Bay Area’s 880 Corridor Primed For Building Boom
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Developers and investors are excited about the area between the Bay Bridge and just south of the San Mateo Bridge in the Bay Area. The 880 corridor is one of a few places in the Bay Area with underutilized land that can be converted in a meaningful way, and cities in the area are receptive to development.
"The East Bay 880 corridor is an amazing, ripe place for continued growth,” MLC Holdings President Charles McKeag said.
The 880 corridor offers a more affordable option for companies to rent space and for their employees to live. The only downside is much of the housing development in the East Bay has been rentals, and for-sale opportunities are harder to find, according to McKeag, who spoke during Bisnow’s East Bay Emerging Cities event Wednesday.
McKeag is very bullish about the 880 corridor, especially since Milpitas and north provides the most reasonable opportunities for for-sale residential. MLC Holdings is working on a project in Hayward that will add 140 townhomes, a hotel and retail on a former auto dealership site, according to McKeag. Following the consolidation of the auto industry after the Great Recession, Hayward had the foresight to change zoning in 2014 to allow for new development at the former dealership, he said.
“The 880 corridor is a place we will always be,” McKeag said. “If you’re not there, you are missing out.”
Within the next 18 months to 24 months, the 880 corridor will be among the most active, according to Paceline Investors principal Mark English. Capital markets also are waking up to the area after being quiet for a long time. About 18 months ago, English would pitch first-generation redevelopment projects, but capital turned it down. Now, those companies are coming back to him and wanting to invest.
Paceline primarily works on first-generation products that are 30 to 50 years old and have become functionally obsolete. The market is so hot that these products have low vacancy because tenants have nowhere else to go, which creates tremendous redevelopment opportunities, he said. These assets are sprinkled from Emeryville to Hayward.
The top markets in the corridor are industrial and research and development, especially with a lot of small businesses being priced out of South San Francisco. Many tenants have been relocating to places like Alameda, Hayward and San Leandro. San Francisco office tenants also are looking for space in the 880 corridor because of rising prices. Repurposing retail provides additional opportunities.
Other parts of the East Bay, like Richmond and Hercules, are on McKeag’s radar and offer more affordable options for residents, but the area is much more susceptible to a downturn than the rest of the Bay Area. To build in these places, developers have to make sure there is enough room left in the cycle for projects to work.
Wanted: Housing, Jobs and Amenities
While a lot of developers and real estate experts keep discussing when the next downturn may come, Polaris Pacific partner Paul Zeger said it is not happening in the Bay Area and it is not happening now.
“Most people have an optimistic view of the Bay Area,” Zeger said.
The biggest problem is finding housing for all the jobs, he said.
The 880 corridor will continue to benefit from the economic boom, our experts said. San Leandro, Hayward and Alameda all want high-paying jobs in their cities, but they also want a mix of residential and commercial.
To convince residents of the benefits of development, San Leandro Mayor Pauline Russo Cutter tells them the city wants more housing so their sons and daughters and grandkids can live and prosper in San Leandro. The city is not trying to change the neighborhood, she said.
San Leandro brought together all of its specific and general plans to provide a better idea of what developers need to conform to and what citizens have accepted in the past, according to Cutter. The city also offers free pre-planning consultations for developers to get feedback early during the planning stage.
Hayward wants more complete communities where residents can have everything they need within the vicinity.
“To me, [complete communities] means that neighborhood has what you need so you don’t have to get into a car every time you need something,” Hayward Mayor Barbara Halliday said.
These mixed-use communities have retail, recreation, parks and other amenities, Halliday said. These communities are far more desirable than tightly packed housing.
Hayward also has encouraged additional business activity. It increased its level of service for businesses willing to work in the city. If a new business wants to relocate to Hayward, the city assigns a staff member to help the business through plans.
Halliday said she wants developers to put more inclusionary housing into a development rather than pay fees, and the city will look into ways to put more affordable units into developments. Hayward previously reduced inclusionary housing and may look at it again in the near future.
Creating an all-encompassing community also is a top priority for Alameda, which is an island and has transportation challenges getting people on and off the island, according to Alameda Mayor Trish Spencer. Adding more jobs to the city would provide residents with the ability to work near where they live.
Building Live/Work/Play In The East Bay
Part of the attraction of the Alameda Point Site A redevelopment project, Alameda's biggest project in the works, is the ability to add a live-work-play community, according to srmErnst Development principal and founder Joe Ernst.
Amenities from food to entertainment are important to have a successful complete community, Ernst said.
“Populations that are there in the daytime and in the nighttime make those communities successful so they can grow and be an integral part of the community,” he said.
“Alameda Point is a good example of cities proactively planning to include affordable housing in the subdivision maps,” Eden Housing President Linda Mandolini said.
Another important aspect of this project is its transit-oriented nature. The project will add another ferry terminal to improve transit on and off the island.
Transportation is becoming an increasingly important aspect for getting funding for affordable housing. Projects need to be close to transit to receive state funding, Mandolini said. Eden Housing has built 4,500 affordable units in the Bay Area.