through the centre make it look like an ancient Chinese coin, but when the building is reflected in the river it forms the lucky number eight. And an infinity symbol. And the insignia of ancient dynasty that reigned in this area 2,000 years ago.

The “iconic ring-shape” hole

Iconic ring-shape … the Sheraton Huzhou is inspired by the form of a humpback bridge.
Iconic ring-shape … the Sheraton Huzhou is inspired by the form of a humpback bridge. Photograph: MAD Architects

A new luxury spring resort on the edge of Taihu lake in China’s eastern Zhejiang province, the Sheraton Huzhou shows that it’s not only western architects that are capable of bringing clunking orientalist symbolism to Asian shores. Designed by Beijing-based MAD Architects, the 27-storey ovoid arch apparently draws on the ancient humpback bridges of the region, and has been souped-up into a space-age glass and steel loop. “Huzhou itself is a place famous for traditional ink paintings and splendid water views, and the arch bridge is one of the key elements of traditional architecture,” says the building’s architect, Ma Yansong. “By incorporating this iconic ring-shape, my goal was to design a contemporary resort that seamlessly integrates with the surrounding environment while evoking the beautiful arch bridge over Taihu Lake.”

The melty hole

Ice cube chic … Zaha Hadid's design for the Opus Office Tower in Dubai.
Ice cube chic … Zaha Hadid’s design for the Opus Office Tower in Dubai. Image: ZHA

Modelled on what might happen to an ice cube left out in Dubai’s midday sun, the Opus tower by Zaha Hadid looks like an office block mid-thaw, as if buckling under the heat of the financial meltdown. Planned for the centre of Dubai’s Business Bay, it is in fact two blocks, say the architects, conceived as “a single cube eroded by a free-form void, which appears to ‘hover’ above ground level.” A pixelated reflective facade makes it look solid by day, while by night, it “dematerialises, as light floods the void”. Launched at the British Museum in pre-crash euphoria, when the model was dramatically revealed from a block of ice, it has since been on hold – although may soon return, its innards effortlessly transformed from offices to a luxury hotel.

The sky-high piazza hole

Flipped plaza … MVRDV's Mirador apartment block in Madrid has a public
Flipped plaza … MVRDV’s Mirador apartment block in Madrid has a public “look out” square cut out of the building. Photograph: MVRDV

Designed as an entire city block flipped 90 degrees, the Mirador apartment tower, by Superdutch dreamers MVRDV, erupted on to Madrid’s skyline in 2005 as a vertical stack of neighbourhoods, each with its own colour combo and joined by an eye-searingly orange route of stairs and corridors. And what lies at the centre of every good neighbourhood, but a big open space? So the architects duly flipped that too, creating a “look-out” 40m above ground, an outdoor piazza and a community garden for “monumentalising life and space”. It’s just a shame most parents find the 12-storey drop a bit of an off-putting place to let their toddlers loose.

The broody pixelated hole

Fun with shipping containers … OMA's proposal for Hamburg was formed of a stack of Tetris-like blocks.
Fun with shipping containers … OMA’s proposal for Hamburg was formed of a stack of Tetris-like blocks. Image: OMA

It looks like someone had a wild time with the shipping container crane in Hamburg docks. Either that, or OMA is in town. Conceived as a great pile of Tetris blocks stacked in a crooked loop, the Hamburg Science Centrewas planned for the entrance to Magdeburger harbour in 2004, and would have included an aquarium, science theatre and exhibition spaces. Ever the pragmatists, OMA justified the form on purely practical grounds, explaining that “the function of the 10 blocks that make up the building allow for large-scale programmatic changes on a daily basis.” And, by pure subliminal coincidence, it bore a striking resemblance to a sculpture outside OMA’s Rotterdam HQ.

The portal-to-another-dimension hole

Gaping portal … La Grande Arche de la Défense is twisted off axis to join up with Paris's other monuments.
Gaping portal … La Grande Arche de la Défense is twisted off axis to join up with Paris’s other monuments. Photograph: Frans Lemmens/Getty Images

More of a hole with a building around it than a building with a hole in it, La Grande Arche de la Défense terminates the end of Paris’s great Axe historique with a monumental void, big enough to hold Notre Dame cathedral. Designed by Danish architect Johann Otto von Spreckelsen in the 1980s, it was the winning scheme in a competition for a “modern Arc de Triomphe”, conceived as a “monument to humanity” rather than military victory. As if trying to suck the entire French capital in through its gaping mouth, it stands like a sinister portal to another dimension, subtly tilted off axis to connect with the Eiffel and Montparnasse Towers and the Louvre, forming a grand masonic geometry of which Baron Haussman would be proud.

