Newport Beach-based real estate investor and developer Irvine Co. has proposed remaking an apartment complex in Cupertino that would target the area’s technology workers, help meet the city’s new housing goals and provide a hefty amount of community benefits.
Renovating The Hamptons at 19500 Pruneridge Ave. “makes sense given the location,” said Carlene Matchniff, the company’s Northern California vice president of entitlements and public affairs. “We’re right on Interstate 280 and adjacent to the [under-construction 2.8-million-square-foot] Apple Campus 2, which will house thousands of employees. If you want to provide housing [to Apple and other workers in the area], this would be the right place. They can walk or bike to work.”[contextly_sidebar id=”7bOThl1tn6w7rqqukujRsDFlxBQo9SMc”]Irvine recently filed redevelopment plans with the city that would take a currently 342-unit community and add 600 units allocated under Cupertino’s newly updated Housing Element for a total of 942 apartment homes. If approved, the project could break ground in 2017. The project cost was not disclosed.
The project would offer studio, one-bedroom, two-bedroom and penthouse units. A rendering shows a contemporary block-stack design. The project’s architect is Miami-based Arquitectonica, whose portfolio includes San Francisco’s Infinity and Lumina condominium towers, both developed by Tishman Speyer.
The project would provide many features that today’s workers look for in a residence. It would include sustainable elements conforming to the California Green Building Standards Code, landscaping irrigated by recycled water, a state-of-the-art fitness center, Wi-Fi lounge and three pools.
With Apple’s new headquarters nearby, Cupertino Mayor Rod Sinks said, “we know many, many thousands of jobs will be there, and people having the option to live [at The Hamptons] could help us with traffic. Putting housing next to jobs is a healthy thing.”
The Hamptons renovation would be the first project to come in under the city’s allocation of 1,400 residential units called for in the Housing Element, which was finalized in late May and covers a span from 2014 to 2022.
The Hamptons project would also represent the largest portion of the units allotted among several sites that the city deemed a priority for residential development. Other sites include the Vallco Shopping District, the Oaks Shopping Center and Marina Plaza.
Currently, The Hamptons offers 34 affordable-housing units, Matchniff said, and those would continue on to the renovated complex. In addition, Irvine would pay $12.9 million in a fee toward funding Cupertino’s affordable-housing efforts.
The project would also pay more than $15 million in park and school fees and contribute an estimated $7 million to traffic improvements at the North Wolfe Road/Interstate 280 interchange, the company said. Moreover, Irvine would donate $7 million toward community meeting space as part of a new civic center and library complex costing more than $40 million.
In total, the company said, its project would bring more than $61 million in community benefits and city fees.
Cupertino may soon see an increase in public benefits from developers wanting to build in town. City leaders are considering a competitive process in which proposed projects are weighed against each other for development rights, Sinks said.
“We would decide which one is the worthiest” to proceed to the entitlement phase based on various factors such public benefits, sustainability features and transportation measures, he said.
Cupertino is taking a cue from other cities such as Mountain View, which asked LinkedIn, Google and other applicants vying for limited development rights in the North Bayshore neighborhood to present their top proposal featuring enhanced public benefits. LinkedIn was awarded the majority of the more than 2 million square feet of commercial space that had been available.
“Our process would be similar in that we want to see companies put their best foot forward,” Sinks said. The City Council could make a decision on this process by summer’s end.
Irvine built The Hamptons in 1996. Owning the property since then and now looking to upgrade it reflects the company’s business model of keeping and reinvesting in its assets.
“The Irvine Co. is known for owning and maintaining its properties,” Matchniff said. “We don’t sell our assets but redevelop them.” The Hamptons is Irvine’s only asset in Cupertino, but the company has many other Bay Area properties.
Existing tenants at The Hamptons would be offered a “relocation assistance program” but also an opportunity to apply to return to the remade complex, Matchniff said.
She did not know the projected rent following the renovation but said rates would be competitive with the market.
That multifamily market in Santa Clara County, as well as most of the Bay Area, has been hot. According to a 2015 first quarter report by commercial real estate services firm DTZ, the average asking rent in the county was $2,457 a month—up 11.8 percent year-over-year. But the pace of rent growth has been easing up and should “fall into the single digits in the months ahead if not flatten as new deliveries surge,” the report said.
Still, the report said, “the market continues to quickly absorb most large new projects within a few months of their delivery.”
The vacancy rate stood at just 3.3 percent—the lowest level since the second quarter of 2012, the report said.