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The Small Bay Area Cities Seeing The Most Office Investment

Bay Area cities like Sunnyvale, Santa Clara and Cupertino have seen some of California's largest jumps in office development over the past six years, illustrating the region's rapid commercial growth over that same time. 

A rendering of Irvine Co.'s Pathline Park when complete

In fact, out of California cities with 300,000 or fewer residents, eight of the 10 that saw the most office development are either along the Peninsula or in Silicon Valley, according to a new report from CommercialCafé.

Sunnyvale, which counts tech giants like Apple and LinkedIn as major corporate tenants, tops the list with 7.3M SF of office inventory added since 2014.

That's not by accident, according to Sunnyvale Economic Development Manager Connie Verceles. Through a series of specific plans for areas like Peery Park drafted over the years, Sunnyvale has positioned itself for rapid office development, even compared to the rest of the Bay Area.

"It gives developers some certainty of where they can grow and the type of projects they can build in certain areas," Verceles said of the city's area plans. "We have developers who have continuously done work in Sunnyvale, and part of that is because of our planning."

Two developers particularly active in the growing South Bay city are Irvine Co. and Jay Paul.

At 1.3M SF, Irvine Co.'s Pathline Park is one of Silicon Valley's largest projects under construction, with software company Synopsys currently moving into three buildings totaling about 360K SF. Three more buildings totaling 356K SF have been completed and are ready for occupancy, with more coming to the Peery Park project later, according to Irvine Co.

Among other big projects, Jay Paul Co. built the largest office building to hit Sunnyvale in recent years, finishing the 883K SF Central & Wolfe building for Apple last year. 

That project — nicknamed Apple's second spaceship campus — still pales in comparison to the original and largest Bay Area office building to come online since 2014: the 2.88M SF Apple Park, which opened in Cupertino in 2017.

Even so, just above Cupertino in new office inventory is Santa Clara, which has added a little over 5M SF since 2014, according to CommercialCafé. Developer Sares Regis Group of Northern California and general contractor Devcon Construction finished work on Nvidia's 500K SF owner-occupied headquarters in 2017.

That same year, Irvine Co. put the finishing touches on the buildings composing its  Santa Clara Square mixed-use development, which includes an office component of about 1.7M SF. That's an example of the attraction Santa Clara has for commercial tenants, according to Santa Clara Director of Community Development Andrew Crabtree.

One notable factor the development community likes, according to Crabtree, is that Santa Clara has its own electric utility company and lower electricity prices than those of surrounding cities.

"It's a good location, with a business-friendly environment and good electricity rates," he said.

In the months and years ahead, office development looks poised to continue for the Bay Area's top two producing cities of the asset class. Sunnyvale will bring another 750K SF of office online in the first half of 2020, CommercialCafé tallies. Later in the decade, Santa Clara is expected to host the 9M SF of office coming in Related Cos.' massive Related Santa Clara project adjacent to Levi's Stadium.