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Downtown San Jose, Oakland opportunity zones attract investors, spur development plans amid Google effect

Developers eye projects in downtown San Jose and parts of Oakland, bolstered by tax incentives keyed to opportunity zone.

Developers and a new crop of investors are eyeing projects in downtown San Jose and parts of Oakland, bolstered by opportunity zones enabled by President Donald Trump’s tax-cut initiative.

Potentially the first project in a local opportunity zone would be development of a brand-new office and retail complex on South First Street in downtown San Jose at the site of the old Lido night club, said Erik Hayden, president of Urban Catalyst, a company that as formed an opportunity fund that would provide cash for selected developments in designated areas.

“These opportunity zones are ways to create greater economic activity in lower-income areas,” Hayden said. “They were originally presented to the Obama Administration but didn’t get a lot of traction. Then they became part of President Trump’s tax cuts and jobs act. San Jose Mayor Sam Liccardo very successfully lobbied Gov. Jerry Brown to get downtown San Jose included.”

Investors who plunk down cash for an opportunity fund can “defer or eliminate federal taxes on capital gains,” according to information on the state’s Department of Finance site.

The Lido night club site, currently a two-story building at 26 and 30 S. First St., is now owned by a partnership led by Gary Dillabough, who has emerged as one of downtown San Jose’s most active realty investors and developers. Among the properties Dillabough-headed groups have bought: the nearby Bank of Italy building, a historic office tower at the corner of South First and East Santa Clara streets.

 

 

 

Read more on The Mercury News

 

 

 

Fruitvale: Transit and Community

More than just a BART station.

metro or subway station may seem one-dimensional, a jumping-off point from one place to another. But some stations are destinations, drawing in visitors on the basis of their own merits. They may be architectural gems, like Grand Central Terminal in New York City or shopping meccas like Shinjuku in Tokyo. A few go beyond attaining this status and have become communities unto themselves.

Fruitvale Station is one such place. It’s a thriving transportation hub that also possesses the elements of a long-standing community.

I commute to the city from Fruitvale Station every day, witnessing this tangible sense of community up close. My daily journey here began in January 2009, just a few weeks after Oscar Grant was shot and killed by a BART police officer in the early hours of New Year’s Day. The tenth anniversary of the tragedy happened on January 1 of this year, marking a milestone that has largely defined the identity of the station.

Fruitvale ingests passengers not only from its namesake neighborhood but also from other areas of Oakland and adjacent towns — as evidenced by the busy AC Transit buses and the jam-packed parking. The ongoing stream of humanity begins in the early morning with commuters and school kids and continues until the last train departs for Warm Springs at 1:00 a.m.

The first clue that more is afoot than simply moving people is the Fruitvale Village sign that stands next to the station entrance. Fruitvale Village was developed in the early 2000s by the Unity Council, a nonprofit Oakland group, and became an early model of transit-oriented development.

The development is home to housing and multiple community organizations, including institutions that are hallmarks of any civic community: a health clinic, a public library branch and a school. It also features shops and restaurants, most of them locally owned, like neighborhood Mexican food fixture Obelisco (formerly the Taco Grill). In 2017, Reem’s, an Arab bakery, opened to much acclaim. Owner Reem Assil has been recognized by the James Beard Foundation and major food publications. Equally notable, Assil has made social justice a core value of her business by hiring local workers and providing a living wage.

Read more at The Bold Italic

New hotel proposal beefs up Mid-Market’s development pipeline

The new proposal will join a party of other sites looking to take advantage of the area’s powerful corporate presence.

Another hotel team has thrown their hat into Mid-Market’s development ring with a plan to cater to the neighborhood’s rising corporate and extended-stay demand.

San Francisco-based Stanton Architecture has submitted a preliminary project assessment application for a $40 million, 16-story limited-service hotel slated to deliver 162 rooms to the corner of Mission and Ninth Streets. The proposal would include the demolition of two existing buildings: a vacant commercial property at 1310 Mission St. and a mixed residential-tourist hotel at 80 Ninth St.

With Twitter, Uber, Dolby Laboratories, and Square headquarters just a block or two away, principal Michael Stanton said the project’s location and oversized rooms are a perfect fit.

“With several corporations headquartered there, it’s seen as a business hotel in the week and a family and visitor hotel on the weekend,” he said. “It will be a terrific plus for the area.”

 

Read more at San Francisco Business Times

 

 

Apartment rents expected to rise faster than inflation in 2019

Rents are likely to rise the most for class-B apartments, and the least for class-C and -D units.
Rents are likely to rise faster for older, class-B apartments in 2019 than for any other class of apartment property.“We expect Class-B to continue to have the strongest average rent growth, as it has through recent history,” says Andrew Rybczynski, senior consultant at research firm the CoStar Group.

