Shaping Silicon Valley: Top 5 Trends To Watch In 2017
As Silicon Valley’s innovative technologies revolutionize the way we live, the region itself is undergoing a transformation.
Home to the tech elite and generations of Bay Area families, the real estate community is coming together to collectively confront tough questions around density, transportation and affordability.
Below are five key trends that will guide the sensible development of Silicon Valley through 2017.
Repurposing the Retail Center
City governments and developers are rethinking underused retail, responding to a shifting retail landscape and a need for more housing in Silicon Valley.
A prime example is The Hills development at Vallco by Sand Hill Property Co, a contentious project that's faced neighborhood opposition and is pending city approval. If greenlit, it promises to transform the defunct Vallco mall in Cupertino into a vast city center, comprised of 2M SF of office, 625k SF of experiential retail and 800 residences, designed by world-renowned architect Rafael Viñoly.
Other standout retail-redesign projects include Gateway Village, City Place Santa Clara and the Pruneyard.
Transit-Oriented Developments
Transit-oriented development encourages sustainable alternatives to driving by clustering housing and resources near transit, a major change from the car-oriented suburban development model that has dominated Silicon Valley for decades.
The Milpitas BART station is expected to open in 2017, marking the start of BART service in Santa Clara County. Nearby, KB Home and Barry Swenson Builder have been approved to build 98 townhomes and a 12-story tower with 210 apartments.
Another important project in play is the Gateway at Millbrae Station by Republic Urban Properties, which would introduce 376 residences, 150k SF of office, over 42k SF of retail and 135 hotel rooms to a site across from the existing Millbrae BART station.
Downtown San Jose: A Residential Renaissance
The 10th-largest city in the US by population, San Jose is experiencing an unprecedented amount of development activity. The project pipeline consists of over 3M SF of commercial office space and 10,000 residences, most of which are clustered in downtown San Jose.
Three noteworthy projects in the vicinity are either underway or in the late planning stage.
First, Trammell Crow has proposed the introduction of 960k SF of office space, 35k SF of retail and 325 apartments adjacent to the Diridon Caltrain station.
Second, Silvery Towers by KT Urban and R&F Properties will bring 643 condos and 20k SF of retail to 22- and 20-story towers.
Finally, Museum Place is a project proposed by Insight Realty Co that will add 200k SF of office space, 334 condo residences, a 143-room hotel, and over 12k SF of retail with a 60k SF expansion of the existing technology museum.
Office As Usual
The accelerated delivery of robust office space has been fueled by the tech boom. Over a five-year stretch ending in 2015, the Silicon Valley area added 350,000 jobs and 220,000 residents.
Several large-scale office projects are generating excitement as companies like Google and Apple, both of which are known for their impressive facilities, continue to expand their sizable footprint in the region.
One development with the green light is Central+Wolfe, Jay Paul’s 800k SF office project under construction and entirely pre-leased to Apple.
Another corporate campus by Jay Paul pre-leased to a major tech tenant is Moffett Place, which will eventually create 1.9M SF of office space for Google’s exclusive use in Sunnyvale.
A final notable example is Menlo Gateway, a 16-acre mixed-use development by Bohannon Development Co that will include a 200k SF, eight-story office building, an 11-story luxury Marriott Autograph Collection hotel, outdoor event facilities and a state-of-the-art Bay Club fitness facility in its first phase.
Affordability Crisis
Like San Francisco, Silicon Valley is in the midst of a major affordability crisis. A lack of housing supply at all levels creates market pressure.
Vacancy rates hover around 2.5% and homeownership vacancy rates below 1%. Private and public sectors are combining to combat the crisis.
Early this December, Facebook officially pledged $20M over the next five years for affordable housing, tenant assistance and job training in Menlo Park and East Palo Alto.
This followed approval by the City of San Jose of a new cap on rent increases in the city’s 43,000 rent-controlled apartments, with an 8% max for properties where landlords had made significant capital improvements.
Stanford University also recently announced free room and board for students coming from families with household incomes under $65k/year. The university, in partnership with Related California, recently completed a 70-residence affordable rental project called Mayfield Place at 2500 El Camino Real.
While there is no easy solution to issues of affordability, it’s clear that coalition and collaboration between major stakeholders, including employers, higher education institutions and local governments, will drive action in the years ahead.
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