Millennials Fuel SV's Multifamily Construction Boom
We suspect Millennials are finally returning to the housing market. But in Silicon Valley, they're doing more: driving the multifamily construction boom.
That was the consensus among panelists at Bisnow's Silicon Valley Construction & Development event at the San Jose Hilton last week. MVE + Partners principal Darin Schoolmeester told the crowd Millennials are spending more time in open spaces than their individual units, so the focus for developers is on creation of communities. Darin's company is big on multifamily, and he's a believer in facilitating a collaborative process between the design team, GC and the owner early on, allowing the owner to make an informed decision about cost quickly.
Bay West Development partner Sean Murphy says his company, which started in 1979, has some 1,300 units in construction or the entitlement phase in the Bay Area. He says the current workload in the multifamily market is so heavy that its affecting the ability of the subcontractor community to respond to bids in a timely fashion.
Sean sent us a rendering of his latest multifamily project in Silicon Valley, which is nearing completion in Campbell and will start leasing in April. The 168-unit project has 12,500 SF of retail along Bascom Avenue that's up for grabs. About a year ago, we toured its North San Jose Aire project, which was one of the first multifamily projects to install fancy Nest thermostats.
Brown Construction CEO Ron Brown says it's all about amenities: people are entertaining outside of their units, meeting with people below in elaborate courtyards or rooftop meeting spaces with bars and magnificent views. He wants to take the BIM model to the next level by integrating cost schedule. That means at any given time, financiers can see a 3D model and get an update on scheduling and pricing. That would allow clients to review the projects from their office locations and minimize travel expenses when they are located in other cities or states.
Devcon VP Andy Schatzman says his firm has been the largest GC in Silicon Valley for at least 15 years. He credits their success to being diverse, willing to do anything from 1k SF to 100k SF TI jobs to football stadiums (they did Levi's Stadium). Their mantra is 90% of the cost of a job is determined in the first 10% of the design. That means the more the GC is involved in the early stages of design, the more they can control cost--especially important with today's escalation in construction prices.
COG director of architectural interiors Grace Dalman, who moderated, asked how the concept of a campus has changed. Andy says campus work is no longer the traditional setup of seven buildings on one piece of property, but rather it's spread out. Campus life is different than it was 30 years ago. The point is to keep workers on site 24/7, with even a place for their dog to roam around. A lot of tech groups have their own personalities, with some trying to make each building have a different identity, whereas others choose to make everything uniform.
United Mechanical Inc VP Leonard Bertolami says 80% of his firm's revenues come from Silicon Valley projects. A lot of companies like his are hiring young professionals coming out of school, but traffic is a major concern. Leonard says it’s tough to attract people when they live 30 miles away and it takes an hour and a half to get to work.
