By Naib Mian
Commercial real estate leaders discussed the evolving corporate campus last week at an event hosted by urban planning group SPUR and co-presented by the Urban Land Institute San Francisco.
University of California, Berkeley, professor and moderator Louise Mozingo introduced the discussion with a historical background of the corporate campus, describing the first such campus in the 1940s, meant to be low density, heavily landscaped, and meld with its middle-class suburban neighborhoods. This suburban commercial real estate was car-dependent and designed to keep the employees in one place for the entire day.
Although freeways and the office park are the norm for Silicon Valley’s suburban environment, Mozingo said this model does not address the future and pointed to forces of change—a new peak in jobs since 2001, a millennial drive to go urban, and a demand for more active communities that engage the public—that are shifting how companies approach real estate.
Millennials are rapidly changing business culture and the real estate environment across the Bay Area. Set to make up 75 percent of the workforce by 2025, this younger generation is less interested in driving, and 77 percent plan to live in the urban core—a statistic that is unsustainable given the current reality of urban real estate, Mozingo said.
Citing a growing excitement factor, Jan Sweetnam, Western Region COO for Rockville, Md.-based Federal Realty Investment Trust, which manages San Jose’s upscale outdoor shopping mall Santana Row, said today’s employees are very different from those of the first corporate campuses.
“People make great streets vibrant and exciting,” he said, speaking to the culture of Santana Row in attracting younger people. Sweetnam, who presented Santana Row’s second office building, which will be completed next year with 223,000 square feet of office space, said that excitement must also transfer to the office. The new construction will feature shared public space, allowing interaction and integration with Santana Row.
“If you’re not a big company and can’t build amenities, you can use our [Santana Row] amenities,” he said.
Amenities have become a large part of that excitement factor, said Lisa Scribante, principal with Seattle- and San Francisco-based architecture firm Mithun. She pointed to new services in wellness at suburban campuses that are attracting employees, including gardens and spaces for meditation or collaboration.
“In urban campuses, however, the city is the amenity,” she said. This is becoming an increasing trend as businesses adapt to millennial urban urges. Scribante described one of Mithun’s projects, a new eight-story headquarters for forestry company Weyerhaeuser in Seattle’s Pioneer Square, relocating from their longtime corporate estate in Tacoma.
“They moved to the city for the same reason a lot of businesses are: to attract talent,” she said.
As young professionals continue to shun driving, urban transit-oriented development has become a key aspect of real estate planning.
Mike Sanford, the Northern California executive vice president for real estate investment trust Kilroy Realty Corp., praised Redwood City’s changed image. Highlighting Los Angeles-based Kilroy’s ongoing project in the city—two midsized office buildings totaling 339,000 square feet—Sanford said Redwood City’s downtown, situated along a Caltrain stop, is increasingly becoming a more attractive location with more than 1,000 residential units under construction.
“We’re no longer looking at Redwood Shores and campuses. The city’s downtown has completely changed,” Sanford said. The Seattle suburb of Bellevue also has incorporated higher densities in development and planning, he said.
“Bellevue is doing really well. They went high, and it was well received,” Sanford said.
Kevin Riley, the City of Santa Clara’s director of planning and inspection, highlighted several local redevelopment projects that would also increase density, which he said is the only way to accommodate growing populations given limited space in the region.
Santa Clara Gateway, a project at 5451 Great America Parkway by Newport Beach, Calif.-based development firm The Irvine Co., is a 911,000-square-foot multitenant corporate campus that was completed last year. Santa Clara Square, another Irvine Co. project, will feature a 100-acre community of office space, retail, housing and recreation at Bowers Avenue and Highway 101. With the lack of access to public transportation, Riley said development must find other ways to make communities less focused on driving.
“If transit is not available, you have to put the jobs and housing closer together,” he said.
Regardless of the tactics, the commercial real estate industry is increasingly being required to shift design, development and planning to accommodate a rapidly changing business and living culture propelled by millennial and emerging professionals.