While 2012 didn’t generate the same sort of market-moving stories as 2011, there was still more than enough activity to populate this years Top 10 Commercial Real Estate stories for the Peninsula:
San Francisco is Silicon Valley? No question that, for the first time since the dot-com boom, certain parts of San Francisco find themselves with a really impressive start-up vibe. While to a very large degree this has been the result of organic growth of companies born in The City, much of this new vibe comes straight from the Peninsula, specifically downtown Palo Alto. Much has been written on the apparent northward migration of the heart of Silicon Valley, and given how recently this shift has arisen, perhaps the discussion is a bit premature. The landscape has clearly changed, though, and San Francisco will I suspect be a bigger player in the tech arena going forward. But framing this as a competition between the two regions reminds me a bit of the historic Giants-Dodgers rivalry, where really only the team to the North cares all that much
Deadwood City no more. Lawsuits and false starts have given way to shovels and great plans. The revitalization of downtown Redwood City went from pipe dream to reality in 2012. The selection of Hunter/Storm as developer of the cornerstone Depot Circle project was an important landmark in the process, and the fact that bulldozers are rolling on some nearby residential projects and new arts organizations are migrating into town only adds to the excitement.
Tear down the Mall. After an absolute marathon entitlement process aimed at replacing a formerly kitschy shopping mall with housing, an 11th hour sale of the property will maintain the sites current zoning and has put a half-million square foot office/R&D campus back in the mix. Did not see that coming. The site offers something that just wasn’t valued back when HP occupied it years ago, but is in high demand now– easy access to transit.
Centennial Towers’ Success. SuccessFactors 90,000 sf lease in South San Francisco was hardly the largest lease of the year, but long-vacant Centennial Towers, with a completed first phase that missed out on the last market boom, may be positioned to take advantage if the current dearth of large blocks of space on the Peninsula continues. A big lease in a peripheral submarket like this is a good indicator of an improving market.
The largest open floor plan in the world. In the wake of the colossal lease that brought its headquarters to Menlo Park, Facebook has taken steps to further their presence in the small Peninsula city. Shortly after securing permission from the city to increase their HQ head count beyond zoning limitations, Facebook announced the hiring of high-profile architect Franky Gehry to design the second phase of their campus. While many are impressed with Gehry’s bold design for the new structure, others see the 430,000 sf single-user open office layout as an albatross in the making.
Saltworks evaporates. One of the biggest stories in last years market was DMB Saltworks ongoing efforts to create essentially a new Peninsula waterfront city on the site of a format industrial salt field. Earlier this year, in the face of heavy opposition from local residents and environmentalists, the developer abruptly pulled their application, intending to scale back and resubmit this 1400 acre project.
New development? In Palo Alto? When a market heats up, new development proposals start finding their way into Planning offices at an accelerated pace. But to see two projects totalling a half-million square feet in Palo Alto is noteworthy no matter the market conditions. An exceptional level of public benefit attached to these two projects has warmed the frigid response one would normally expect in Palo Alto, but both developments likely will face hurdles based on concerns over increased traffic.
Big Build to Suit in Mtn View. The City of San Jose pulled out all the stops to lock down a major expansion by Samsung the the North First St area. Perhaps as a nice little side benefit, TMG Partners secured a 325,000 sf build-to-suit deal with the multinational electronics powerhouse at a high profile site on Clyde Avenue. Expect to see more new development in the Ellis St corridor of Mtn View going forward.
Big waves at Shoreline. After gobbling up huge chunks of Mountain View real estate in 2011, Google continued establishing its turf in the Shoreline Park area in 2012. Inuit, meanwhile, has quietly been putting together their own puzzle pieces to accommodate their own growth in this same confined business park. Much of this appetite to control property in the north Bayshore area was no doubt driven by the city’s new General Plan, allowing for substantially increased densities there. Collateral damage in the battle for limited space in this prime location would appear to be the loss of LinkedIn’s future expansion— their long term commitment to a new Sunnyvale campus, and that site’s subsequent sale would have to be on anyone’s list of the biggest real estate stories in Silicon Valley.
Grubb and Ellis dissolves. Sure, this is a national story, and maybe only of real interest to industry insiders, but the bankruptcy of brokerage house Grubb & Ellis led to the biggest game of commercial real estate musical chairs that the Peninsula has seen in a long time. Colliers was a definite beneficiary of Grubb’s demise, both on the Peninsula and in Silicon Valley.
So, what did I miss? Comments on my list? I’d love to hear your feedback!