NAIOP 24th Annual Real Estate Challenge Awards Stanford Team the Golden Shovel

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Real Estate Challenge Held at the Four Seasons Hotel

SAN FRANCISCO, May 8, 2013NAIOP, the Commercial Real Estate Development Association, San Francisco Bay Area Chapter (NAIOP), hosted the 24th Annual Real Estate Challenge on May 2 at the Four Seasons Hotel. The Stanford team, Cardinal Development Group (CDG), won with their development proposal to the San Francisco Public Utilities Commission. Some key points of the presentation were:

The San Francisco Public Utilities Commission (SFPUC) site is 17.2-acre of office and operations, located along El Camino Real in Millbrae, CA (the site). CDG analyzed the site’s potential and recommended a course of action that maximizes its value while meeting SFPUC’s current and future needs.

SFPUC’s goal is to consolidate administrative and lab operations, currently scattered throughout the Peninsula, into a single office location with improved parking and access to public transportation. However, SFPUC also aims to obtain the highest and best use for the existing site, which is well-suited for mixed-‐use, transit-oriented large-scale development.

The analysis found that SFPUC’s most important decision is whether to stay or go. It can stay and build a new facility that meets all of its needs in one place, but this would be expensive and not aligned with the site’s highest and best use. Alternatively, it can sell the site to a developer who can maximize the site’s potential, and use the proceeds to move to facilities more suited to its needs. Either of these paths will present further key decision points in the near future.

To advise on this decision, CDG performed a thorough analysis of the SFPUC’s goals, the site’s characteristics and opportunities, market opportunities and trends, community characteristics, the entitlement process and feasibility, design and development alternatives and disposition strategies. CDG also performed a complete financial analysis to evaluate the economic arguments for several alternatives. In considering site development possibilities, CDG conducted extensive analysis on the market context and the advantages of possible land uses, and performed multiple land residual analyses. The team also considered several options for the parcel currently occupied by Orchard Supply Hardware.

CDG’s recommendation is that SFPUC sell the site to a developer who can maximize its value. Based on their analysis and conversations with real estate experts, a developer would be likely to build a mixed-use development with retail and residential product. The recommendation reflects this opportunity and proposes the creation of Rolling Hills, a new community-oriented development with a mix of apartments, townhomes and retail space that leverages the great site location along El Camino Real and is consequent with the city’s and the Grand Boulevard Initiative goals of maximizing the potential of El Camino Real and creating opportunities for the community. This proposal captures the residential demand in the area and allows the developer to position the development in a way that foresees future market trends. At the same time, the retail space will attract people to the site and contribute to the city’s tax revenues, potentially saving the PUC $150 million.

Photo caption (left to right): Stephen Koch, team adviser; Cynthia Hardy, Adrian Bejarano, Hans Buder and Alex Carel

About NAIOP San Francisco Bay Area Chapter
NAIOP San Francisco Bay Area Chapter is a chapter of NAIOP, the Commercial Real Estate Development Association, serving eight of the nine counties in the San Francisco Bay Area market.  NAIOP is the leading organization for developers, owners and related professionals in office, industrial and mixed-use real estate, with 18,000 members in North America.  NAIOP advances responsible commercial real estate development and advocates for effective public policy.  For more information, visit www.naiopsfba.org.

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