Selling Silicon Valley

On a cloudy, cold and wet morning, the mood was decidedly sunny at the Computer History Museum in Mountain View, Calif., where the Tri-County Division of the California Apartment Association held its economic summit for the Silicon Valley rental housing industry on February 6. The region is experiencing an economic boom unseen throughout the rest of the nation, with decreasing unemployment and increasing housing prices, according Joshua Howard, executive director of CAA Tri-County, who opened the event and served as the moderator during its panel discussions.

Redwood City Hall The Registry real estate
Redwood City

One of the first signs of our economic recovery has been the increase in traffic on our highways and the time it takes to travel between two points. This was reaffirmed by this morning’s log jam as the participants waited patiently to exit Highway 101 at Shoreline Blvd.; the museum is less than a mile away from the headquarters of Google, Inc. and its ever-expanding array buildings.

As the guests settled into their seats, the event commenced with an economic outlook that featured Sam Liccardo, the City of San Jose council member and mayoral candidate; and Rosanne Foust, vice mayor of Redwood City. The two cities sit at opposite ends of Silicon Valley in more ways than simple geography. San Jose, the self-proclaimed capital of Silicon Valley, is home to several large companies such as Adobe and Apigee; it is the largest city in the Bay Area by population; and it offers a rich palette of cultural and entertainment offerings. More prosaic Redwood City on the other hand is “Mayberry meets Silicon Valley,” according to Foust, who also reminded the audience of its other less-complimentary nickname of “Deadwood City.”

But technology is changing all that. Both cities are very bullish about their prospects for 2014. In different ways, they are able to offer amenities that any modern city can claim, although in Redwood City, perhaps because of its size, that offering is a little less prescriptive.

“If Mr. and Mrs. CEO come to Redwood City, I would say ‘Welcome, what is it that you’re looking for?’” says Foust, explaining that the Peninsula city takes a more client-focused approach, trying to understand what resonates with each different party. “Everyone is different and wants something else, so you have to drill down to their perspective and what is going to make them successful,” she adds.

San Jose
San Jose

From a practical point of view, Redwood City has a type of hard-working, diverse and eclectic flavor that separates it from the rest of the Bay Area by temperament as much as by geography. The selling point is the equidistant proximity to San Jose and San Francisco, located on the Caltrain line with different commercial space options and occupancy costs that remain slightly lower than the overall market. Its charm does pack a punch. The public square by City Hall offers free concerts in the summer, and its renovated Fox Theatre is a Bay Area jewel. It is no wonder that Crossing 900, its new 300,000 square foot development in the heart of the city, is attracting strong interest from a dozen or so technology tenants, according to Foust.

In San Jose, Liccardo focuses on the same things, but in a slightly different tone. “It’s really around those public spaces, and if we can focus our energies as a city around creating opportunities for great things to happen in those public places, we’ll be successful,” he says. Livability in San Jose’s downtown was driven primarily by empty-nesters in the past, and because of that, the amenities offered in its core catered more to that demographic.

But Liccardo sees that changing. He is seeing a convergence between that traditional downtown occupier group and the Millennials, who have a greater appreciation for the urban setting that downtown San Jose can offer. ”There is passion around what we do with those public spaces. Those parks and the plazas; everybody appreciates a farmer’s market, everybody appreciates free live music in the park, everybody appreciates going to the San Pedro Market before a Sharks game and being able to have lots of food offerings.”

Development is following suit. Emerging from the Great Recession was not as speedy in the South Bay city as it was elsewhere in the region, partially due to its own doing. After the city reduced its fees, it saw a surge of interest in housing creation. Says Liccardo, “It’s finally caught San Jose. By this time next year, we’re going to have about 2,500 housing units under construction in the downtown core alone.”

Redwood City saw the need for that a little earlier. It touts its approval process as one of the main assets of working with the city, even completing reviews of one project in just 91 days. As a result, the city is  in the process of delivering 1,650 housing units by early 2015, which is more than double what was constructed from 1960 to 2010, according to Foust.

Both officials understand the critical need of bringing an urban option to Silicon Valley. “Young creative professionals want an urban option, that’s why they’re living in San Francisco, and we critically need to have [that] in the Valley,” says Liccardo.

Employers understand it, too. While San Jose opened over 20 restaurants in its downtown core in 2013, it is its proximity to the searing-hot Golden Triangle sub-market that brings companies to the area. Polycom and LSI recently moved into the region, as has Dell and Samsung, with more announcements on the way.

“We’re soon going to be able to announce a major tech company filling about 2 million square feet just north of downtown,” says Liccardo. He did not respond to questions for more information before this article went to press, but it will hardly be the last big announcement the two cities will have this year.

West Coast Commercial Real Estate News