Despite high prices and tight inventory, the Bay Area remains a strong market for real estate investors.
The Urban Land Institute ranked San Jose and San Francisco among the top 20 metros for real estate prospecting, citing a growing local economy, young workforce and a long-term sustainable market.
The Bay Area scored better this year than in previous years, in part because home prices have leveled off from record highs, said Urban Land Institute senior vice president Anita Kramer.
Now, she added, Bay Area properties “are worth it.”
The annual report, conducted by the institute and consulting firm PwC, surveyed more than 1,000 real estate professionals, investors, developers and bankers. Those surveyed considered a wide range of community features, including local economies, property prices, demographics and expectations for growth or stagnation.
Austin, Texas, Raleigh and Durham, N.C., Nashville, Charlotte and Boston grab the top spots for future growth and potential, according to the report. The cities share some common threads with San Jose and San Francisco — strong, growing economies, young workforces and renowned universities.
Experts believe the Bay Area economy will stay strong. San Francisco (ranked 12), San Jose (13) and Oakland and the East Bay (30) were viewed as strong markets among the top 80 metros ranked.
Nationally, Kramer said, real estate remains a desirable option if the U.S. economy slows or stalls next year.
“Even though we are late in the expansion cycle, volatility in global financial markets, coupled with global geopolitical instability, continues to drive investors towards U.S. real estate,” the report says. “The asset class remains desirable as investors seek predictable cash flows from tangible investments.”
The Bay Area housing market has leveled off after a record run between 2012 and early 2019. The median price for an existing Bay Area home hit a record of $928,000 in May 2018 and has since dropped to $875,000 in July, according to real estate data firm CoreLogic.
But signs of construction — fenced-off building sites, closed roads, and high-rise cranes across city skylines — still abound throughout the region.
San Jose is expected to more than triple the number of new apartments from last year, as investors open about 6,000 units in 2019, according to Rent Cafe. The real estate firm estimates this year Oakland will add 1,850 units, Milpitas nearly 1,700 units, and San Francisco 1,200 apartments.
Gustavo Gonzalez, an investor and president of the Santa Clara County Association of Realtors, said the added tech jobs and Google’s ambitious expansion plans in San Jose make the city an attractive spot.
But he cautioned that rent control and other regulations in San Jose can make it difficult for existing owners, as well as investors looking to develop new housing.
“We could be way better,” Gonzalez said, adding, “If I take a step back and look at the big picture, there’s a lot of opportunity.”
Dan Ramas, a Keller Williams agent in Santa Clara, said many small investors in rental properties find better returns in outlying suburbs. For example, a $400,000 home in Tracy might yield a similar rent as a $1 million property in San Jose, he said.
The market has cooled from last year, he said, and interest rates have dropped. “It’s becoming a buyer’s market,” Ramas said. “This is the time for investors.”
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As vice president of global workplace services for Okta, a publicly traded, San Francisco-based cloud software company, Armen Vartanian has to look ahead.
What he sees, starting with the San Francisco Bay Area but heading to most major markets, is an amalgam of new software capabilities, macroeconomic factors and demographic trends changing the way companies operate.
“A number of things are shifting,” said Vartanian, who will be one of several panelists at Bisnow’sBay Area State of Office event Sept. 26.
“We have an antiquated practice of hiring people where our office locations are, but with the housing supply fixed and transit infrastructure not supporting population growth, you get this imbalance of cost of living to wages,” he said. “We’re enabling our employees to work in a far more flexible environment.”
Millennials, who Vartanian said tend to value flexibility in work, will account for 75% of the global workforce by 2025. Okta’s workforce is 60% millennials, and 30% of its employees work remotely, Vartanian said.
Fewer employees in offices means less real estate to pay for, and is partially a result of an intensifying cost-wages imbalance. But Vartanian said remote work also stems from a preference for flexibility shared by many of the 70% of Okta employees still working in an office.
As a result, Okta, which takes up 210K SF across 10 floors at 100 First St., builds its offices for what Vartanian calls “dynamic work,” which is meant to give workers flexibility from within the office. “That means providing a variety of environments from which to work in an office rather than just one desk, and having the infrastructure to get your job done, allocating less square footage to desks,” he said.