The spiralling worm-hole

Swiss cheese … BIG's design for a technology centre in Taiwan features a spiraling public route cut through the building.
Swiss cheese … BIG’s design for a technology centre in Taiwan features a spiraling public route cut through the building. Image: BIG

A 57m cube of Swiss cheese would be a fine thing to behold, and that seems to be what Bjarke Ingels and his merry band at BIG are aiming for with their proposal for a Technology, Entertainment & Knowledge Centre, or TEK, in Taiwan. A great shed of shops, showrooms, offices, conference rooms, exhibition spaces, restaurants and galleries, it is livened up by having a spiralling wormhole drilled all the way through the building, designed to suck the public in through its irresistible vortex. The entire block will be clad with step-spaced concrete fins that recede inwards, allowing people to climb into the facade and walk all the way up to the roof.

The sinister Eye-of-Sauron hole

Mordor awaits … Shanghai's World Financial Centre has a hole cut out to reduce wind loading.
Mordor awaits … Shanghai’s World Financial Centre has a hole cut out to reduce wind loading. Photograph: KPF

When the architects of Shanghai’s 500m-tall World Financial Centrebegan to worry about wind loading at the top of their twisting tower, they did what any sensible person would do and just cut a big hole out of the top to let the wind go through it. The hole was originally going to be round, with a plan to install a ferris wheel inside it, but costs – and the potential terror factor of spinning around 500m in the air – meant the plan was binned. Still, despite looking like it might shoot out an Eye of Sauron deathray any second, it will make a nifty bottle-opener when the giants arrive.

Oh and another pixelated hole

Collaborative cloud … Ole Scheeren's design for the Axel Springer HQ is designed to
Collaborative cloud … Ole Scheeren’s design for the Axel Springer HQ is designed to “reunite” East and West Berlin. Image: Buro Ole Scheeren

How to reunite East and West Berlin with a big new media headquarters? A massive pixelated hole is the answer proposed by Buro Ole Scheeren– because, in the hands of the ex-OMA wunderkind, a gap can also be a bridge. “At the core of the new building floats an urban-scale void, establishing a visual axis between former East and West and conceptually reuniting the two sides,” says the architect. “The building emerges as a symbol of transparency and historic awareness.” But this gaping chasm, punched out of the heart of the building, is not any old hole: it’s a “’collaborative cloud’, reuniting a multiplicity of enterprises in a space of shared digital identity.’” Because of course, where buildings with holes in are concerned, “identity is defined not as an object, but as space – a physical void is carved to create flexible permeable places for imagination, collaboration, and interaction.”

California More Than Doubles Solar Energy In 2013

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california solar energy doubled

California installed more megawatts of solar energy in 2013 than it did in the last 30 years combined, the California Solar Energy Industries Association reported.

“It took California over 30 years to build 1,000 MW of rooftop solar, hitting that landmark in early 2013. Today, California is closing out the year with more than 2,000 MW of rooftop solar systems installed statewide,” CALSEIA executive director Bernadette Del Chiaro said.

The number is an estimate based on the California Public Utilities Commission’s latest reported 1,917 MW of rooftop solar with added figures.

“Those numbers exclude basically all of Pacific Gas and Electric’s 2013 installations, by far the largest market in the state, as well as a significant number of installations in other utility territories,” Del Chiaro said. “California won’t have a clear picture of 2013 — or 2014 for that matter — until all of the utilities’ data on rooftop solar installations is released to the public — something resisted by the utilities and still pending at the CPUC.”

California, the number one state for solar energy, powers the equivalent of 626,000 homes, and the energy trend has been growing across the nation. About 200,000 U.S. homes and businesses installed rooftop solar in the last 2 years. That’s about 3 gigawatts of power and enough to supersede up to five average coal plants.

Once a seemingly far-off alternative, solar has risen to prominence and has beenembraced by major retailers like IKEA, Home Depot and even Wal-Mart.

The transition is not just for the wealthy, either. Data from the Center for American Progress found that the move to solar is largely a middle-class phenomenon.

But solar’s disruption of the utilities business model has not been entirely welcomed. Following a months-long battle between solar users and utilities companies in the fall, California lawmakers moved to preserve net metering until 2017, a practice allowing customers to be compensated for excess energy produced by their solar panels. Net metering has dug into the profits of utilities companies, which say non-solar users are carrying the weight of paying for the grid.

But in light of a record year, solar advocates remain hopeful for their industry’s future.

“No matter how you slice and dice the numbers, 2013 was a good year for solar power and another example of California’s leading the country toward a clean energy future,” Del Chiaro said.