“While occupancy is sky high in class-C product, rent growth in that sector is beginning to slow a little,” says Ron Willett, chief economist for MPF Research, a RealPage company.

 

 

 

Read more at National Real Estate Investor

 

 

 

 

Big downtown San Jose housing towers, retail, restaurant complex pushes ahead

A big development that will bring downtown San Jose two striking residential towers containing more than 600 dwellings, along with spaces for a restaurant, coffee shop and retailers, is slated to push ahead with construction this month, according to a realty executive.

Miro is a housing high-rise that would dramatically reshape San Jose’s skyline and become its tallest towers.

The project has gotten through a three-month delay after workers hit an aquifer and water poured into the construction site, creating a large pond that had to be controlled and pumped out.

Now that project developer Bayview Development Group has vanquished the water woes, contractors are expected to begin pouring the surface concrete slab within the next few weeks, a necessary prelude to construction of the vertical components.

 

The development would include two towers that each will rise 28 stories and will also offer 18,000 square feet of commercial space, including enough room for a sit-down restaurant, a coffee shop and other retailers.

 

The project fronts on East Santa Clara Street as well as the corners of North Fourth and North Fifth streets. It’s right across the street from San Jose City Hall.

 

 

Read more on East Bay Times

 

 

New Richmond ferry draws developers and businesses to long-struggling city

A new ferry terminal has spurred development and optimism in Richmond.

Keba Konte hopes a new ferry in Richmond will bring his business scores of new customers.

Konte’s Red Bay Coffee, which currently operates three locations in Oakland, will cater to Richmond’s first ferry commuters in over two decades when the city opens its new $21 million ferry terminal on Jan. 10. He plans to park his coffee truck near the waterfront Craneway Pavilion.

“Richmond interests us because it shares the same spirit as the city of Oakland, a working-class city that has often been viewed as the underdog. It’s a developing city and we strive to be a part of that story,” Konte said.

The ferry terminal has spurred other businesses and developers to want to be a part of Richmond’s story as well. They’re attracted to the idea of a high-density waterfront community, a 35-minute commute to San Francisco and increased foot traffic to businesses and restaurants along the waterfront and downtown. Already, there are over 2,000 housing units slated to be built within five miles of the terminal, said Richmond Mayor Tom Butt.

“The waterfront is our biggest opportunity to promote Richmond,” Butt said. “The ferry service is going to accelerate some of these projects in the pipeline because a l lot of people are really anticipating that ferry. A lot of people commute to San Francisco from Richmond and areas around it. It’s going to be popular.

 

 

 

Read more on San Francisco Business Times

 

Lucca Ravioli Co.’s parking lot sold — five-story tower may rise

Lucca Ravioli Company’s parking lot at 22nd and Valencia Street, which went on the market in August, quietly sold in October for around $3 million — and now plans are in the works to develop it into a five-story residential building.

The parking lot’s new owner — M3 LLC — filed a preliminary application with the city in mid-December. The plans for 1120 Valencia Street envision a five-story, 18-unit building with around 1,171 square feet of ground-floor retail and a rooftop deck. Two of the units will be below-market-rate, and the building will include 18 bicycle spaces but no car parking.

The project’s estimated cost is $4.8 million.

The owner of M3 LLC could not be reached for comment, as his or her identity could not be confirmed. Planning documents list the owner’s address as the Garaventa Accountancy Corporation on Church Street.

 

 

Read more on Mission Local 

 

 

The shopping mall’s savior is starting to eat itself

Restaurants, one of the supposed saviors of regional malls, have been hurt in the past 12 months by too much expansion and a slowdown in consumer spending.

Stephen Wall’s restaurant chain Pho is the kind of tenant that mall landlords would love to attract. The Vietnamese menu is right on trend, the business is expanding and, even better, it has a track record of success in shopping centers.

Yet he thinks that even restaurants like his won’t be the savior of malls suffering from the rise of internet retailing and mobile phone addiction.

As competition from the likes of Amazon.com Inc. and Asos Plc intensified, British mall owners looked to food as a way to stay relevant. People would come to the restaurants to eat, buy some clothes in the shops while there, and the extra spending would allow the landlord to boost the rents. A simple, virtuous circle.

