Exclusive Q&A: Oakwood Worldwide On What's Driving Corporate Housing Demand
There's growing demand for corporate housing in the Bay Area, and Oakwood Worldwide's growing presence in Silicon Valley reflects that demand.
Bisnow caught up with Oakwood Worldwide's T.J. Spencer, vice president of sales (on left), and Mike Jara, West Coast acquisitions director (right), to talk about what is making corporate housing so hot in the Bay Area.
The company now manages three Oakwood-branded properties purchased by Mapletree Group in Redwood City, Sunnyvale and Mountain View (a purchase that hit a high for price per unit in the city). Oakwood Worldwide also manages other units in various buildings throughout the Bay Area (those units vary each year based on client demand).
Bisnow: Where are you seeing the most demand growth in the Bay Area?
T.J. Spencer: We are seeing demand growth throughout the Bay Area. The Silicon Valley is obviously seeing tremendous employment growth and the demand there has been a driving force behind us adding three Oakwood-branded buildings to our portfolio in the last 18 months (starting with the one in Sunnyvale, above).
Bisnow: What is it about the Bay Area market that makes corporate housing so hot here right now?
T.J. Spencer: Within the Bay Area, the demand for corporate housing far exceeds the supply in the area and the surrounding companies generate ever-increasing demand.
Bisnow: What has been the greatest challenge to finding the right properties in this area?
Mike Jara: Our corporate housing strategy is extremely location-specific. We search for locations which are convenient to our clients' workplace and also offer excellent neighborhood amenities. Within that context, we look for properties that are sized appropriately for our corporate demand, have full amenity packages, and have the unit mix and floor plans that lend themselves to the corporate business.
Bisnow: What sort of amenities are musts for Bay Area corporate housing?
Mike Jara: Community amenities should include a pool, outdoor living/BBQ areas, fitness center, a community lounge area as well as a business center. The apartment interiors should include in-unit washer and dryers and central air conditioning. Our Oakwood Mountain View (above) includes a specifically designed workspace, which includes fully equipped individual office/conference rooms around a community meeting area. This space allows our clients to work from the property or conduct meetings in a communal environment without leaving the property.
Bisnow: Do you foresee increasing demand in 2016?
T.J. Spencer: We do foresee increasing demand for corporate housing in the Bay Area and globally. In addition to employment growth, which generates its own demand, a key factor driving demand for corporate housing includes an increase in short-term assignments. Companies are looking to plug skill gaps, secure cost containment, appeal to younger workers who want to broaden their experience and also respond to the increasingly connected global marketplace.
The PWC Talent Mobility: 2020 and Beyond report finds that 20% of assignments now last less than 12 months, compared with 10% in 2002. Companies realized that corporate apartments are more cost effective than long-term hotel stays while providing better work/life balance options for the employees with larger room space with living rooms, kitchens, etc.
Bisnow: Are there other Bay Area locations where you see acquisition potential?
Mike Jara: We see great potential in San Francisco. We have very strong corporate demand in and around the financial district and have a very strong desire to acquire a property there. With three acquisitions in the Silicon Valley (including Redwood City, above), we are probably satisfied there for a while. Over the longer term, we could see adding another property in the Silicon Valley, one in North San Jose and one in the East Bay.