At 100 First St., less square footage going to desks allows room for more attractive amenities, like Okta’s fitness facilities and speak-easy bar, but also more flexible workspace areas.
Relatively new products like Slack‘s workplace messaging, video conferencing and various cloud-based offerings allow for a de-emphasis on traditional desk or benching systems. “For this first time in history, there’s this stack of core technologies that’s available to enterprises to get work done anywhere,” Vartanian said.
In a wider sense, the need for flexibility is also affecting important leasing decisions by large companies, especially in the Bay Area, he said.
Pointing to his time as global head of real estate for LinkedIn, Vartanian thinks more companies will pursue bifurcated and trifurcated headquarters as they seek nodes both in S.F. and the South and East Bays. As a pioneer in this strategy, LinkedIn has a significant office presence in both San Francisco, with all 450K SF of 222 Second St., and the South Bay, with a 1.1M SF HQ redevelopment recently approved by the city of Mountain View.
Vartanian brought the same strategy to Okta soon after he joined in 2015. The company currently has 40K SF at 300 Park Ave. in San Jose, where it originally leased 20K SF in 2016.
“Infrastructure can’t support the growth in population and jobs in the area, and you have fixed constraints on office development,” he said. “San Jose has done a really good job of opening that up, but with San Francisco and Prop M caps, there’s not going to be a lot of new commercial office development here.”
In addition to driving more diffuse headquarters, San Francisco’s lack of space is also leading businesses to decide buying rather than renting is the more sound long-term decision. Vartanian thinks this trend — currently led by Kaiser, Salesforce and Juul, according to San Francisco Chronicle reporting earlier this week — will continue.
“With rents rising, I think you’ll see companies thinking more of owning versus leasing, especially in strategic locations,” he said.
Want to get a jump-start on upcoming deals? Meet the major San Francisco players at one of our upcoming events!
As vice president of global workplace services for Okta, a publicly traded, San Francisco-based cloud software company, Armen Vartanian has to look ahead.
What he sees, starting with the San Francisco Bay Area but heading to most major markets, is an amalgam of new software capabilities, macroeconomic factors and demographic trends changing the way companies operate.
“A number of things are shifting,” said Vartanian, who will be one of several panelists at Bisnow’sBay Area State of Office event Sept. 26.
“We have an antiquated practice of hiring people where our office locations are, but with the housing supply fixed and transit infrastructure not supporting population growth, you get this imbalance of cost of living to wages,” he said. “We’re enabling our employees to work in a far more flexible environment.”
Millennials, who Vartanian said tend to value flexibility in work, will account for 75% of the global workforce by 2025. Okta’s workforce is 60% millennials, and 30% of its employees work remotely, Vartanian said.
Fewer employees in offices means less real estate to pay for, and is partially a result of an intensifying cost-wages imbalance. But Vartanian said remote work also stems from a preference for flexibility shared by many of the 70% of Okta employees still working in an office.
As a result, Okta, which takes up 210K SF across 10 floors at 100 First St., builds its offices for what Vartanian calls “dynamic work,” which is meant to give workers flexibility from within the office. “That means providing a variety of environments from which to work in an office rather than just one desk, and having the infrastructure to get your job done, allocating less square footage to desks,” he said.
At 100 First St., less square footage going to desks allows room for more attractive amenities, like Okta’s fitness facilities and speak-easy bar, but also more flexible workspace areas.
Relatively new products like Slack‘s workplace messaging, video conferencing and various cloud-based offerings allow for a de-emphasis on traditional desk or benching systems. “For this first time in history, there’s this stack of core technologies that’s available to enterprises to get work done anywhere,” Vartanian said.
In a wider sense, the need for flexibility is also affecting important leasing decisions by large companies, especially in the Bay Area, he said.
Pointing to his time as global head of real estate for LinkedIn, Vartanian thinks more companies will pursue bifurcated and trifurcated headquarters as they seek nodes both in S.F. and the South and East Bays. As a pioneer in this strategy, LinkedIn has a significant office presence in both San Francisco, with all 450K SF of 222 Second St., and the South Bay, with a 1.1M SF HQ redevelopment recently approved by the city of Mountain View.
