How upcoming tech IPOs could affect the Bay Area housing market.
Last week, San Francisco-based ride-hailing startup Lyft finally filed to go public – the first of what is expected to be a number of area startups (such as Uber, Slack and Pinterest) that could be making the leap from the private market this year. To understand what this means for those living and working in the Bay Area, I talked to a couple of people in the real estate industry to get their thoughts. The short answer: The IPOs will almost certainly impact inventory and pricing.
The San Jose housing market has cooled more than any other in the country — and it’s still the hottest in the nation, according to a recent Zillow survey. The bidding wars and quick cash sales have abated, and home sellers are cutting prices more often and waiting longer to close deals than a year ago. But middle-income families still struggle to afford the median-priced home of $1.2 million in the San Jose metro area. A typical family needs to put about $600,000 down to fit that mortgage comfortably in their budget.
Leader in multifamily, retail, and office investment transactions recruits real estate industry veteran to lead the charge in the South Bay
SAN JOSE, CA – March 12, 2019 – NAI Northern California is pleased to announce that Tod Rudee has joined as Executive Vice President in San Jose to focus on leadership and expansion of commercial real estate services throughout the greater Silicon Valley area. Tod brings nearly 30 year of extensive experience in commercial real estate strategy, transaction services, and brokerage performance management in Silicon Valley. His previous background includes leading the San Jose office as Managing Director for CBRE as well as management roles with Colliers International and Premier Properties.
“Silicon Valley has been one of the top tier real estate markets in the United States for a while. As the home of big tech influencers like Apple and Facebook, the South Bay region continues to be major hub for investment. We have had great success working with a multitude of real estate investors on transactions for multifamily, retail, office, industrial, and mixed-use asset types from San Mateo to Palo Alto to downtown San Jose and Gilroy. We have have some major success stories representing corporate clients in meeting their leased space requirements, as well as representing some Silicon Valley landlords. Bringing a great leader like Tod Rudee on board is all about doubling down our efforts in Silicon Valley by building a first-class team of institutional brokerage professionals,” remarks President James Kilpatrick.
NAI Northern California is a full service commercial real estate firm serving the San Francisco Bay Area and beyond. Our team delivers technology-enabled commercial real estate services that create value for our clients, industry, and communities. NAI Northern California is a partner of NAI Global, the largest commercial real estate brokerage network with more than 400 offices worldwide and over 7,000 professionals completing in excess of $20 billion in commercial real estate transactions globally.
Report says both incomes and costs soaring in the state’s tech capitol.
It’s the best of time and the worst of times in Silicon Valley, at least according to Joint Venture Silicon Valley, a regional think-tank that issued its annual Silicon Valley Index last week.
The 2019 index, a “comprehensive report based on indicators that measure the strength of our economy and the health of our community,” describes the Valley as materially successful but fundamentally anxious, as new wealth puts additional stress on those most vulnerable.
The report defines Silicon Valley as a broad region encompassing parts of Santa Clara, San Mateo, and Alameda Counties, ranging from Daly City to Union City to Gilroy to Scotts Valley.
The index includes some data from San Francisco for context but does not include the city as part of its larger regional definition. Most of the data covers 2017, with some references to 2018 as well.
Santa Clara has approved its largest affordable housing project in the pipeline — an “agrihood” that will combine urban living with farm life.
The city approved the project, a public-private partnership between the city and developer The Core Cos., last week. Called Agrihood, the mixed-income property will have 361 apartments, with 181 of those below market rate, 160 of which will be for low-income seniors. A 1.7-acre urban farm and community retail and open space will complete the neighborhood.
The city had the site earmarked for senior housing for more than a decade.
“This project was borne out of a dire need to bring affordable housing through a truly creative, community-driven process. The Core Companies has kept this mission and urgency at the center of its work and dialogue with the city and community stakeholders,” The Core Cos. Senior Development Manger Vince Cantore said in a statement. “Santa Clara’s seniors have already waited more than a decade for housing at this site. An available below-market home for a senior can be the differentiator between a comfortable, safe environment in which to spend one’s golden years, or an extended period of financial stress and uncertainty.”
WeWork is leasing a new downtown San Jose location, a clear indication of an ongoing expansion by the co-working titan in the core area of the Bay Area’s largest city.
The newest WeWork location is at 152 N. Third St., a downtown San Jose office building owned by a group led by Gary Dillabough, a realty investor who is partnering with WeWork on the Bank of Italy office tower project a few blocks away.
The interest from WeWork in the North Third Street building appears to point to a rising focus on downtown San Jose, spurred by potential major developments in the area by tech titans such as Google and Adobe Systems.
WeWork agreed to lease 75,000 square feet at 152 N. Third St., according to commercial realty experts and information from sources with knowledge about the WeWork plans at that office building. The WeWork operation on North Third Street also shows up on the company’s website as a “just announced” location.
“It’s very encouraging that WeWork is getting more interested in downtown San Jose,” said Mark Ritchie, president of Ritchie Commercial, a realty firm.
In addition, WeWork has taken space in one of the Riverpark Towers office high-rises at 333 W. San Carlos St. and the tower at 75 E. Santa Clara St.
“WeWork is now into four buildings in downtown San Jose,” Ritchie said. “152 N. Third St. should function very well as a co-working building.”
“Too many children go to bed at night without seeing parents who are stuck in crippling commutes.”