Instead, food and beverage operators have been hurt over the past 12 months by a combination of rapid expansion and a consumer-spending slowdown. An influx of private-equity investment into restaurants led some chains to open too many outlets that aren’t breaking even. Popular names like Gourmet Burger Kitchen, pasta place Carluccio’s and the Jamie Oliver chain — often found at big malls like Westfield and Bluewater around London or Manchester’s Trafford Centre — have been among those suffering. Nationwide, the number of restaurants going insolvent rose 24 percent last year, compared with 2017.

 

 

Read more on National Real Estate Investor

 

 

 

Neighbors rise against plan to replace Red Cottage Inn with bigger hotel

Owner wants to tear down small hotel for Hampton Inn with three times as many rooms in Menlo Park, but residents call it too massive.

The owner of a Menlo Park hotel who wants to replace it with three times as many guest rooms is facing fierce opposition from a neighborhood group that threatens to appeal the project if the city approves it.

Sagar Patel, who owns the 28-room Red Cottage Inn at 1704 El Camino Real near the Atherton border, said his proposal to raze the hotel and build a taller, 68-room Hampton Inn in its place checks off all the city’s approval boxes. He’s also made a number of concessions sought by nearby residents, such as better screening for privacy, after meeting with them over the past 16 months, he said.

“I was under impression that we meet (Downtown) Specific Plan requirements and that’s the holy grail,” Patel said. “Not only did we meet them, we exceeded them.”

Residents say they aren’t pleased because after Patel came forward with a proposal in the spring that would have placed all parking underground and set back the building 36 feet from their homes, he later scrapped it saying the concessions would be too costly and without warning, presented a different plan to the Planning Commission during an October study session.

In the latest proposal, parking would be at ground level and setbacks reduced to 10 feet.

“He decided he couldn’t afford underground parking and he changed everything,” said Deborah Melmon, a member of Park Forest Plus, the group opposing the new hotel.

Melmon said the current proposal places the edge of the three-story building 17 feet from her master bedroom window and living room on Buckthorn Way.

“He’s gone from a hotel that a lot of time and effort was spent on trying to compromise with the neighbors … and suddenly changed it up on us,” she said. “If the Planning Commission votes to approve the plan, we’ll appeal it; if it doesn’t, he will. Either way it’s going to end up at the (City) Council.”

Patel said he is tweaking the proposal to possibly put the parking back underground, though in a less expensive fashion, before going back for possible approval in February.

 

 

Read more on The Mercury News

 

 

Oakland requires landlords to retrofit ‘soft-story’ buildings

Landlords have six years to retrofit the buildings, which are prone to substantial earthquake damage.

To prevent hundreds of multi-story, wood-frame apartment buildings from collapsing as they did in the 1989 Loma Prieta earthquake, Oakland is requiring seismic upgrades of all those at risk in the next big shaker.

There are 1,479 such “soft-story” apartment buildings in the city constructed before 1991 — when the building code changed — that stand two to seven stories tall and contain five or more apartments, according to a 2008 analysis by the city and the Association of Bay Area Governments.Those buildings are supported by slim columns with either garages or storefronts underneath, and contain a total of 24,273 apartments.

With fears of the “big one” occurring any day now along the Hayward fault — which runs along northeast Oakland and south along Interstate 580 — the City Council unanimously passed an ordinance Dec. 14 making the seismic retrofitting of soft-story buildings with more than five units mandatory, giving landlords four to six years to get their buildings up to code.

“A major earthquake along the Hayward fault is not a matter of if, it is a matter of when,” Mayor Libby Schaaf said in a statement released a week before the meeting. “As a city, we have a responsibility to put measures in place that will prevent injury and loss of life, and reduce displacement and recovery time in the aftermath of a major quake. This ordinance does all of those while also ensuring that we’re not placing an undue financial burden on property owners and tenants in our community.”

San Francisco passed a similar ordinance that went into effect in 2017; Berkeley and Fremont also require soft-story buildings to be seismically retrofitted. The Hayward council is scheduled to consider a similar measure in February.

In 2009, Oakland required soft-story building owners to gauge the potential earthquake damage that could occur. In the city’s 2015-2023 General Plan, officials called for the creation of a seismic safety retrofit program that would encourage retrofits through financial and procedural incentives.

Councilmember Dan Kalb — who introduced the ordinance — said city staff had been researching the risks of soft-story buildings and working toward the legislation for about four years. Though some California cities have required the buildings be retrofitted, others have not yet addressed the issue.

Seismic retrofits fall under the Oakland rent board’s definition of capital improvements, and thus up to 70 percent of the cost of may be passed on to the tenants. This ordinance requires that pass-through costs to tenants be dispersed over 25 years to prevent substantial rent hikes.

 

Read more on East Bay Times