Vartanian brought the same strategy to Okta soon after he joined in 2015. The company currently has 40K SF at 300 Park Ave. in San Jose, where it originally leased 20K SF in 2016.
“Infrastructure can’t support the growth in population and jobs in the area, and you have fixed constraints on office development,” he said. “San Jose has done a really good job of opening that up, but with San Francisco and Prop M caps, there’s not going to be a lot of new commercial office development here.”
In addition to driving more diffuse headquarters, San Francisco’s lack of space is also leading businesses to decide buying rather than renting is the more sound long-term decision. Vartanian thinks this trend — currently led by Kaiser, Salesforce and Juul, according to San Francisco Chronicle reporting earlier this week — will continue.
“With rents rising, I think you’ll see companies thinking more of owning versus leasing, especially in strategic locations,” he said.
SAN FRANCISCO (CBS SF/CNN) — A fundraiser for President Donald Trump at the posh Portola Valley hills home of Sun Microsystems cofounder Scott McNealy raised $3 million for his re-election campaign, an official said Wednesday.
California’s National Republican Committeewoman Harmeet Dhillon told CNN that 400 people attended the afternoon gathering on the $98 million Silicon Valley estate and others had to be turned away.
“The President has millions of supporters in California,” Dhillon said. “There was not a single empty seat there.”
The stop was one of four in the state, staged over the last two days, that raised a combined today of $15 million. It also highlights the ability of the White House incumbent to find support in pockets of the nation’s most populous state, even as he spars with its elected officials and celebrity residents.
“He’s President and he’s very popular with Republicans,” Dhillon told CNN.
The biggest windfall of Trump’s California swing: the $5 million raised Tuesday night at the gated Beverly Hills home of real-estate developer Geoff Palmer, who has supported the President in the past and recently hosted Vice President Mike Pence for a fundraiser.
More than 900 people attended, and Trump spoke for 45 minutes, White House press secretary Stephanie Grisham told reporters.
On Wednesday, Trump was expected to collect another $7 million at two events: $3 million at a breakfast at the Intercontinental Hotel in downtown Los Angeles and $4 million at a luncheon in San Diego.
Trump’s son-in-law, Jared Kushner, who has been informally involved in the re-election effort, tagged along for his West Coast visit.
The President, who filed his reelection paperwork the day he was sworn into office, is raising money at a pace unprecedented for a modern president. And his two-day haul surpasses the nearly $12 million that California’s home-state Sen. Kamala Harris raised during the entire April-to-June fundraising quarter in her bid for the Democratic presidential nomination.
However, advance details of the President’s California fundraising activities were kept under tight wraps in the days leading up to his visit.
After billionaire real-estate developer Stephen Ross faced serious backlash for hosting a fundraiser for the President last month in the Hamptons, an official familiar with how the fundraisers are planned said there has been an active effort underway in recent weeks to keep the names of those hosting the fundraisers out of the press.
Dhillon also cited violent demonstrations that broke out during Trump’s 2016 visit to California as a candidate as a reason for the secrecy surrounding his events this week.
For decades now, Republicans in California have been receding into the political wilderness, but Trump appears to be accelerating that decline.
There is no Republican official elected statewide in California, and the GOP’s last grip on power was the number of seats they held in Congress. But that grip was weakened in the 2018 midterm elections. Trump’s policies brought out outraged Democratic voters — particularly women — in droves and they succeeded in flipping more than a half-dozen seats from red to blue.
The number of registered independents in California (28.3%) has also been rising. Democrats, who make up 43% of the electorate, vastly outnumber Republicans here (23.6%), according to data from the Public Policy Institute of California. The institute has found that more Californians favor Trump’s impeachment than the nation as a whole, and 65% of voters said they would choose a candidate other than the President in the election next year.
Still, Trump — whose approval rating has hovered around 40% nationally — enjoys strong support from Republicans here: 84% of GOP voters approve of the job that Trump has done as President, while 43% of independents and 8% of Democrats approve, according to the latest PPIC survey.
Gov. Gavin Newsom has relished the fight against Trump’s agenda, stating that California is the “progressive answer to a transgressive president.”
The two tangled this week over the Trump administration’s decision to revoke California’s waiver with the Environmental Protection Agency, which allowed the state to set more stringent vehicle emissions standards than those set at the federal level.
