By Jon Peterson
The posh Peninsula enclave of Burlingame with six square miles of persistent luxury continues to attract investor interest.
At the same time, Chicago-based Equity Residential hopes to strike a like negotiating agreement with Burlingame city by yearend to redevelop two additional city-owned surface parking lots near Howard Avenue, also downtown.
Peter Solar, vice president of development for Equity Residential in its regional office in San Francisco, said the company hopes to begin the entitlement process as soon as the development agreement is in place. “Ultimately the development will entail replicating the existing parking and augmenting it with 140 quality, for-lease residences above,” he said.
One of the lots, identified by the city as parking lot F, has 100 parking spaces and totals 36,694 square feet. The second, lot N, has 69 parking spaces and totals 22,500 square feet. Neither site has a street address.
Equity already owns 650 apartments in two Burlingame projects: Skyline Terrace Apartments at 3133 Frontera Way and Northpark Apartments at 1080 Carolan Ave., neither of which are downtown.
The proposed Grosvenor development involves a city-owned parking lot with 28,480 square feet and the adjacent U.S. Post Office property at 220 Park Road. The post office building has 20,000 square feet and the land measures 55,000 square feet. In its response to a city request for proposals, Grosvenor suggested the parcels could support 100 apartments and some ground-floor retail.
The U.S. Postal Service has selected CB Richard Ellis to handle the sale of the land and post office building, part of which is considered historic. Hernan Santos, a senior vice president with CBRE in its Foster City office, is managing the listing.
It is not clear when the property will come to market. Grosvenor will have to compete with other prospective buyers to acquire the site.
“We think that downtown Burlingame is going to become a more vibrant area with people spending more time there on the nights and weekends. Our site has a good location. It’s within walking distance of a Caltrain station. Burlingame in general is kind of halfway between downtown San Francisco and Silicon Valley. This would allow the renters in our project to have a commute in either direction,” said Steve O’Connell, vice president of development for Grosvenor.
Downtown Burlingame, particularly Burlingame Avenue, is a well-known shopping and dining destination not only for local residents but for the thousands who stay in the city’s more than one dozen hotels. Housing in the town of 30,000 and neighboring Hillsborough, which has 11,000 residents, is among the most expensive in the country. Hillsborough has only housing, meaning its residents often turn to downtown Burlingame as a local retail service center, too.
Burlingame city is also in the midst of improving downtown’s public space and infrastructure. Tenants include national and international retailers such as Apple Inc., Starbucks and J Crew as well as local shop owners and restaurateurs.
Other institutional investors also have found reason to place money in Burlingame in recent years. In 2012, Invesco Real Estate acquired a just-completed Safeway Inc.-anchored shopping center in downtown at 1450 Howard Ave. Safeway was the seller of the 70,000-square-foot center, which was producing a 5.4 percent yield at the time. Millennium Partners also has gained entitlements from the city of Burlingame to build Burlingame Point, two office towers with 780,000 square feet adjacent to the bay on the east side of U.S. 101. Downtown is on the west side of 101.
The city of Burlingame feels there are benefits to the municipality from the Grosvenor project. “The development should help the downtown to become a more active area. There also will be public benefits like a public open space. This could become like a central plaza, which the city doesn’t have at this time,” said Bill Meeker, community development director for the city.
The city and developers are negotiating whether the city will sell its land outright or insist on a long-term lease, Meeker said.
The San Jose and San Francisco metropolitan markets set the rent-growth pace for apartments in the second quarter among 41 markets nationwide tracked by RealFacts LLC, a Bay Area apartment data-research company. Average asking rents in the quarter in both markets hovered around $2,000 a month.
In Burlingame, average asking rents increased 4.1 percent over the past 12 months, according to RealFacts. Occupancy dropped from 96.2 percent to 94.8 percent over the same time. Four Burlingame properties with an aggregate of 792 units are included in the RealFacts survey of complexes with 50 units or more.