On Thursday, San Jose Mayor Sam Liccardo endorsed SB 50, the proposed new law that aims to create more dense housing near major transit lines in California, as did the mayor of Stockton, Michael Tubbs.
Introduced in December, the bill, written by SF-based State Sen. Scott Wiener, is a follow-up to the very similar but unsuccessful SB 827.
According to Wiener’s office, the bill “eliminates hyper-low-density zoning near transit and job centers.”
The text of the proposed law specifies that it applies to “sites within one-half mile of fixed rail and one-quarter mile of high-frequency bus stops and in job-rich areas.”
On Thursday, Liccardo praised the proposal as a potential antidote to long commutes.
“Too many children go to bed at night without seeing parents who are stuck in crippling commutes,” Liccardo said in an emailed statement.
The mayor predicts that “SB 50 will spur more affordable housing near transit and job centers so that people can live close to where they work.”
Stockton Mayor Michael Tubbs endorsed the measure this week too, promoting it as a way to encourage more housing and keep prices down.
“As we force individuals to pay more for their rent, we also push them into poverty,” said Tubbs. “This is a policy failure that we must address.”
San Francisco Mayor London Breed, Oakland Mayor Libby Schaaf, and the mayors of Sacramento and Los Angeles are also among those who endorsed the measure or “made positive statements regarding the direction of the bill” previously, according to Wiener’s office.
California lawmakers are exploring new ways to limit skyrocketing rents.
Crooning in the shower is not Chad Regeczi’s thing.
That’s why when he learned last year his monthly rent would go up $300 so the new owners of his La Mesa apartment in San Diego County could upgrade his bathroom with a sound system, he was bemused.
“300 bucks!” he said. “I mean an iPod costs less than that. Everybody has got a phone now. Who needs a Bluetooth speaker in a bathroom apartment? It’s just weird.”
Regeczi, a VA employee, said the 30 percent rent increase didn’t match the condition of his apartment. But he felt powerless to challenge his landlords on the hike.
“Who’s gonna tell them no?” he asked. “There are no rules to how much your rent can go up.”
That may change. Talk is underway about putting a law on the books that would bar California landlords from raising rent beyond a certain percentage.
Oakland Mayor Libby Schaaf said in November the rule would mimic limits on what businesses can charge during natural disasters.
“When there’s a fire, you pass an anti-rent gouging ordinance,” Schaaf said. “The state has a fire. It’s called the housing crisis.”
Rents are surging in some California cities where there is no rent control by double, even triple digits, according to mayors and tenants rights advocates.
And more than half of the state’s renters pay more than a third of their income on housing, according to the California Budget & Policy Center. And a third of renters spend more than half of their paycheck on a place to live. The real estate firm Zillow reported last month that communities where people pay more than a third of their salary on rent, see a faster rise in homelessness.
For years, much of the area around Diridon Station has been a neglected jumble of grimy auto body shops, vacant lots overgrown with weeds and shabby warehouses.
Google — whose plans face a critical City Council vote Tuesday — is expected to transform some 50 acres into a mix of offices, shops and restaurants connected by pathways that wind through parks and plazas filled with public art. Steps away, Diridon is set to undergo its own renovation and become the only place in the Bay Area where BART, Caltrain, Amtrak and high-speed rail converge.
It’s a tall order. But if the tech giant succeeds, the project could transform a downtown that has struggled to rebound from sprawling development in the 1950s and 1960s, when city manager Dutch Hamann rapidly annexed land at the city’s fringes while neglecting its urban core. When it’s complete, the area could support more than 25,000 workers, a 65 percent increase in the number employed in the core of the city today.
For longtime restaurateur and downtown business owner Steve Borkenhagen, Google’s foray into San Jose might finally spark the kind of urban rejuvenation he’s dreamed of for decades. For Kathy Sutherland, a nearly 40-year resident of the Delmas Park neighborhood in the shadow of the proposed development, the project brings both the long-sought possibility of a vibrant neighborhood and the fear of displacement. And for the urban studies theorist Richard Florida, the project is less personal but no less important — a chance for a major American city to finally get redevelopment right, to provide an antidote to the debacle of the Amazon HQ2 rollout.
It will be years before any such dreams or fears are fully realized, but the sale of more than $100 million dollars of city land — expected to be finalized at the Tuesday council meeting — sets the stage for planning and development to begin in earnest after months of closed-door talks and speculation about the biggest thing to happen in San Jose in generations.
In a head-spinning mega-deal, Google has paid $1 billion for a huge Mountain View business park, the Bay Area’s largest real estate purchase this year.
It is also the second-largest property purchase in the United States this year, eclipsed only by another Google acquisition, the $2.4 billion the company paid for Chelsea Market in Manhattan.
The newly acquired site in Mountain View, where Google has been the primary tenant, is larger than the property that accommodates the company’s Googleplex headquarters a few blocks to the west, and also exceeds the size of the parcel across the street where Google is building an iconic “dome” campus that features canopies and tents.
“Wow. What a deal,” said Chad Leiker, a first vice president with Kidder Mathews, a commercial real estate firm. “This is an opportunity for Google to own more office space very close to their headquarters. That office space is becoming very rare in Mountain View.”
Google’s Mountain View purchase means that in the two years since the search giant began to collect properties in downtown San Jose for a proposed transit village, the company has spent at least $2.83 billion in property acquisitions in Mountain View, Sunnyvale, downtown San Jose and north San Jose alone.