Friday, January 18, 2019

What People Were Talking About In Bay Area CRE In 2018

 This year in Bay Area commercial real estate, the hot topics ranged from a continued housing crisis to the specter of rent control to cracks that shut down the new transit center. Here are some of the stories we were following in 2018:

Continued Housing Crisis

Throughout California, the housing crisis was a leading topic of conversation this year. Some people continued to move to the Bay Area, particularly for high-paying jobs such as those in the tech industry. But with high rents, high home prices and a high cost of living, some people left. Many of those leaving the area were workers with lower incomes who could not afford the cost of housing and could not find adequate workforce housing. The housing crisis has affected all sectors, from how much affordable housing is demanded of multifamily developers to the looming affordable housing crisis for seniors. Residents who have been displaced and are now homeless create new issues on the streets of San Francisco and Oakland, steering the local conversation and, in some cases, affecting tourism and the hospitality market. Several bills were introduced in 2018 to help address California's housing crisis. Efforts such as allowing Bay Area Rapid Transit to develop housing, office and retail around its stations should help address that need, as should the passage of a streamlined process to move forward projects with an affordable housing component that meet all relevant criteria. In the Bay Area, the Sand Hill Property Co.'s Vallco Mall project in Cupertino was the first in the area to receive approval through the streamlined process. The project had been stalled for years by a vocal group of community opponents. The process also has been put to use in Berkeley for an affordable housing project. It can only be expected that the housing crisis will continue as a top story in the coming year.

Google's Growth

Google made headlines with its $1B purchase of a site near its Googleplex headquarters in Mountain View. The price was the second-highest in the U.S. this year, with Google's $2.4B purchase of Chelsea Market Square in New York taking the highest spot. Google was also busy elsewhere in Silicon Valley this year. It spawned the "Google effect" in San Jose with plans to build a transit village in the area, and other companies responded by buying up nearby property and projects. The city of San Jose approved selling some city-owned property to Google to make the project a reality. Of course, Google isn't the only tech giant growing: Facebook signed San Francisco's largest office lease ever this year, and had leased over 3M SF in the Bay Area by mid-year.

Rent Control Rears Its Head

The debate over rent control went into high gear this year as Proposition 10 was placed on the ballot and would have allowed cities to expand rent control at their discretion. Those in the industry actively sought to sway voters against the measure. Some buyers shied away from California multifamily properties in the months leading up to the proposition, while others saw an opportunity in the market. While Prop. 10 ultimately failed, many in the CRE community worry that expanding rent control will come up again and want to take a lead in shaping that discussion.

Modular Construction Boom

With the need to build faster and more efficiently to address the rising costs of labor and materials, more Bay Area developers are looking at modular construction as one way to address that need. In the Bay Area, there are multifamily projects, student housing and hotels being built with modular construction. San Francisco is pushing for more modular construction of affordable housing and city leaders are hoping to have a modular factory built in the city. Local modular technology firms like Katerra, which is vertically integrating the modular unit process, and RAD Urban, which is building steel modular units for high-rise construction, have received funding and are expanding and opening modular unit facilities. Modular still has its challenges — it is not for every project and developers say there is still need for a better understanding of how inspections and permitting are handled by cities and the state. But for those where it makes sense, modular construction is offering a new way to speed developments along through off-site work that is not affected by weather.

Cracks, Tilts and Troubled Buildings

The Transbay Transit Center, also known as Salesforce Transit Center, opened this year to great fanfare as a hub that would route through a large part of the city's transit, offer a future home for high-speed rail and welcome a rooftop park open to the public. But less than two months after it opened, cracked beams were discovered in one part of the transit center. They appear to have been caused by weld access holes cut into the beams. The cracks resulted in a shutdown of the center while it was inspected for any additional problems and short- and long-term solutions were worked out. There is no date yet for when the center will reopen. Any mention of troubled buildings would be incomplete without San Francisco's sinking, tilting Millennium Tower. The Millennium Tower saga that started in 2016 continued this year with the added concern of fire dangers and cracked windows, the inspection of which gained additional attention when the drone sent to inspect the windows crashed. The cracks were determined to be an issue separate from the sinking and tilting. The high-rise luxury condo tower's homeowners association is now suggesting a nearly $100M fix that would drive 50 piles into the bedrock below to stabilize the building.

Salesforce Moves Into Tallest Tower

Salesforce employees moved into Salesforce Tower, which, when it opened in January, became San Francisco's tallest tower. The tower design raises the bar in employee wellness design, with the Ohana floor (the very top floor of the building, which is open for employee use and soon will be available for community use) and meditation rooms on each floor. It also breaks new ground in sustainability, bringing the first blackwater system to the city and creating one of the area's most sustainable buildings. The company's move into the new tower means it freed up office space in San Francisco. Google, in its continued push for growth, signed a 300K SF lease for Salesforce's former HQ.

