(photo credit: Steelblue via Business Insider)
Major real estate projects are underway all over the Bay Area
Sure, with the new Salesforce Tower, the Transbay Transit Center and the Warriors moving to SF, "the city" has gotten its fair share of the Bay Area real estate news headlines in 2017. In fact, there are at least seven mega projects underway in SF that are each valued at $1B or more.
The South Bay is keeping pace however. The town of Brisbane is in the spotlight this August as a fierce debate about a proposed Baylands housing development there shakes out. The city council is planning to vote on the matter around the end of August or early September.
Brisbane needs to approve large amount of transit-oriented housing at Baylands. Not acceptable to minimize housing. https://t.co/cqoFVH9JLr— Scott Wiener (@Scott_Wiener) August 4, 2017
Further south, there are major developments out of Google, Facebook and Apple. Facebook is planning a Facebook "village" called Willow Campus which could include around 1,500 homes, along with retail, green spaces and offices. Facebook says that at least 15% of these housing units will be classified as affordable housing. And of course there's Apple's "spaceship", which has drawn criticism for being old-school in that it is dependent on cars: 11,000 parking spaces for a building which is meant to house 12,000 employees. It's also drawing some criticism from Apple employees for the open floor plan design. One of the major factors contributing to this surge in Bay Area corporate real estate development is the high cost of housing. Large employers like Google and Facebook are struggling to attract employees to the Bay Area and are looking for ways to provide their own solutions.
Google is making major real estate moves
Google has recently purchased $800M in Sunnyvale area real estate. The package consists of nearly 50 properties on 13 streets near Moffett Field airstrip, which they took over in 2015. What's it for? Google is staying fairly tight-lipped about it so far, but we can safely guess that corporate housing for their employees and contractors will factor in. What exactly is corporate housing? Read our intro post here.
Google has also paid about $30 million to provide temporary, prefab housing for 300 of its employees. A company called Factory OS is their chosen prefab partner for this project. Prefab housing is gaining attention mostly because construction costs tend to be lower. It's also possible to build prefab houses in a more sustainable way, since there's less construction waste. They're also more sustainable on an ongoing basis since they tend to be highly energy efficient. Google intends to pass these cost savings on to the tenants, aiming to save them hundreds of dollars a month.
These two initiatives pale in comparison to Google's downtown San Jose development plan consisting of six to eight million square feet of office and housing. This might be the single biggest South Bay real estate project since Levi's Stadium was completed in 2014, luring the San Francisco 49ers from San Francisco. San Jose is actually Northern California’s largest city, with a population of approximately 945,000. Check out our definitive guide to finding corporate housing in San Jose here.
(photo credit: Trammell Crow via Silicon Valley Business Journal)
So what does all of this mean? Will real estate prices continue to shoot upwards?
Like so many markets, the housing market ultimately comes down to supply vs. demand. One has to believe that with a step-change in housing supply like this, prices will face downward pressure, unless population growth keeps pace. While many fear that this new supply will be exclusively for the wealthy, we also have to realize that expensive residential real estate tends to become more affordable as it ages. All of this new real estate development also means that a higher percentage of the Bay Area's housing supply will be up to code, including seismic regulations. It also means a growing stream of tax revenues to local governments for things like public education, health and transportation.
You may not know that healthcare is actually another big driver of major real estate trends. Bisnow outlines 5 Healthcare Trends Impacting Medical Real Estate in the Bay Area. Homesuite has provided monthly furnished housing solutions to many families looking for a nice home near a medical facility like Stanford University Medical Center.
As far as Google specifically, it's clear that their real estate strategy is focused on providing competitively-priced housing for their employees and contractors. It's also diversifying a bit geographically, in an era when companies like Salesforce and Twitter seem to be aiming to locate most of their employees in San Francisco proper. Perhaps Google feels that by becoming an "anchor tenant" in a city like San Jose, they can help influence major public transportation plans to the benefit of their employees and ultimately their bottom line.
If you're a corporate travel manager and would like to learn more about corporate housing, we've got a ton of resources for you here.
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Homesuite is a leading provider of monthly furnished rentals and corporate housing for business travel. Homesuite homes combine the comfort of home with the professionalism of a hotel. Our customers include Google, Facebook, Microsoft and thousands of smaller businesses. In addition to our business offering, we also serve individuals traveling for work and personal reasons. Founded in 2014, we operate across the United States with specific focus in large urban markets. #HomesuiteHome