Does transit drive deals?

| August 30, 2010 | 2 Comments

An article in the SF Business Times discusses a trend that I’ve written about here more than once– the seeming surge in interest in office space located in range of Caltrain stations.   This is an interesting look at the market, but I remain unconvinced that Caltrain ALONE is what drives the strength we’ve seen in some downtown markets.
Downtown Palo Alto, Mtn View and Redwood City (particularly the former two) offer a great combination of: amenites, excellent proximity to executive housing AND access to CalTrain.  I dont think that public transportation alone would, particularly in this climate, suddenly go from a “would be nice” feature to a “must-have, higher rent or not” item.

In my experience working with small tech users, access to amenities generally ranks higher on the priority list than transit.  My team’s office leasing success at the Town & Country Village in Palo Alto is a great example– we have consistantly stayed ahead of surrounding markets (with higher lease rates than any submarket except downtown PA), and were able to attract tenants at strong rents even during the worst of the downturn.  Most of our tenants were focused on downtown markets, but found the amenities at T&C very compelling, despite the greater distance from CalTrain (though the station is within walking range).  We are currently 100% leased in the office portion, and havent had a significant level of vacancy for quite some time.

Maybe this is more of an emerging trend than I realize– the fact that Palo Alto and Mtn View, where this trend is most pronounced– are both bullet train stops and therefore the busiest stations on the CalTrain line outside of SF cant be dismissed, and I very much want to believe that companies are making a smart Green choice on their employees behalf.  But with very high vacancy rates to be found only a few minutes on the Light Rail away from the downtown MV Caltrain station, I am yet to be completely convinced.

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