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Exclusive: Chinese developer brings on local development muscle as it digs into Santa Clara megaproject

A Chinese company has brought on local development help as it studies the feasibility of building a 10.5 million-square-foot mixed-use development in Santa Clara — a project that local insiders say could get even bigger.

The Chinese developer working on getting approvals for a 10.5 million-square-foot-development on a former Yahoo site in Santa Clara appears to have forged a formal relationship with a local developer to help with the process.

Harmonie Park Development last week announced in a tweet it was “excited to be named development advisor to Kylli.”

Kylli Inc., an American subsidiary of Shenzhen, China-based pharmaceuticals and real estate company Genzon, earlier this year got unanimous approval from Santa Clara City Council members to study amending the city’s general plan to grow the allowed development for the 48.6-acre site roughly at 3005 Democracy Way more than three-fold.

One local land use consultant now says the project could get even bigger, according to conversations he’s had with people purporting to be involved with the project.

Read more from Silicon Valley Business Journal

 

 

Silicon Valley grapples with security risks after YouTube shooting

Tech offices are modeled after college campuses.

Will they rethink their layouts? A shooting outside the offices of YouTube on Tuesday prompted an outpouring of support from fellow technology workers, as well as a sense of dread over whether other corporate headquarters in Silicon Valley were vulnerable to similar attacks.

YouTube’s campus in San Bruno, California, where three people were injured by gunfire, is laid out much like other tech offices nearby. It consists of a group of buildings within close proximity, spread across a suburban area. There’s outdoor seating and grassy pastures inviting colleagues to congregate. Visitors and employees can wander freely together in the vicinity, and security guards typically stay at desks inside the buildings.

“Companies invest in security but purposefully keep physical security measures discreet because the vibe is casual and relaxed,” said Joe Sullivan, the former chief security officer at Uber Technologies Inc. and Facebook Inc. who’s now an independent consultant. “Leaders want to stay connected with their teams, generally choosing less visible security than you would see in traditional finance or media companies.”

A woman — identified by police as Nasim Aghdam — shot and injured at least three people before killing herself. She was found at the scene and appeared to be dead of “a self-inflicted” gunshot wound, San Bruno Police Chief Ed Barberini said at a press conference Tuesday. No motive was given for the shooting.

In an American age where shooting rampages have become increasingly common, openness can work against companies, said Jeff Harp, a retired agent at the U.S. Federal Bureau of Investigation in San Francisco who consults for technology companies. While employees are required to badge into buildings, access to many outdoor areas is generally accessible to all.

The episode could prompt executives to tighten security, Harp said. “Companies are going to be asking themselves, ‘Maybe our guard services need to be where they pull into the parking lot.’”

Read more from Bloomberg

 

 

Facebook In Talks For 1M SF In Sunnyvale

Jay Paul Co.’s Moffett Towers II in Sunnyvale is all leased up, and Facebook could be one of its main tenants.

Facebook is said to have leased about 1M SF in three out of the five buildings within the office complex, the East Bay Times reports. This could allow Facebook to move about 5,000 to 6,000 employees into Sunnyvale.

Facebook would not be a new tenant for Jay Paul Co.; the social media giant leased all of Jay Paul Co.’s 445K SF office space at 181 Fremont last year.

While Facebook did not confirm the leases, one of the site’s brokers, Newmark Knight Frank Vice Chairman Phil Mahoney, confirmed with the East Bay Times that all five buildings have been leased to unspecified tenants.

Two of the five buildings within Moffett Towers II are nearing completion and a third is under construction.

Amazon already leased one 350K SF building at Moffett Towers II and leases about 1M SF throughout Sunnyvale.

Outside of its growth throughout Menlo Park, which includes an expansion of its headquarters as well as a proposed Willow Campus, Facebook has leased space in Fremont and may also sublease 475K SF from WeWork at the Village at San Antonio in Mountain View.

Read more from Bisnow

 

 

Facebook Files $303M Permit For Construction At Menlo Park Campus

Facebook is gearing up for construction of a $303M building as part of its headquarters expansion project in Menlo Park. The social media giant plans to build a four-story, 464K SF building as part of the western development of its campus, according to BuildZoom. Facebook also has been working toward creating a mixed-use village called Willow Campus off Willow Road in Menlo Park, which would include housing, retail and a 1.75M SF office. The tech company has filed permits over the last five years worth over $1B. At its headquarters, construction of Building 22, which is designed by Frank Gehry, will include a connecting bridge between buildings 22 and 21. The project includes the demolition of buildings 301, 302, 303, 304 and 306, which will be replaced by the four-story structure. The tech company filed a $73M permit in October for a seven-story above-grade parking garage to be adjacent to Building 22, also known as MPK 22.

Read more from Bisnow

San Jose mayor counters Evergreen Senior Homes initiative with own proposal

Sam Liccardo is concerned the initiative could open San Jose to new sprawling development.

San Jose City Council’s strategy to fend off a ballot initiative over a development in Evergreen — one it fears could override its general plan for land use — is a ballot measure of its own.

But attorneys for the private residential developers behind an initiative backed by more than 35,000 signatures say the city’s gambit will lose in court.

“We will pursue litigation,” elections attorney Sean Welch warned the council on Tuesday as his microphone was silenced at the end of his two minutes’ speaking time.

Mayor Sam Liccardo’s last-minute agenda addition to put a rival measure on the June ballot to override the one from Ponderosa Homes and developer Carl Berg, which won its ballot place through a petition drive, is yet to win City Council approval. All 10 members present Tuesday voted to delay final consideration until 8:30am on Thursday.

Read more from Silicon Valley Business Journal

 

 

Investors are spending big bucks for a piece of Silicon Valley office

It is already proving to be an active year for Silicon Valley office.

