WeWork takes last vacancy in San Mateo development near Caltrain

The lease marks the co-working company’s first foray into San Mateo and the mid-Peninsula and comes on the heels of plans to open a second location in downtown San Jose.

WeWork is filling in the gaps of its footprint between San Francisco and San Jose, this week announcing it will take over the last of the remaining vacancy at a San Mateo office development recently completed by developer Hines.

The coworking company plans to move into about 96,000 square feet on four floors at 400 Concar Drive, one of two buildings in Hines’ 400/450 Concar creative office complex steps away from the Hayward Park Caltrain Station.

The 305,000-square-foot development has stood 70 percent leased since it was completed in early 2017. The lone tenant in the complex has been software maker Medallia, which in 2016 signed a lease for all 210-115-square-feet at 450 Concar. Now, the veritable co-working giant WeWork has staked a claim to an entire building in the complex, where it will offer 1,650 desks when it opens its doors in December.

“WeWork members all over the Bay Area have been asking for a location in San Mateo,” Elton Kwok, general manager at WeWork, said in a statement to the Business Journal on Wednesday. “We’re thrilled to finally be able to service theMid-Peninsula area with our very first San Mateo location, and to meet the demand in this booming community.”

The news of the lease comes weeks after New York-based WeWork also announced it would open a second location in downtown San Jose, meant to meet overflowing demand from its existing downtown location at 75 E. Santa Clara St. Amazon.com’s secretive Lab126 division leases some of the co-working company’s 75,000 square feet in Santa Clara Street building, and entrepreneurs and small companies have maxed out the rest of the space in the building.

 

 

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San Francisco delays decision on retail-to-office conversions

The owners of 220 Post St. spent $75 million to buy the Union Square property in 2016. The goal: to attract a luxury tenant to the five-story building. Too bad few of those exist.

City Center Realty Partners shelled out nearly $75 million for Union Square’s 220 Post St., the former Saks Fifth Avenue Men’s Store, with the goal of attracting a luxury tenant to the five-story space. That goal has been more difficult than expected.

Nearly as difficult for the owners has been convincing city planners that retailers are no longer interested in space above the ground floor.

Seven proposals to convert upper-level retail into office space have been filed with the San Francisco Planning Department, including 220 Post’s. Most of those properties are in Union Square. Earlier this year, the city decided to freeze those applications for 18 months. That meant that 220 Post, which was supposed to be heard by the planning commission this month, is waiting indefinitely for a decision pending the creation of permanent rules.

What’s at stake is the future of the city’s retail heart. City officials are hesitant to give up the sales tax revenue and jobs that retail generates, but landlords say empty space accomplishes nothing. Instead, landlords argue that adding more office space would not only help them fill buildings, but alleviate the extreme shortage of office space that is sending small businesses and nonprofits to Oakland.

San Francisco’s Board of Supervisors unanimously approved a resolution by District 3 Supervisor Aaron Peskin in May that imposed temporary rules banning conversions for an 18-month period. Planning Department spokesperson Gina Simi said the department has postponed hearings for properties located within the city’s downtown retail area.

The controls don’t apply to properties located south of Market Street or for applications that have already been approved, such as the former Macy’s Men’s store.

 

 

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Big downtown San Jose office, retail Museum Place complex pushes ahead

A new vision has emerged for a crucial downtown San Jose development known as Museum Place that would add offices and retail next to The Tech Museum of Innovation, according to city documents being reviewed this week.

Some details about the new Museum Place approach were contained in San Jose city staff reports regarding an agreement to bring aboard a group led by realty entrepreneur Gary Dillabough. The Dillabough group will provide fresh capital and investments to get the project moving forward. This news organization had reported previously about Dillabough’s planned involvement in the Museum Place development on Park Avenue.

“The developer has a formidable vision for San Jose’s future,” according to a memo prepared by Kim Walesh, San Jose’s economic development director. “Mr. Dillabough has indicated a strong desire to make the Museum Place project a standout location that the City of San Jose can look to with pride.”

 

 

Read more on The Mercury News

 

 

Amid office space crunch, Google grows in San Francisco

As its fellow tech giants jockey for space in downtown San Francisco, Google has signed another office lease in the southern Financial District, The Chronicle has learned.