Coworking And Flexible Office Providers Grow

While tech companies continue to dominate the area's large office leases, a large part of leasing up the smaller office spaces goes to those coworking and flex space providers that provide the flexibility companies are looking for. WeWork has leased six locations in San Francisco for its HQ by WeWork, which targets midsize companies. In Oakland, WeWork signed the city's largest office lease this year for 68K SF. Knotel now operates nearly 200K SF in 20 San Francisco locations, having added six locations earlier this year and signing three in December. Around the Bay Area, coworking companies are offering innovative models that address everything from childcare to green office space. Some have even expanded into vacant retail space and restaurants in off-hours to offer a new working environment.

Opportunity Zones

Opportunity zones were the topic of discussion this year as those in the industry tried to figure out the best way to invest and develop under the program. Many potential investors had a lot of unanswered questions surrounding the program most of the year until new guidance was issued (though finalized guidelines have yet to be released). Cities that could benefit from increased interest in their designated opportunity zones are now working to attract the kinds of investment that could be most beneficial for those neighborhoods.

Wildfires

While the wildfires that burned in Paradise and Southern California this year didn't directly affect buildings in the Bay Area (though the Camp Fire smoke created some of the worst air quality in the world as it moved into the Bay Area), they once again reinforced the idea that fire is an increasing threat in California. Areas that burned in the 2017 Wine Country fires are still recovering, and this year's fires will add to the burden on an already strained construction industry.

By Allison Nagel

Friday, January 4, 2019

Why S.F. rents are likely to remain the highest in the nation?

San Francisco rents are down slightly in 2018, but are still the highest in the nation, and likely to remain there according to research from Zumper. In its annual wrap-up report, the rental site showed that, once again, San Francisco had the highest median rents in the country, with a median of $3,560 for a one-bedroom apartment and a two-bedroom median of $4,720.

While those numbers are down slightly and flat, respectively, year-over-year, Zumper Data Analyst Crystal Chen explained why no other city was able to catch up.”Though San Francisco had flattening rents this past year, many of the top 10 markets experienced a similar trend as well,” she said. “Since there wasn’t a ton of movement in these cities throughout 2018, I’m not surprised San Francisco remained on top. Boston, Oakland, and LA rents had large one-bedroom year-over-year growth rates, all above 9 percent, but San Francisco was still around $1K-plus more expensive than these cities and I doubt any of them would move up that much in rent within a year.”

She added that San Francisco’s available square footage is also the second-smallest in the country, just behind New York City, and with the economy softening and developers starting to become concerned about the possibility of a recession, it’s highly unlikely that building here will keep up with demand for the foreseeable future.

“The cities surrounding San Francisco will continue to bear the weight of ever-growing prices since the demand for housing in the Bay Area will stay strong and people will look for more affordability in San Francisco’s neighboring areas,” she said. Additional Zumper research shows double-digit increases in Redwood City, Santa Clara, Oakland and Mountain View in 2018. In fact, Mountain View rents are now just under San Francisco levels, according to Zumper data.

Within the city itself, renters also seemed to be looking for bargains. “Historically cheaper, family-friendly neighborhoods like Outer Sunset and Lakeshore have seen increased demands throughout the year and this will most likely continue to grow,” Chen predicted.

It turns out that, in Chen’s research, the newest, most expensive buildings at the tip-top of the market are having the hardest time finding tenants. “Many apartments are still offering incentives, like a month of free rent or up to X amount off, so the cooling off experienced last year in this type of apartment has only continued,” she said. “I don’t think 2019 will see a high resurgence of demand for luxury housing.”
By Emily Landes

Monday, December 31, 2018


A New Year is like a blank book, and the pen is in your hands. It is your chance to write a beautiful story for yourself. Happy New Year and may this year bring success, prosperity, new happiness, new goals and new achievements!

#HappyNewYear2019 #wishes #allthebest #success #prosperity #newhappines #newgoals #newachievements

Friday, December 7, 2018

What kinds of living situations do tech people consider?

What kinds of living situations do tech people consider?

If you’re coming to San Francisco to work in tech, thinking about the city’s housing crisis will daunt you. The area’s reputation for having some of the highest rents in the world is well known. And if you’re not familiar with SF’s distinctive neighborhoods, it can be tricky to narrow your search to locations that would suit you best.

Despite the challenges, this city offers all types of living situations from deluxe high-rise apartments to budget-friendly shared-living situations. If you cruise online classifieds, you’ll see that studios start at around $2,500 per month, with rents for larger spaces soaring higher and faster than the skyline.

But in the last few years, a handful of entrepreneurs have come up with creative ways to tame the cost of housing in San Francisco, including new ideas of communal living and tiny apartments. You can even stay in a hotel. Or on a couch. Or in a mansion.

Here are a few options that newcomers to the city can use to find a place to call home.

Think small

Starcity, a startup that launched in 2016, has renovated four old hotels to offer compact rooms that come fully furnished, with locations in SoMa and the Mission. Starting at $1,950 per month, you can have a room with a shared bathroom or pay more for a private commode.

“The appeal is you don’t have to bring much with you,” says Erin First, a spokesperson for the company. “Land on your feet, get your bearings, and find your community.”

Like many of the shared-living situations popping up in response to San Francisco’s housing crisis, Starcity actively promotes a neighborly atmosphere among its residents.

