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Seeing Pros and Cons in “Digitization” of Real Estate

A future-focused Urban Leaders Summit discussion in Frankfurt in May on embracing new technology raised just as many questions as it answered.

Many German business leaders have been fretting about what they call Industry 4.0—the sweeping changes created by machine learning, automation, the “internet of things,” and big data—innovations they categorize under the umbrella of “digitization.” The waves of change triggered by this digital shift are going to be felt for generations to come, as more and more jobs are capable of being done by machines. Will we need humans at all? Will we create a superintelligence that finds us an unnecessary burden?

But going back to the present, Sascha Friesike, professor of digital innovation at VU Universität Amsterdam, wondered why urbanization continues to grow even as we increasingly decentralize work. If jobs can be done from anywhere, why do we still largely choose to move to cities?

Klaus Dederichs of Drees & Sommer was wary about the rush to incorporate the internet of things into properties. Tests have shown that the current generation of smart devices, which usually operate over wi-fi, is easy to hack. “They are compromising buildings’ cybersecurity,” he said. “What if terrorists attack smart buildings rather than drive into crowds?”

But Dederichs did also note some potential for buildings to get smarter, optimizing energy use being one of them. Building information modeling (BIM) is another promising field in the world of smart buildings. This digitizing of the planning, construction, and maintenance of buildings increases efficiency and extends the life of a project. Thus far, BIM has not seen huge adoption rates in Germany; the industry is hesitant largely because of the financial investments and the additional training needed for workers.

Blockchain came up in practically every discussion, as did artificial intelligence. It is difficult to find the middle ground between viral anxiety and tech evangelism, said Thomas Metzinger of the Johannes Gutenberg-Universität Mainz. “What do we do when a smart city crashes? And it will crash. We need graceful degradation,” referring a web design term that refers to designing a project to continue to function even if some features fail.

“We aren’t going to build houses that aren’t future-proof anymore,” said Martin Rodeck of EDGE Technologies, owned by OVG Real Estate. You cannot risk a new building being outdated within five years. And you should not jump on a trend like blockchain or virtual reality just because everyone else is doing it—you need to focus on how to solve the problem at hand.

Read more on Urban Land Institute

 

Facebook creates three huge Bay Area job hubs for expansion

Facebook has created three Bay Area work hubs that each total at least one million square feet, following big leases with two legendary developers that widen its Silicon Valley footprint.

The tech titan could employ as many as 19,000 in the expansion sites, located in Fremont, Sunnyvale, and Menlo Park.

The social networking giant is already expanding in its hometown of Menlo Park and has signed a mammoth lease in Sunnyvale. Now, it has signed major leases with Sobrato Organization and Peery Arrillaga totaling 18 buildings in a part of Fremont near the Dumbarton Bridge’s east end.

The most recent set of leases in Fremont total 1.04 million square feet, according to Facebook.

 

 

Read more on The Mercury News

 

 

 

Free time and fun: the new must-haves at apartments

As the luxury multifamily market approaches a peak, apartment owners and managers turning to social amenities to engage residents at their properties.

The new must-have amenity for luxury apartment projects? Time.

During this economic growth cycle apartment developers have engaged in a virtual arms race of amenities. Most were physical goodies they could tout in property tours – features like furnished guest suites for resident’s out-of-town visitors, rooftop pools, and walk-in lobby refrigerators for food deliveries.

Now, say apartment developers and property managers, the trend is towards providing services that save residents time, or experiences that make effective use of it.

Across the country high-end apartments are now offering a host of new services to attract renters: dog-walking, wine tastings, poker nights, errand-runners.

“There’s this feeling that the amenities war has run its course – everyone has the same check list on their website,” said Tom Geyer, vice president of branding at the Bozzuto Group, the Greenbelt, MD.-based developer and apartment manager.

“But I do think the battle of services is a newfound strategy to build value.”

Bozzuto, which owns or manages more than 60,000 units up and down the East Coast, has become a specialist in adding these experience-based and time-saving services, and notes the appeal of service and experience-based amenities goes across all age groups.

For its part, Geyer said Bozzuto doesn’t try to mold their properties to fit a certain age group – for millennials, say.

Rather, the company sees its properties and tenants in terms of “tribes.” Some properties have a preponderance of bike riders, some have dog owners, and others are dominated by retirees looking for urban living experiences.

“Most of our residents are not non-social people,” said Geyer. “Building amenity space is about supporting interaction, looking for a chance meeting of the tribe.”

For example, Geyer said residents aren’t just interested in an onsite gym, they want access to classes.

“Classes are the number one thing, group classes,” he said.

That means not just adding amenities, but re-designing some of the existing amenity spaces. Gyms have to be designed to accommodate the new trends of cross-fit, PX-90 workouts. And equipment has to be placed to accommodate classes.

National Development, a multifamily developer and manager based in Boston, agrees with the new thinking. It hired a full-time marketing and community engagement manager who coordinates events for a dozen National Development properties.

“It’s not an either-or proposition,” said Ted Tye, a managing partner at National Development. “There’s been a real push for physical amenities, and that hasn’t abated. Layered on top of that, as the market gets more competitive, is the social amenity.”

 

 

Read more on CoStar

 

 

 

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

 

 

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.

 

 

Read more on San Francisco Business Times

 

 

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

 

 

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.

 

 

Read more from Silicon Valley Business Journal

 

 

 

Google unveils broad vision for San Jose’s Diridon Station as some community members rally to halt the plans

 

Google announced nearly a year ago that it had visions of a mixed-use campus spanning up to 8 millions square feet in San Jose’s Diridon Station.

Since then, the tech giant has invested heavily in real estate in the area. Google has begun to lay out a high-level vision for San Jose’s Diridon Station area, a 240-acre swath of land around the city’s primary transit hub where the company has dreams of building a massive mixed-use campus.

But barely as Joe Van Belleghem, senior director of development for Google cleared his throat to start a presentation that would outline a framework for long corridors filled with retail, homes, art and a cluster of office buildings, more than a dozen city residents marched in, banner and signs in hand.

“OK now Google, we know you’re bad,” the protesters yelled. “Don’t need you here, we’ve got our own, turn around and go home!”

 

 

Read more from Silicon Valley Business Journals

 

 

Facebook’s building permits soar past $1B in its hometown of Menlo Park

Facebook may be rapidly expanding its footprint across the Bay Area, but a new report shows the social media giant is still highly focused on — and invested in — its hometown of Menlo Park.

In recent years, Facebook has filed building permits valued at more than $1 billion in the small Peninsula city, according to an analysis by Kelsey Graeber of BuildZoom, a San Francisco-based startup that tracks building permits to connect property owners with contractors.

“Menlo Park has been our home since 2011 and we’ll continue to be a responsible corporate citizen as we grow in this community,” John Tenanes, the company’s vice president of global facilities and real estate told Silicon Valley Business Journal in a statement on Tuesday.

Facebook declined to confirm specific dollar amounts for the campus, often referred to as its “West Campus,” and it’s worth noting that building permits are not an exact science.

The values on the publicly available permits are companies’ best estimate early on of what a given project will cost, and often fall below what is actually spent on a building. The permits generally do not include costs for items like small change orders, furniture or some fixtures for instance.

 

Read more from Silicon Valley Business Journal