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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Developer proposes nearly 1,000 units near Richmond BART station

A project that began over 15 years ago could be on the road to fruition.

Two developers are battling to bring hundreds of homes to Richmond.

In coming months, the City Council will choose between San Francisco’s oWow and SAA/EIR as the developer for a 5.8-acre parcel across the street from the Richmond BART station. The project is the second phase of the Richmond Transit Village or Metro Walk, a nearly 17-acre vision of housing and retail that has been in the works for over 15 years.

“This is the dram site,” said Richmond Mayor Tom Butt. “It fulfills a lot of the goals and objectives of sustainable policies from the city level to the state level.”

 

 

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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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Mall tenants had an out when giants like Macy’s left. Now landlords bar the door

The only thing more dangerous for America’s malls than a string of apparel-chain bankruptcies is when the trouble hits department stores.

Retailers like J.C. Penney Co. and Macy’s Inc. are considered “anchors” that keep malls humming and foot traffic flowing. They’re so important to the ecosystem that smaller tenants may refuse to set up shop without a promise that the anchors will stick around: Many leases include so-called co-tenancy clauses that let them cut and run or pay less if those key tenants depart.

Now, many landlords are pushing to eliminate or narrow the escape clauses in the wake of mass department-store closings. That means less flexibility for the remaining tenants.

 

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Oakland housing developers turn to new ways of building to reduce costs

Rising construction costs are pushing Oakland developers to rethink traditional construction methods to make sure much-needed housing continues to get built.

“It is an issue right now that we are all facing increased construction costs,” UrbanCore Development CEO Michael Johnson said during Bisnow’s recent Oakland Construction & Development Update event. “What will happen is some projects will not move forward as a result of that.”

Double-digit increases in the cost of new construction projects are not driven solely by increases in material costs, but also by higher profit margins and greater labor costs as contractors struggle to find a qualified workforce, he said.

Several developers have turned toward using modular units, designing more efficient floor plans and creating new building technologies.

OWow is developing a type of unit that can adjust the number of bedrooms with a push of a button. Mechanized, acoustically rated walls would raise and lower to create up to four bedrooms, oWow founder Danny Haber said. His company has been building macro-units in Oakland that use efficient design to cut down on construction costs.

Other developers have been pursuing modular construction. UrbanCore Development decided to go modular on its Coliseum Connections project about five years ago, Johnson said. Conventional construction was more expensive, and an analysis estimated about a 10% cost savings on a $40M construction budget, he said.

The modular units are expected to be fully in place by Friday and the 110-unit mixed-income housing project is expected to be completed in January.

 

Read more on Bisnow

 

 

 

The era of big leases is over as San Francisco awaits next crop of towers

The era of massive office leases — including the likes of Salesforce, Dropbox and Facebook — is coming to a halt now that most of San Francisco’s pipeline of new office buildings is spoken for. Robust demand for office space has filled up buildings months or years ahead of completion, but development is drying up.

In May, another company declared it had signed the “biggest office lease ever” in San Francisco. The trend of going bigger and bigger started with Salesforce taking 714,000 square feet in Salesforce Tower at 415 Mission St. in 2014 followed by Dropbox taking 736,000 square feet in 2017 in the Exchange in Mission Bay. Then Facebook topped both with a deal to gobble up the entire, 750,000-square-foot Park Tower.

But, the era of massive office leases is coming to a halt — at least for the next few years — now that most of San Francisco’s pipeline of new office buildings is spoken for. Robust demand for office space has filled up buildings months or years ahead of completion, but development is drying up.

Some industry insiders say more building would be going on if it weren’t for Proposition M, a 1986 voter-approved law that limits how much office space can be approved in a given year. Still, others say that factors such as the lengthy city approval process and availability of development sites has also put the brakes on office development.

 

 

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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.”

 

 

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Exclusive: Huge cannabis business campus headed to Oakland

Will this business park near Oakland’s Oracle Arena be California’s next big hub of cannabis innovation?

A sleepy Oakland business park a stone’s throw from Oracle Arena may be transformed into the Bay Area’s next big cannabis business campus.

Mesh Ventures, a venture capital firm focused on investing in cannabis startups, hopes to turn an office complex on Edgewater Drive into a center of the region’s cannabis manufacturing, marketing and production.

“It’s going to look very much like a tech campus,” said Mesh Ventures Partner Parker Berling.

The complex is master leased to Mesh Ventures Partner Martin Kaufman who is making around $20 million in infrastructure and tenant improvements.

California Capital and Investment Group bought the 207,700-square-foot office property in 2013 for $7.8 million, but has struggled to fill it. Kaufman said the Mesh Ventures team saw the opportunity of creating a campus in an area with access to top-tier scientific and technological talent.

“Sure, we could have done this in Fresno or Humboldt and t would have been cheaper but the level of people that we have here are unmatched anywhere else,” Kaufman said. “We have academics, scientists, really trained qualified people who are located here and are looking to enter the industry as it turns from a black market to a white market.”

Kaufman is the co-founder of dispensary Blum Oakland, which was sold in 2016 to Irvine-based cannabis agriculture company Terra Tech.

The center is being built out with the particular security and regulatory concerns of the cannabis industry in mind. Berline said roughly three-fourths of the tenants will be cannabis companies, mainly from the firm’s investment portfolio. Tenants are starting to move into the campus – which already has a functioning grow operation – and the renovations are expected to be completed by the end of the year. Leasing rates are rates around $2 per square foot.

 

 

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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

 

 

Cupertino to get serious tonight about new business tax that could generate millions from Apple

Cupertino’s City Council tonight will consider what kind of restructured business tax it might place on November’s ballot for Apple Inc.’s headquarters city.

The move comes as nearby Mountain View looks like it’s headed toward referendum to place a “head tax” on Alphabet’s Google and other large employers in its boundaries. Public polling in Cupertino has indicated heavy support for something similar there. Such a tax would mostly hit Apple, by far Cupertino’s largest employer.

Just a week ago, the City Council in Seattle — headquarters to Amazon.com — repealed a controversial head tax that it had put on the books just a few weeks earlier, after opposition from Amazon and others in the business community.

No such public threats have been made in Mountain View, but the Cupertino Chamber of Commerce posted a no jobs tax message on Twitter on Friday and sent out a press release quoting its president, Andrew Walters, calling for no such measure in November’s election.

The impetus for this budding movement in prosperous, tech-dominated cities is the belief that the traffic congestion and housing shortages in those places is due to tech growth, Cupertino Vice Mayor Rod Sinks recently told the Business Journal.

But although no one from Cupertino’s chamber would comment on the record, the organization’s opposition stems from the fact that the tax revenue the city hopes to gain is not restricted to specific projects that would address transportation issues that the chamber sees as most critical, the Business Journal was told.

Tonight’s meeting will be to decide what kind of tax — head tax (based on the number of a company’s employees), payroll tax or an expansion of Cupertino’s existing square-footage tax — might be proposed.

 

 

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