The S.F. Peninsula is Booming. Here's Why.
The peninsula is full of shovels and entitled projects ready to go—and we got some top players to tell us more about the booming area, which has millions of SF of entitled properties in various stages of development.
BKF Engineers CEO David Lavelle , whose firm has done work on the peninsula since 1915, told attendees at Bisnow's Peninsula Boom event at the San Mateo Marriott we're riding the biggest development wave the peninsula has seen in 30 years. He counts 6M SF of entitled properties in various stages in San Mateo County—and that's non-corporate space (count what Genentech and others are doing, and that figure is about double). David says soil conditions around bay front remain an issue, as putting foundation in is like putting a "toothpick into a piece of cream cheese."
Turner Construction operations manager Kamran Chaudhry thinks the peninsula could take a page out of S.F.'s playbook when it comes to quicker processes to get projects done. In S.F., permit expediters are used extensively, and the city often uses consultants for plan check. Resources are scarce in the peninsula with the number of projects coming up and the extent of work going on. The cities there have started to catch up, he says.
Here's Ropers Majeski Kohn & Bentley PC partner Matthew Zumstein , who moderated, with DTZ m anaging partner Mike Moran. The peninsula has seen big changes since the '80s in terms of types of products being built, Mike says. What's interesting is what tenants are bringing out. Five years ago it would have been hard to imagine a spaceship campus for Apple, all-glass skins for Google and a 10-acre rooftop garden for Facebook. These tech tenants are craving new product because the 30-year-old buildings aren't what they are looking for.
The Oracle HQ was there by itself a long time (David can see it from his office), but it has since driven a lot of development in the Redwood Shores area. David had a scare in the late '90s and early 2000s that people were going to telecommute and the corporate campus would disappear. But, happily, Facebook, Google, Apple and other new high-tech corporate campuses (many of which his firm has designed) have proven that wrong.
Wilson Meany partner Christopher Meany says his big project on the peninsula is Bay Meadows, which is at an exciting moment because all the infrastructure is in place, there are public parks, some housing is already there and offices are coming on line. He says it's great Stockbridge Capital Group and San Mateo officials are farsighted in trying to create at a train station. But that process started in 2000 and it was the better part of eight years to get entitlements due to lawsuits from locals that drove up costs.
Sares Regis Group president of commercial development Jeff Birdwell spells out the crazy escalation in land values. Three years ago, land values for FAR foot of office space he'd put in pro formas at $40/SF. In the hottest markets today that figure has more than quintupled, with Google paying $250 a FAR foot for land in Mountain View. And in three years, office rents have doubled. Three years ago Sares Regis was buying land for apartment units for $50k to $60k a unit. Today people are paying $125k a unit. Luckily, Sares had the foresight to tie up most of its pipeline a number of years ago and it's more selective now.