The Mountain View company is taking an additional 57,299 square feet at Hills Plaza at 2 Harrison St., according to real estate data company CoStar. That brings the total in the complex, where Google has had an office since 2007, to more than 400,000 square feet.

Google did not respond to a request for comment. Architecture firm Gensler occupied the space before recently moving to 45 Fremont St. A Morgan Stanley investment fund owns Hills Plaza.

Google is also in talks to sublease space from Salesforce, two sources said. The potential deal could be up to 228,000 square feet at Rincon Center at 101 Spear St. No contract has been signed.

Salesforce is one of the few large tech tenants vacating space as it consolidates workers into Salesforce Tower, which opened in January, and adjacent buildings. Salesforce, the city’s largest tech employer with 7,500 employees, is also subleasing space at the Landmark building at One Market Plaza.

Google’s expansion follows office leases by Facebook, Dropbox and other fast-growing tech companies, which have broken records for size and made San Francisco one of the priciest and tightest office markets in the country.

The office vacancy rate in San Francisco’s southern Financial District, which includes the area around the Transbay Transit Center, is 4.6 percent, down from 6 percent in the first quarter, according to CoStar.

“The new development has pretty much been snatched up,” said Jesse Gundersheim, CoStar’s San Francisco market economist. “Opportunity like sublease space from Salesforce is pretty rare.”

Read more on The San Francisco Chronicle

 

 

Cupertino’s ‘Apple employee tax’ put off for one year

Cupertino elected officials have scrapped a controversial plan — for now — to impose an employee tax on Apple and other businesses in the city, saying they don’t want to move forward in haste and will instead ask voters to weigh in during a special election in 2019.

Though the city council intended only to discuss the plan Tuesday night, after impassioned public comment during which several people spoke out against the proposal as either too vague or unfair to businesses, the council voted 3-1 to put off placing a measure on the November 2018 ballot. Vice Mayor Rod Sinks recused himself because his wife is an Apple employee.

Councilman Barry Chang dissented, saying that waiting even another year would prolong the city’s transportation problems. While the council had not yet come up with specific plans to use revenue generated by the so-called head tax, it had broadly earmarked transit and housing improvements.

“I think not only here, the big corporations in the entire nation, the corporations need to take up their fair share to help solve the problems we are facing now,” Chang said. “So that’s why this issue needs to be done and needs to be done now instead of waiting.”

Chang said he proposed a more ambitious plan two years ago — which would have charged businesses $1,000 per employee — but that that proposal was shot down by other council members.

“Two years ago, no council member supported it, so nothing happened,” he said. “Two years passed. If we don’t do anything this time now, another two years will pass, nothing will happen, I guarantee you.”

While Councilman Steven Scharf appeared to be in agreement with Chang about the urgency of addressing the region’s transportation problems, he explained, “We can’t do this justice in two weeks.”

The council would have had to agree by July 3 on the details of the proposed tax in order to get it on the November ballot. Instead, the council now plans to discuss on July 3 whether it should propose a general or special tax on businesses to put before voters in 2019.

 

 

Read more on The Mercury News

 

 

Oakland’s growing pains could stifle future development

Dozens of cranes dot Oakland’s skyline and thousands of new housing units are in the works, making the current cycle one of the most robust in Oakland’s history.

As more people and businesses turn toward Oakland as a cheaper area to live and work, Oakland has struggled to keep up with both office and housing demand. Downtown Oakland is one of the tightest office markets in the country and multifamily rents have risen 51% since the start of the cycle.

Developers and designers are looking for ways to build more efficiently to keep rents down, but growing community activism, overworked city planning staff and tightening financing could stall future growth in Oakland.

Panelists discussed these topics as well as the impact of modular units and designing housing to meet residents’ changing needs during Bisnow’s Oakland Construction and Development Update event Thursday.

With 900 housing units delivering this year and 2,400 next year, the city is undergoing rapid change.

“Instead of the city [staff] focusing on department stores and auto dealerships, they’re making Oakland a very vibrant place to live,” Junction Properties owner Charles Long said during the event.

The increased development has spurred an anti-displacement movement and a backlash over a lack of affordable housing, which could shut down the future fulfillment of housing that Oakland has in its pipeline, he said.

Developers need to be more cognizant of working with the city and other stakeholders to better address the anti-displacement backlash, he said.