In the last few months, investors have spent millions to expand their Silicon Valley office portfolios.

San Jose’s office market, which has been relatively slow in recent years, picked up following Google’s plans to build a massive campus near Diridon Station. The Peninsula, which includes Palo Alto and Menlo Park, also has seen additional activity.

Santa Clara County office vacancies were about 12% in 2017 and the likes of Google, Apple and Facebook continue to buy or lease office space around the county, according to The Mercury News. Adobe Systems bought a parcel at 333 West San Fernando for $68M in January and plans to build a fourth office tower. Google continues its buying spree as it prepares for its Diridon Station campus and early this year bought three North San Jose office buildings at Midpoint@237, a business park developed by Trammell Crow, for over $117M.

Investors are expanding their San Jose office portfolios as well. DivcoWest bought three buildings from Cisco Systems in North San Jose in January, according to the Silicon Valley Business Journal. The $50M sale was for the buildings at 10 and 80 West Tasman Drive and 125 Rio Robles Drive, totaling over 313K SF.

Read more from Bisnow

 

 

 

Poll finds strong public support for Google’s downtown San Jose development plans

Google’s plans for a major development in downtown San Jose are solidly supported by city and county residents.

This is according to polling done for the Silicon Valley Leadership Group, which found nearly eight of 10 respondents support the project.

“That is a blowout of biblical proportions,” said Carl Guardino, the Leadership Group’s CEO.

The polling is an annual project by the group and has a margin of error of plus or minus 4.8 percent based on 431 registered Santa Clara County voters.

It included four questions on the project by Alphabet-owned Google and found that:

  • 62 percent had heard of the Google project,
  • 79 percent supported it vs. 16 percent opposed and 5 percent with no opinion,
  • The same 79-16-5 breakdown applied to support of this type of development mixing jobs, housing and mass transit in an urban setting, and
  • The prospect of 20,000 new jobs drove support over the provision of new housing by 54-35 percent among  San Jose residents and 54-38 country-wide.

Opposition to the project has been visible, however, in the form of protesters at Mayor Sam Liccardo’s recent state-of-the-city speech and meetings and demonstrations organized by Silicon Valley Rising.

Guardino said the poll results challenge the opponents’ claims that they represent the view of the majority of San Jose’s residents.

Read more from Silicon Valley Business Journal

20 Secondary Cities to Watch in 2018 (and Why)

It took about 7 years from the height of the housing collapse for primary markets to rebound.

Until 2016, they were still exceeding the appreciation rates of secondary markets, but then secondary markets surpassed them in the second half of 2016 and continue to outpace primary markets.

PwC (PricewaterhouseCoopers) and Urban Land Institute have highlighted secondary cities that are on the rise in their recent market outlooks. We take a look at which secondary cities we need to be paying attention to in 2018 and why they have become so popular with investors.

Why Secondary Cities?

In PwC’s survey, some of the top primary markets like San Francisco and Manhattan tumbled down to 27 and 46 respectively while secondary cities leapt into the top 20. There are several reasons for the surge in investor interest – chief among them is affordability. Other factors:

·      Investors have come to understand the complexities underlying the potential of secondary cities

·      Unlike typical real estate cycles, new construction in secondary cities has remained low, preventing the problems created by overbuilding

·      Hiring costs for businesses are 14% – 16% lower than in primary markets

·      Cost of living is much lower in secondary cities with housing a full 45% lower

·      Foreign investors are increasingly focusing on secondary cities, accounting for 10% of transactions involving secondary markets last year

Lower costs of living and of doing business in secondary cities enable investors to save more money on their investments while reaping more of the profits. On the opposite side of the coin, as real estate pricing continues to go up in primary markets, investors are pocketing less and less while also being constrained by limited inventories and interest waning in assets in places like New York, DC and LA. What is more, those macroeconomic factors are predicted to hold for years to come.

Read more from NAI Global

Why Silicon Valley isn’t headed for a recession any time soon, economist predicts

At least one respected economist has an uplifting message for the real estate community: stop worrying about a downturn.

Christopher Thornberg, founding partner of Los Angeles-based Beacon Economics, on Tuesday told the crowd at Colliers International’s 19th annual Trends event that it isn’t yet time to start collective hand wringing. In fact, he predicted the economy would be full steam ahead for another 24 months and that, in many ways, the economy may better in 2018, even as he warned that he did see signs of a new bubble that could impact the market in the long-term.

“When you look at the underlying indicators, not only is there no chance of a downturn over the course of the next 24 months, if anything, the economy is actually going to accelerate,” he said. “It’s going to be a good year.”

The message comes as a welcome reassurance in Silicon Valley, which has seen economic upswing for a nearly unprecedented stretch, bringing consistent gains in leasing activity, transaction dollar amounts and development across the Valley.

Read more from Silicon Valley Business Journals

Ten-X: Bay Area Multifamily Top ‘Sell’ Markets In Country

This might be a good time to consider selling multifamily assets in the Bay Area.

San Francisco, San Jose and Oakland were listed as Ten-X’s top sell markets in its most recent U.S. Apartment Outlook report, which compared Q3 rents and vacancy rates to 2021 projections.

Bay Area cities are expected to face rising vacancies and flattening rent by 2021 following a flood of new supply from years of development. Ten-X’s models take into account a cyclical downturn in 2019-20 and a recovery by 2021.

San Francisco is particularly vulnerable to the cycle due to a heavy construction pipeline that is already impacting the market, according to Ten-X. Vacancy rates are at 4.5%, up 140 basis points from the cyclical low, and rates are expected to increase through 2020. Ten-X forecasts rents will contract by 7.5% over the recessionary period, which will result in severe net operating income declines.

Read more from Bisnow