Peninsula's Biggest Developers Ride the Wave
With tech giants expanding in the area, the S.F. Peninsula is on a roll. Yesterday at Bisnow's Peninsula Boom event at the San Mateo Marriott, we got the top developers in the region to spill the beans on the latest projects in the pipeline—and some of the challenges those projects face along the way.
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.
Bay Meadows’ Delaware Street, the street-front hub of indoor and outdoor spaces, will feature 40k SF of retail (rendered here). Chris says he was fortunate to get a long-term development agreement that will be a mix of office, residential, and open and social spaces. Markets change, and Wilson Meany was able to deliver residential when the office market was slower and now that office is hot, they are able to deliver both. Even when the market is good we have to think about all the threads we need to weave together to make a project work, he says.
San Mateo mayor Maureen Freschet (here chatting with with BSB SVP of development Bill Ryan) says her city is growing quickly. She says there's 1M SF of commercial space in the pipeline. During the recession, several projects went to a standstill; now three developments are moving ahead on Delaware Street. Thank the 2005 rail corridor TOD plan for development along transit hubs. She calls Bay Meadows a world-class development, and there's also housing, commercial and retail coming to the Hayward train station. The goal is to get people out of cars and to live in these communities.
Here's Essel Environmental Engineering & Consulting president Nik Lahiri , who moderated, with Sares Regis Group president Jeff Birdwell . Jeff says land values in the hottest markets have more than quintupled in the last three years, with Google paying $250 a FAR foot for land in Mountain View. And in three years, office rents have doubled. Three years ago Jeff was buying apartment units for $50k to $60k a unit. Today people are paying $125k a unit. Luckily, he says Sares bought most of the 3,000 units in its pipeline a number of years ago and it's more selective now.
Sobrato Organization president Rob Hollister is looking for projects that move the needle, with five to 10 acres at a minimum. When dealing with the peninsula and product that size it makes most sense to do mixed-use, because that's what people want and it has big benefits related to traffic. His firm is doing 600 apartments and 400k SF of office on land it owns in Shoreline.
Chris says we're living in a fabulous time when it comes to the health of our tech companies, VCs and universities. Rob says one of the main challenges is the fragmentation of the peninsula. It's tough to maintain relationships and do good business with 10 to 12 communities, councils and staff, and coordinate transit plans. Chris agrees that we need to stop thinking just on the local level; we must address these issues as a region.