TODs are shaping Bay Area’s real estate.
THIS ARTICLE WAS PUBLISHED IN THE ‘Q’ – THE REGISTRY’S PRINT PUBLICATION – IN JULY OF 2016
According to a new Jones Lang LaSalle research study, Bay Area Mid-Year 2016 Multi-Family Trends: An In-Depth Study of Supply and Demand and Investment Fundamentals, 2016 will be another good year for Bay Area multi-family real estate. Home prices have surpassed all previous peaks and single family home affordability is one of the lowest in the U.S. Overall Bay Area job growth will slow from a very strong 3.3 percent annual growth rate (last five years) to a more stable 1.8 percent annual growth rate through 2020, still outpacing U.S. job growth during the same period.
With a multi-family vacancy rate of 3.7 percent and an average asking rent of $2,583, young employees are looking more and more to mass transit to offset the high-cost of owning a car (and spending hours and hours in it on overcrowded freeways).
“If you add in the cost of maintenance, gas and parking, owning a car can cost upwards to $1,000 to $1,500 per month,” said Stephen Jackson, JLL’s senior vice president and head of Capital Markets-Multifamily Investment Sales.
“We have the most expensive rental housing in the country here in the Bay Area and many employees are being priced out of urban living so are forced to look at the suburbs. For these renters, BART access is critical,” added Jackson.
This, he said, means that landlords of properties within easy access of existing BART stations are sitting on some of the most valuable properties in the Bay Area. Next generation real estate company Estately recently compiled the average sale price per square foot for all the houses, townhomes and condos that have sold within a one-mile radius of each BART station over the past six months: Most expensive is Embarcadero at $1,191 per square foot and the least expensive is Pittsburg/Bay Point at $219 per square foot.
JLL reports that San Francisco saw transit utilization increase 10 percent between 2004 and 2014 and is the fourth most heavily used transit region in the country (after Los Angeles, Chicago and Washington, D.C.). But, according to a report by SPUR, at current rates of ridership growth, BART’s ability to transport riders across the bay will be maxed out by 2024, further impeding access to a BART station by car. In fact, BART parking is already maxed out at most stations—garages and lots throughout the BART system routinely fill up by 7:30 a.m. weekdays.
TOD projects are definitely on the table for BART’s current expansion projects from Fremont to North San Jose. Three new stations and track are under construction at Warm Springs/South Fremont, Milpitas and Berryessa, with the first two stations set to begin operations in 2017. At the Warm Springs/South Fremont station, for example, the Fremont City Council approved up to 1,000 multi-family units, 5,000 square feet of commercial development and two acres of parks. The Warm Springs TOD Village is being developed by Toll Brothers and Van Meter Williams Pollack Architects.
Milpitas is also seeing some construction by Citation Homes near its new BART station. Amaifi with 378 units coming on line this year, and the Berryessa area is seeing the expanding Riverview project expanding even more with 959 units also coming on line this year.
BART is also adding two stations in East Contra Costa along 10 miles of new track from Pittsburg/Bay Point to Pittsburg Center and Antioch, though no TOD development has been officially proposed as yet.
Meanwhile, Caltrain has some TOD projects underway near its Hayward Park station in San Mateo and in San Carlos, according to spokesperson Jayme Ackemann.
Hines and Pearlmark are in the final stages of a three-building, 305,000-square-foot office complex off Concar and South Delaware streets in San Mateo. In April, Medallia, a global SaaS Customer Experience firm, signed a 210,000-square-foot lease at the complex. Across Concar Street from the Hines complex is the Essex Property Trust project called Station Park Green, which will offer 599 apartment units, 25,000 square feet of retail space and 10,000 square feet of office. The project, which sits on land adjacent to the Hayward Park station, is in the foundation stage and is projected for a fourth quarter of 2019 completion. MVE is the architect.
The San Carlos Caltrain TOD project consists of two parcels north and south of the station still under planning mode and another off San Carlos Avenue and Laurel Street, which is set to feature 109 condo units, 10,000 square feet of commercial space and underground parking via KB Homes and KTGY Architects.