Bay Meadows spurs big demand

Bay Meadows is proceeding with its second phase. When complete, the project will bring 1,200 housing units and 90,000 square feet of retail space.

Courtesy of Wilson Meany

Bay Meadows is proceeding with its second phase. When complete, the project will bring 1,200 housing units and 90,000 square feet of retail space.

Even though the plan to redevelop the historic Bay Meadows racetrack into a mixed-use neighborhood has been in the works for decades, its basic bullet points still pack a punch: 83 blank-slate acres; adjacent to one the region’s blue chip mass transit systems, Caltrain; and smack-dab between the job powerhouses of San Francisco and Silicon Valley. When complete, the neighborhood will be one of California’s largest transit-oriented developments.

All of this made it even more important that developers got the San Mateo project’s second phase — the one with the bulk of residential and office development — right.

The market’s response is one vote of confidence. Demand for the project’s first units has been so strong, builders are using a lottery system to satisfy demand. Activity on the shovel-ready office component also has been brisk.

“It’s a vision we believed in strongly, and if you talk to the homebuyers out there, people are really excited to be part of the community,” said Janice Thacher, a partner with developerWilson Meany. “It’s more than just buying a house. They really believe in what we’re doing.”

What they’re doing didn’t happen overnight, and comes with plenty of twists and turns.

An epic, seven-year entitlement process culminated in the 2008 approval to tear down the longtime Bay Meadows horse racetrack and build roughly 1,200 housing units, 750,000 square feet of office and 90,000 square feet of retail there.

But that coincided with the economic catastrophe, putting plans for speedy vertical construction on hold. Wilson Meany and its partner, Stockbridge Capital, held on. Infrastructure work started in 2010. As it happened, that put the project in an enviable position when the economy started on its recovery.

“At the depth of (the) recession, we were building those so we’d have finished land pads when the market was back,” Thacher said. “It was a strategic business decision.”

The city of San Mateo also stands to gain: On tap are utility enhancements and additional tax revenues.

For instance, city estimates peg annual property taxes at full build-out in 2025 at about $1.5 million – up from $167,000 during the racetrack’s final year of operation. Additional tax revenue from other sources related to Bay Meadows will double that haul.

“We think the project has spurred a lot of interest to live in San Mateo, as demonstrated by the housing demand for the project,” said city economic development manager Marcus Clarke.

Bay Meadows came close to landing its first office tenant — Shutterfly — earlier this year, but that tech user ended up staying put in Redwood City.

Experts say it’s only a matter of time before a user looking for a big chunk of space signs on, allowing construction to commence.

“We’ll built the office buildings when we get the tenants,” Thacher said. “It’s a matter of when the right tenant comes along.”

Bay Meadows already features a mix of uses: The Nueva School is under construction on an elite high school campus. Two city parks are built. And Wilson Meany has started work on the first apartment project, called Field House.

So far, TRI Pointe Homes and Shea Homes have bought off housing development sites.

Wilson Meany is maintaining a cautious pace for future land sales so as not to flood the market.

“We believe in the concept of a mixed-use community,” Thacher said. “People feel like this is their project.”

Developer proposes new office zone in Mountain View

The outlined area shows where Calvano Development is proposing a new redevelopment zone in Mountain View

city of Mountain View

The outlined area shows where Calvano Development is proposing a new redevelopment zone in Mountain View

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Calvano Development has big plans for Mountain View — if the developer can get the city to agree.

The San Francisco-based firm proposes a redevelopment zone, called a “precise plan,” for a largely light industrial area just south of Highway 101 at North Shoreline Boulevard. That would allow properties in the area, just south of Google’s sprawling headquarters, to be rebuilt at higher densities.

Calvano Development, headed by longtime real estate investor Mark Calvano, currently “owns or controls” six acres of land in the proposed Terra Bella Precise Plan area, according to his application with the city. (See map for an overview of the proposed plan area). A new precise plan there would allow Calvano to build a modern mid-rise office project of up to 260,000 square feet, according to city estimates.

Traffic is always a concern in Mountain View, but Calvano told me his project makes sense from a traffic perspective because it would keep drivers off of neighborhood streets and include transit infrastructure for shuttles and bikes.

“We plan on adding a dedicated bike and bus transit station. Our project is transit-oriented,” Calvano told me. “Part of the community benefits associated with this is we’d be widening Shoreline and unclogging the bottleneck between South and North Bayshore.”

The Mountain View City Council will consider allocating staff time for Calvano’s request at a meeting later this month.

Mountain View’s North Bayshore, home to the Googleplex, is bursting at the seams, making property nearby attractive to developers. The North Bayshore is currently undergoing a land-use review that is expected to allow the largely low-density office and R&D buildings to be redeveloped with larger footprints.