To create a sense of community, the company organizes “opt-in” events including dinners, weekend outings, and volunteer opportunities, says First, adding that the friendly vibe carries over when residents see each other in shared spaces like the kitchen, media lounge and outdoor area.

The residents, whose average age is in the mid-30s, include recent college grads, tech workers, and what First calls “re-starters”—i.e., people starting a new career, leaving a long-term relationship, or looking for a fresh start in a new city.

Live in a hotel

Charlotte Jones, 39, who lived with a roommate at 333 Fremont, a high-rise not far from the new Salesforce tower, wasn’t looking for a new start. But after the neighborhood grew more popular, her share of the rent ballooned to nearly $3,000. She had to move out.

Last month, she moved into a small room in the Herbert Hotel near Union Square. She found it through Anyplace, a startup that provides rooms at 17 hotels in the city at monthly rates that total far less than paying on a nightly basis. For $1,800 per month. Jones gets a small room with a mini-refrigerator and a sink.

“I do use the community bathroom and shower, which doesn’t bother me at all. It’s like being back in college,” says Jones. “The sink in my room is key.”

She says the room is a little tight with Annie, a boxer mix she rescued after the North Bay fires last year. After she walks her dog at night, she feels safe coming home to a building with a doorman.

This is not a hacker house

Hacker houses certainly exist, including those like Negev, the former warehouse with “bunk beds, roaches, and nerdy geniuses” that Andrew Frawley, a former resident, described in the Guardian. Recognizing that these environments don’t appeal to everyone, several entrepreneurs who like the idea of tech-centered group living have launched tidy twists on the idea. But do not confuse their “startup hotel” concepts with grubby hacker houses.

“We don’t like to affiliate with that,” says Anne-Sophie Baumann of Bedinbuild, a company that offers temporary and permanent housing in three San Francisco homes where professional housekeepers clean once a week.

For entrepreneurs visiting for a few weeks or months, Bednbuild offers flexible terms and organizes networking events to help its guests meet people in the tech community. It also removes the distraction of moving between Airbnb rentals, buying food, or doing laundry.

“It’s almost like moving into a house that’s fully stocked,” says Baumann. “And you have really cool roommates.”

Other tech-focused co-living facilities include 20 Mission, a former hotel with 41 individual rooms; Startup Basecamp, a co-living and co-working space; and Hack’n’Sleep, which offers month-to-month rooms in four co-living houses.

Upscale co-living

The idea of communal living may bring to mind a group of idealistic flower children solving the world’s problems over lentils and kombucha—and, indeed, co-ops are still going strong in the Bay Area. But like hacker houses, entrepreneurs have given the commune an upgrade to appeal to a broader range of people.

Several companies offer private rooms in (sometimes stunning) homes designed for comfortable group living, most emphasizing community events and amenities like large kitchens, shared workspaces, fast internet, and free laundry.

In SoMa, Common offers a contemporary home with several private bedrooms starting at around $2,500. If you’re looking for the charm of an old Victorian mansion with an interior fit for Curbed House Calls, Outsite offers eight bedrooms in a home near Dolores Park.

In a former circa-1904 Archbishop’s Mansion in Alamo Square, Roam offers luxurious rooms for around $3,900 per month. Intended for nomadic workers, guests who purchase the company’s flex plan can also stay at their other locations in places like Miami, London, and Tokyo. Bonus: The kitchen offers a separate refrigerator for a half-dozen types of milk, including Milkadamia, an unsweetened, vegan macadamia nut milk made from “free-range trees.”

Luxury apartments

If you’re interested in a deluxe apartment in the sky, several buildings make their mark on the city’s skyline, especially in the Mid-Market area near Twitter and in SoMa—just a few options highlighted below.

You’ll find contemporary interiors and impressive views in the many glass towers that have finished construction over the last few years. In SoMa, 340 Fremont offers 348 luxury units in a 40-story tower where studios start at $3,373. Nearby at 399 Fremont, which stretches 42-stories high, studios begin at $3,575. And up in Rincon Hill, the 45-story Jasper offers studios starting out at $4,005.

In the Mid-Market area, near the Twitter Building, the 29-story Fox Plaza apartments date to 1966 and rents start at $2,524. Newer buildings in the micro-neighborhood command higher prices like at 100 Van Ness and NEMA.

A short walk away, at Trinity Place, three new apartment buildings surround a one-acre park that features Venus, a stainless-steel sculpture that measures almost as tall as the Statue of Liberty. Rents range from $2,299 to $5,199.

The social network

If you don’t mind the sofa, you can follow the lead of Guillaume Richard, 34.
Although he’s not a techie, his story of trying to find a place to call home in San Francisco is a situation with which many transplants are all too familiar. Earlier this summer he left his hometown in a forested area of Western Quebec, Canada, arriving here in August after camping in his van along the way.

He plans to soon work as a salsa and tango instructor, but while he waits for a work visa, he has used the Couchsurfing site. It helped him find people to hang out with and others who offer a place for him to park his vehicle and sleep indoors. But he didn’t need a website to find his current host. They met last week in a coffee shop, where Richard’s charm and French accent landed him a spot on a sofa in Nob Hill.

By Andy Bosselman

Thursday, November 22, 2018