Why the Silicon Valley Development Boom is Spreading
The SV office market is mature, which is forcing developers to adapt to competitive conditions. Top Bay Area talent can be tough to recruit and retain, and developers are building to accommodate near transit.
Kilroy Realty EVP of NorCal Mike Sanford told attendees of Bisnow's Silicon Valley State of the Market event last week that his region's hot spot is from Sunnyvale to SoMa. In the last few years, development has made financial sense and the firm has completed six Bay Area projects in this cycle, all of which are leased. The seventh (The Exchange in Mission Bay) starts in June. Mike says the company also is looking at Oakland, especially since Prop M is about to kick in in S.F.
Dasher Technology EVP Chris Saso, who admits he's the odd man out on the panel, is an IT supplier of data center servers. He grew up in Saratoga, so he's a local, and his current favorite project is with the San Jose Community College at Evergreen, a multi-year expansion of the campus network. But with lots of demand comes some hurdles. Training and recruiting enough staff to get them out to customers has been a challenge, he admits.
Lane Partners principal Mark Murray's advice for 21-year-old grads: don't focus on salary, title or the company you're working for, but rather opportunities to take on responsibility. That might mean holding a briefcase for six months and living off of Hot Pockets and Keystone. His company's business model has changed. Two years ago Lane was about renovating existing buildings, but now those deals are harder to come by. It's shifted to entitling and developing new properties, and Lane is in the process of entitling ground-up office developments in Sunnyvale, Redwood City and downtown Menlo Park.
Turner Construction GM Dan Wheeler, whose company has had a San Jose office since 1968, is busy building the new US Patent & Trademark office nearby. He says future hot spots are those that have a transit component, since traffic isn't getting any better. Some places to watch: Santana Row and Willow Glen. His company, which has 400 NorCal employees, does a ton of recruiting (his alma mater is Chico State, so a few grads come from there). But their barrier of entry is where they are going to live; employees aren't sharing studios in S.F., but rather settling in East Bay.
Polaris Pacific partner Paul Zeger (left), who moderated, says he's worked in San Jose 20-plus years and it's amazing to see the progress there. With banks lending and projects getting built, everything seems rosy. But, as panelists told him, recruiting and retaining talent is a top concern. Mike, via his role at BOMA, is trying to create a new crop of commercial RE employees via an SFSU real estate program.