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Housing, Traffic Issues Shifting The Tide Of Multifamily Development In Silicon Valley

Despite the job and economic growth in the Bay Area, two issues time and again have given employers pause: housing and traffic. 

Bisnow San Francisco Bay Area Business Manager Nick Bates, Silicon Valley Leadership Group CEO Carl Guardino and Blach Construction Senior Project Estimator Kevin Brady

During the last 15 years, a Silicon Valley Leadership Group survey of over 200 CEOs has led to the same results. Housing and traffic congestion are the most pressing issues for local employers, according to Silicon Valley Leadership Group CEO Carl Guardino, who spoke during Bisnow’s Silicon Valley multifamily event Thursday. 

From 2010 to 2016, Santa Clara County created 300,000 jobs and 50,000 new housing units. In San Mateo County, 73,000 jobs were created during this time and only 3,850 new homes, Guardino said.

“We all know supply and demand ... and that just doesn’t work,” he said. “Jobs need a place to go home to sleep at night.”

In 2018, SVLG plans to campaign for a statewide housing bond, the Veterans and Affordable Housing Bond Act of 2018, and a nine-county traffic initiative. The housing bond would provide $4B in funding for affordable housing, with $1B going toward veterans who cannot afford to live in California without assistance and $3B going toward a spectrum of housing. These needs would include housing for homeless to those at risk of becoming homeless, decent housing for the agricultural areas in the Central Valley, affordable rental homes in high-cost areas of the Bay Area and down payment assistance for workforce housing. 

Silicon Valley Leadership Group CEO Carl Guardino throws a T-shirt to an audience member.

He said the bond could help nearly 100,000 Californians in a state that has built 80,000 new homes on average each year for the last 20 years. The state needs 200,000 to meet its housing needs, he said. While he said this bond will not solve the state’s housing problems, it will be a step in the right direction.

SVLG also has been providing ongoing support for housing developments and endorsed 300 projects in the last 20 years. With its backing, a majority of these housing developments have received approval from planning commissions, according to Guardino. 

Guardino said the region has the second-worst traffic conditions in the U.S. On average, commuters spend an average of 72 hours stuck on the freeway in traffic below 35 miles per hour.

SVLG has partnered with Bay Area Council and SPUR on a nine-county traffic initiative that would provide $5B in improvements across county lines for the next 25 years. This funding would go toward improving freeways and Caltrain modernization and improvements to stations, Guardino said.

“On a regional front, we have to pull together as a Bay Area and do better,” he said.  

Creating Housing Communities That Improve Transit

Anton DevCo President Andrew Baker, City Ventures Senior Vice President, Northern California Patrick Hendry and Sares Regis Group Senior Vice President Dave Hopkins

One of the ways developers have been working toward solving the housing and traffic issues is by building mixed-use transit-oriented neighborhoods where residents do not always need to get in their cars to go to work or go to a retail center.

While some developers have had less-than-favorable opinions of San Jose’s urban village concept, City Ventures Senior Vice President, Northern California Patrick Hendry said urban villages are presenting new opportunities for the company in San Jose. The company closed on a 10-acre site last year at 641 Capitol Ave. and is looking for additional opportunities for urban villages as well as anything adjacent to transit.

Anton DevCo has been working on a project in Milpitas alongside Lion and Lennar to create a mixed-use neighborhood next to the future Milpitas BART station, which is expected to open in June, Anton DevCo President Andrew Baker said.

Anton DevCo has 2,000 units in the pipeline with 500 in lease-up and 500 under construction. Two projects are expected to start this year with Phase 2 of its Milpitas project across from BART and another project in Alameda County. Several projects in North Peninsula are in pre-development for 2019.

Baker said he expects more of these urban villages throughout Silicon Valley that are creating their own destinations, much like what was done in Santana Row.

The Core Cos. Executive Vice President Chris Neale and Swenson Senior Vice President Steve Andrews

The Core Cos. is building a mixed-income and mixed-use community in Santa Clara near the San Jose border, according to The Core Cos. Executive Vice President Chris Neale. The project, Agrihood, will provide senior housing, affordable housing, middle-class rentals, single-family homes and market-rate rentals.

“Our goal for the project was how to create housing for the broadest range of Santa Clarans,” Neale said.

Part of that meant working closely with the local community to figure out what it wanted and how best to create a new neighborhood within an existing area that was predominately single-family homes, he said.

The developer took cues from the history of the land, which used to be an agricultural site and will turn a portion of the land into an urban farm, according to Neale. The whole process took a lot of upfront work with the local community, which had vetoed a previous developer’s plan for the area.

“It’s a tough battle to get projects entitled,” Neale said. “They have to be at the edges of density.”

Why Location Is Becoming The Top Selling Point

Dern Architecture + Development principal Michael Dern and Polaris Pacific partner Paul Zeger.

Having a multifamily project close to density as well as office and retail has benefits and does make lease-up easier.

“The best amenity isn’t the building. It’s where you can walk to from it,” Sares Regis Group Senior Vice President Dave Hopkins said. “It’s the transit. It’s the job. If you really hit a home run, you put [the project] near a base of employment.”

At Sares Regis’ newest condo complex, which began sales last year, 3,500 people expressed interest in 52 units in Mountain View along El Camino Real and close to transit and 120 people were pre-approved, according to Hopkins. The complex quickly sold out at over $1K/SF.

Sares Regis has been working on transit-oriented developments in South San Francisco, San Bruno, Belmont and Downtown Redwood City. Its biggest project is the redevelopment with Hunter Properties of downtown Sunnyvale's former Sunnyvale Town Center into a mixed-use community with retail, office and residential. 

At a project in Downtown Sunnyvale, SummerHill Apartment Communities decided to forgo a swimming pool for a small project that had 105 units, SummerHill Apartment Communities Executive Vice President and Managing Director Katia Kamangar said.

The project was in a great location in downtown but was competing with a larger project farther from downtown that had a huge swimming pool. SummerHill’s project had fire pits, water fountains and high-quality spaces, she said. Despite some initial nerves, the project leased up, she said. 

“You have to be careful ... your location and your amenity package has to be commensurate,” she said. 

Cal Solar Design/Build Contractor Sean Neman

The Core Cos. is planning to build the 300-unit Gateway Tower in Downtown San Jose and Neale said one of the biggest features to this project is its location.

“Residents in these apartment communities really want to be in these vibrant 24/7 neighborhoods,” he said.

What is also driving the need for denser communities near transit are people’s perceptions of how housing is changing. Families want that smaller home near transit where they can go out and spend weekends walking around with their kids, Polaris Pacific partner Paul Zeger said.

“Municipalities have to accept density near transit as a good thing,” Zeger said.