Top 10 Peninsula Commercial Real Estate Stories of 2011

| January 2, 2012 | 5 Comments

Who can resist a good Year-End Top Ten list? Here’s my take on the Top Commercial Real Estate stories for 2011 from the SF Peninsula:

1. Google Eats Mountain View: The 800-lb internet gorilla went on a real estate feeding frenzy like none seen previously in tiny Mountain View. With a mix of high profile purchases and leases, not to mention the acquisition of a number of smaller properties, Google stayed in the real estate headlines throughout 2011.

2. Tenants Descend on Downtown Locations: Everybody likes downtown Palo Alto, right? With the best selection of tony restaurants on the Peninsula, great access to rail and a terrific high tech vibe, it’s no wonder that a mix of VC and startup tenants have flooded the University Avenue corridor. And what about downtown Mountain View? Another amenity-laden transit friendly downtown has suddenly emerged as a hub for start-ups. These two submarkets, which led the earliest signs of a market recovery in 2010, absolutely exploded this past year, with rents skyrocketing and vacancies evaporating, in stark contrast to nearby multi-tenant markets which remained largely flat. It should have surprised none that this feeding frenzy led to one of the highest per-square foot office building purchases in Silicon Valley memory.

3. Facebook Likes Menlo Park: Welcome to Sun Quentin, Facebook. The fast-growing social media behemoth has plans to grow beyond its new 1,000,000 square foot headquarters, which may prove a challenge in development-unfriendly Menlo Park. Facebook has gone to great lengths to repurpose the dowdy Sun facility into a more modern tech friendly campus

4. Downtown RWC Redevelopment Agency: Shortly after approving a new redevelopment district within the downtown corridor, the city of Redwood City initiated an RFP process for a key property, which garnered extraordinary interest. With finalists selected, much-needed additional high end office space seems in the cards for this emerging downtown core.

5. Saltworks Controversy Grows: Possibly the largest proposed real estate development in the region for decades, the plan to transform a 1400 acre tract of baylands from their current use as salt ponds into a new mixed-use community faced enormous controversy in 2011 over traffic concerns and issues surrounding water rights. Given that residents of Redwood City recently defeated a much smaller project on the east side of 101 just a few years ago, it seems likely that developer DMC has a long battle in front of them

6. VMWare’s dramatic growth: VMWare’s 1,000,000 square foot lease of the beautiful former Roche campus in Palo Alto’s Stanford Research Park isn’t one of the Top Five stories of 2011? It was just that sort of year.

7. Sony lands at Bridgepoint: On and off the market for years, Sony pulled the trigger on the largest deal in San Mateo County this year. Great news for the Sobrato Organization, which pre-leases the former Siebel HQ to a solid tenant long before the collection of short-term subleases currently filling the property expire.

8. Industrial-Strength Life Sciences Development The Shorenstein Companies 40 acre, 2.3 million square foot biotech project was approved early in 2011. “The Industrial City” continues its evolution as the Biotech Capital of the West, though a potential glut of life sciences real estate in the Bay Area may slow this project down.

9. Sobrato Buys Frys’ Site: Tenants in the area around Fry’s Electronics in Palo Alto have long been operating under the knowledge that the current commercial uses would eventually give way to new residential development. the 15 acre site purchased by Sobrato is certainly one of the best developable in-fill sites in Northern California. It’s hard to imagine a site in this size range with more potential anywhere, really.

10. Starship Apple: Cupertino may be a few freeway exits away from where most would say the Peninsula ends, but Apple’s proposal for a very distinctive new headquarters is just too interesting to leave off the list. The proposal to construct the worlds largest Aerobie has elicited a lot of interest, but will spreading out Apple’s employee’s in a massive circle foster the sort of collaboration that built Silicon Valley?

So, there you have it. Some of my runners-up included the successful major leases in South Mtn View by developers Four Corners and Dostart, the approval of the massive expansion of Stanford Hospital, and the continuing saga of downtown Sunnyvale’s redevelopment efforts (another one not technically on the Peninsula). National stories of local importance such as the AMB/Prologis merger got my attention as well.

Agree? Disagree? Think of a flagrantly obvious story that I completely forgot about? Comment away–I’d love to hear from you.

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  1. Jim Pollart says:

    Excellent summary! Nice work Mike – thanks for bringing this valuable information together in one place for those of us who are not brokers. Keep up the good work!

  2. Great blog, Mike! Since you position this as a story about the entire peninsula, I think one trend you omitted is health care construction. Mills-Peninsula Health Services opened a fantastic new hospital and medical center in Burlingame, Kaiser opened a new outpatient care center in San Mateo, and the Palo Alto Medical Foundation is building new medical centers in Sunnyvale and will soon break ground in San Carlos. Why all the health care growth? Someone will have to take care of all of us Boomers and our families!

  3. Mike Cobb says:

    Great feedback, Cynthia- thanks! I am especially intrigued to see what impact PAMF’s San Carlos site will have in the long term on the surrounding industrial market.

  4. Daniel Callagahn says:

    Mike great story and great blog. I am a urban planning major at SFSU(The City is also on the SF Peninsula)
    and this web site is great. It keeps me in the loop on devlopment projects and I love your inside knowledge and
    understanding of the SF peninsula. As a SF Peninsula(West Bay) native, I can definetley say your on the money.
    Keep up the good work and thank you for actually knowing what the SF Peninsula is. Cupertino and Sunnyvale are
    100% NOT on the Peninsula. Some people dont get that but you do. SF Peninsula = 650 and the City.
    Anyways we need to find ways to unite the SF Peninsula, for all the 25 cities and 3 counties to work together. I mean
    we are surrounded on water on 3 sides, we are almost an island, we are definetly one community and need to start
    acting like it!

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