Redwood City’s Rapid Changes

Page 2 of 2

Redwood City construction The Registry real estate

It wasn’t always so great. Until recently, downtown Redwood City looked very much like it was stuck in the past. Then in 2011, the City Council approved a new precise plan for the downtown area that called for increasing the density and height of its buildings. Additionally, before the city’s redevelopment agency was dissolved, it invested heavily in the area, helping finance a new movie theater and to demolish a New Deal-era courthouse annex and convert it to an open space and recreation area.

[contextly_sidebar id=”cc13a0c40d4c70dba1676bd3271ed09b”]The planning took years. The council adopted a slightly different version of the land plan in 2007. A local property owner sued under the California Environmental Quality Act to block it. The city lost and a judge ordered it to scrap those plans after finding faults with its environmental review. Then the financial crisis hit, putting a chill on building and lending nationwide. For Redwood City, rather than soliciting developers to build downtown at the nadir of the financial crisis, it was forced back to the drawing board.

By January 2011, when the City Council again approved a precise plan for the area, this time with a “bulletproof” environmental impact review, the economic climate had started to change.

Hunter Storm had monitored the city’s progress on the precise plan closely, and in late 2010 it acquired the key corner parcels from two private property owners, then worked closely with the city on the plan’s final steps, Hunter said. In mid 2012, the city selected its joint bid with Kilroy.

Historically, Kilroy projects have been about 70 percent leased at the beginning of construction and 80 percent leased by the end of construction. Though Redwood Towers does not have a tenant, Kilroy has begun meeting with prospective occupants. “The chances to build 300,000 square feet of brand new, Class A space literally on the Caltrain station are few and far between on the Peninsula,” said Mike Sanford, Kilroy’s senior vice president for Northern California. Kilroy has built spec projects before, though the rest of its projects under construction—about 1.5 million square feet—are 100 percent pre-leased.

Lenders are still wary of financing speculative development. “I think most developers, if they can get a lender to finance it, would probably be optimistic to go,” Sanford said. “What differentiates us is we don’t need debt. We’ll fund the whole project without asset-specific debt, which allows us to be more nimble.”

The building is being designed to appeal both to technology companies and professional services. High ceilings, extra restrooms, showers, lockers and Gold certification or higher under the Leadership in Energy and Environmental Design program are all planned for the building and are elements that appeal to tech employers. The San Mateo County Courthouse also sits not far from the station, generating a draw for law firms and other professional services, too. Sanford said Kilroy has had meeting with prospective tenants looking for 75,000 square feet to 300,000 square feet. About half have been technology companies and half professional service.

Beyond the courthouse, downtown Redwood City is itself an attraction, Sanford said. There are restaurants, shops, drug stores, a post office and movie theater all within a few blocks. “That urban feel and access to transit is exactly what’s attracting so many tenants to San Francisco, and we think that relates to downtown Redwood City as well,” Sanford said.

[btn link=”http://wp.me/p2egQr-35i” target=””]PREVIOUS PAGE[/btn]  1  |  2

Photography by Laura Kudritzki

West Coast Commercial Real Estate News