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San Jose Mayor Says CRE Reopening Will Be Gradual, With Restaurants Last

San Jose Mayor Sam Liccardo said Wednesday that he expects a renewed push for reopening the economy, which could begin with construction and end with the restaurant industry.

San Jose Mayor Sam Liccardo

"Now, we clearly see the need for a transition from saving lives to saving livelihoods," Liccardo said Wednesday afternoon in a Bisnow webinar.

"I think that the public conversation is going to be changing dramatically in the next two to three weeks, both because of the intensity of need we have right now, and simply because folks are going to recognize that the counties have done a very good job in bending the curve.”

Efforts to slow the Bay Area's rate of infection, which have been led by six counties and the city of Berkeley, appear to be having an effect, though not without unprecedented economic costs.

Growth in new cases in Santa Clara County, which has seen the worst of the coronavirus in the Bay Area, appears flat, and county officials said Sunday that hospitals in San Jose and the rest of the county are likely ready to meet demands through mid-May. 

Meanwhile, 2.7 million Californians have filed for unemployment benefits in the last four weeks, Gov. Gavin Newsom said Wednesday.

Liccardo said he is on the phone every morning with county officials, and that they have two primary concerns about reopening commercial office and market-rate residential construction. Those are the potential diversion of personal protective equipment, and extra behavior that could accompany work resuming, like stops for coffee and other interactions.

“I know there’s been a lot of nudging to see if we can expand the range of construction projects that can go forward," Liccardo said.

In Oakland, for instance, officials argued that in-lieu fees toward affordable housing development should give developers the same right to build that those actually building affordable housing units have, Liccardo said.

When extending a shelter-in-place order until May 3, counties deemed almost all commercial construction nonessential and thus not allowed to continue. The original mandate considered all types of residential construction essential.

San Jose Mayor Sam Liccardo, Sares Regis Group of Northern California Commercial Division President Jeff Birdwell, Bisnow Event Producer and Moderator Matthew Seukunian and Bisnow West Coast Vice President Michael Guimond

One thing working in the favor of developers? Occupations with more built-in social distancing, like construction and landscaping, will likely open up sooner than most other industries, Liccardo said. Conversely, those that tend to have a lack of social distance could be closer to the last bit of restrictions.

“I think what we’re going to see is probably restaurants coming last with regard to the opening just because of the challen­ges of social distancing,” Liccardo said. 

For office construction, Sares Regis Group of Northern California Commercial Division President Jeff Birdwell, who joined Liccardo in the webinar, said he is a long-term believer in the continued demand for office space in Silicon Valley, where over 8M SF of office was under construction at the end of 2019, according to Kidder Mathews

But he said there is still some uncertainty and that companies will ask, '‘Are we creating office in the same way, or do we need to change the product that we’re creating to be responsive to this new normal?"

“There may be some hesitation about doing things in exactly the same way,” Birdwell said, adding that coworking might be particularly vulnerable to changes in office use and acceptance of telecommuting.

There were fewer questions about Silicon Valley's need for housing, which Liccardo said is one of the main keys to the region's economic recovery. 

“We know that housing construction is going to be critical," he said. "We had a crisis before we had this crisis, and we really don’t want to do anything that constricts that supply."