 

Read more on Bisnow

 

 

Why clothing stores are still opening in San Francisco

A majority of shuttered mall stores over the past few years have been clothing shops, but new Bay Area leases show a sector not in free fall quite yet.

Hip women’s clothier ModCloth, streetwear brand Supreme, athleisure label outdoor Voice and luxury basics purveyor Everlane are among a new class of specialized labels defying recent trends.

Shifting consumer demands, years of oversupply and the rise of ecommerce combined to trigger more than 7,050 tore closings last year, according to Coresight Research. Already, the New York-based retail analyst has tracked nearly 3,900 store closings compared to about 1,800 openings this year.

Yet, while most clothing brands are racing to weed out underperforming stores, others are ramping up.

 

Read more on San Francisco Business Times

 

 

Exclusive: Nordstrom to close Stonestown location, leaving S.F. mall anchor-less

Nordstrom is preparing to close one of its San Francisco locations amid monumental shifts in the retail market that have upended the traditional department store model. 

The Seattle-based retailer is set to vacate its 174,000-square-foot location at Stonestown Galleria, according to Retail West Principal Matthew Holmes and another source with knowledge of the decision, who spoke on the condition of anonymity because of pending lease negotiations at the property.

Holmes said the plan is for Nordstrom to close the location, which it has leased for the past three decades, leaving GGP another opportunity to backfill it with smaller tenants.

“It was never the grand Nordstrom like it is downtown,” Holmes said of the retailer’s 350,000-square-foot Market Street location. “They do so much more business in downtown, because it’s a showcase store for them. They’ve realized they don’t need two stores in San Francisco.

A Nordstrom spokeswoman said in an email that the retailer did not have any store closures to announce. Stonestown Mall operator General Growth Properties’ Darren Iverson, a senior general manager, declined to comment.

 

 

Read more on San Francisco Business Times

 

 

Big north San Jose live-work development of offices, shops, homes is proposed

A big mixed-use development is being eyed in north San Jose, an ambitious project that developers tout as a live-work complex of offices, homes and retail which could help ease the region’s traffic woes.

Sand Hill Property, the developer and owner of the project site, has requested a preliminary review of a proposal for 505,000 square feet of offices, 800 residential units and 13,000 square feet of retail on 9.3 acres at the southwest corner of North First Street and Orchard Parkway in San Jose.

“We are looking at a jobs-housing balance with this project,” said Steve Lynch, director of planning and entitlement with Palo Alto-based Sand Hill Property. “This is a significant site right on the light rail line.”

The proposal is in the very preliminary stages and is being floated as a way for Sand Hill and San Jose city officials to consider what sort of project would work at that location. The early stage review is occurring amid a wide-ranging effort by San Jose to establish guidelines for future development in the area.

North First Street is a heavily traveled route with a light rail line and a diverse array of tech companies.

“What Sand Hill is talking about is a mix of offices and residential, with some retail along North First Street,” said Patrick Kelly, a supervising planner with the city of San Jose. “It would be a transit employment center.”

Although considerable review of the proposal is still needed even in this preliminary stage, it’s possible this type of development conforms with the sorts of projects San Jose officials envision in the area, Kelly said.

 

 

Read more on The Mercury News

 

 

San Jose becomes a ‘city of churn’ as high-earners move in and residents look to lower-cost markets

San Jose is simultaneously one of the nation’s most sought cities by job seekers and home to the most job holders who want to leave, a dichotomy that could have profound impacts on Silicon Valley’s business future and social fabric.

That dichotomy stems from the way technology has become the foundation of the U.S. economy and Silicon Valley the capital of that industry, says the author of a recently published study by the online jobs and recruiting site Glassdoor. And it could have profound impacts on the Valley’s business future and social fabric.

“San Jose is a city of churn,” said Andrew Chamberlain, Glassdoor’s chief economist. “It’s the most dynamic of any city of the big metros we looked at” in the company’s 25-page report entitled “Metro Movers: Where are Americans moving for jobs and is it worth it?”

San Jose ranks third on the list of places — after San Francisco and New York — where U.S. job seekers in Glassdoor’s database of 668,000 job applications are applying, the report says.

But San Jose ranks behind only Providence, Rhode Island — which turns out talented college graduates much faster than it creates jobs — as home to the largest percentage (47.6 percent) of applicants seeking work elsewhere.

 

 

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