California had been so successful in negotiating with auto makers in their efforts to curb greenhouse gas emissions and address air quality issues that 13 states and the District of Columbia follow at least some portion of their Advanced Clean Car Program.
“One thing I won’t do is capitulate,” Newsom told CNN’s Kyung Lah in an interview about his contentious relationship with the commander-in-chief before Trump formally announced that his administration would revoke the vehicle emissions waiver.
“Look stay out of our way, let California continue, not to survive, but thrive, despite the headwinds, despite everything you’re doing to try to put sand in the gears of our success.”
Donald Trump stepped off Air Force One at Moffett Field in a dark suit and bold yellow tie Tuesday for his first presidential visit to the San Francisco Bay Area, tapping Silicon Valley campaign wealth in seeming defiance of his unpopularity in the Democratic stronghold.
His arrival in Mountain View, not far from House Speaker and political nemesis Nancy Pelosi’s San Francisco district, was greeted by a small group of party officials and supporters chanting “USA!” before he headed to a tech mogul’s Portola Valley mansion for a fundraising luncheon.
“Coming here makes great political sense,” said David McCuan, a politics professor at Sonoma State University. “He’s showing he can come into the center of anti-Trump energy, right into Nancy Pelosi’s backyard, thumb his nose at her and still walk away with a wad of cash.”
Before Trump’s arrival, his campaign and local GOP officials had been tight-lipped about the location of the fundraiser, citing violent demonstrations that broke out during Trump’s visits to the Bay Area as a presidential candidate in 2016.
Though word had spread by mid-morning that the event would be held in Portola Valley and protesters began to gather there, the demonstrations were uneventful, and there were no reports of arrests.
The Bay Area voted against Trump by the highest margin of any large metro area in 2016, and his trip comes amid acrimonious and escalating battles with California leaders on a host of issues, from sanctuary cities to greenhouse gas emission standards to high speed rail. State officials have sued the Trump administration more than 50 times since he stepped into the presidency. Most recently, Trump criticized the California Democratic leaders over the state’s growing homelessness problem and suggested he could take federal action to “clean it up.”
“What they are doing to our beautiful California is a disgrace to our country,” he said at a campaign rally last month.
But there are plenty of big Republican donors in the Bay Area. Trump’s campaign and joint fundraising committee received more than $6.5 million in large-dollar donations from Californians in the first six months of the year, more than many other Democratic presidential candidates.
Trump’s four events in California today and tomorrow are expected to raise $15 million for his joint fundraising committee with the RNC, a GOP source said. Today’s Bay Area luncheon will bring in $3 million, the source said.
McCuan said that for Trump, California “is the Golden State because of the money, the coverage and the contrast it lets him draw” between him and the state’s Democratic leaders.
“He’s able to use California as a symbol of brokenness across the country,” McCuan said. “He uses us as a foil.”
After headlining the Portola Valley fundraiser, a luncheon for which tickets ranged from $1,000 to $100,000, Trump left for other fundraising events in Los Angeles and San Diego.
The fundraiser was held at the 32,000 square-foot mansion that Sun Microsystems co-founder Scott McNealy put on the market last year for nearly $100 million. The five-bedroom house, completed in 2008, sits on 13.35 acres and offers “four floors of seemingly infinite amenities,” according to real estate agents. Among them: a 110-yard golf practice area with putting greens, an indoor hockey rink and tennis pavilion, and a large “social room” for hosting events. If the home, which technically sits just over the border in Palo Alto, sells at its original $96.8 million asking price, it would more than triple the previous record for the most expensive home ever sold in the city.
State and federal campaign finance records show Scott and Susan McNealy have given nearly $1 million to Republican candidates in state and federal races since 2000 but don’t list any contributions to Trump. The couple has supported Republicans who have sparred with Trump — they gave $156,600 to committees supporting Mitt Romney’s 2012 presidential campaign and $88,500 to committees associated with former House Speaker Paul Ryan, according to the Federal Election Commission.
Their only contribution from the 2016 presidential campaign, according to the FEC, was $2,000 Susan McNealy gave to a committee supporting Carly Fiorina before the Republican primary. Within California, state campaign finance records show they contributed to the gubernatorial campaigns of Arnold Schwarzenegger and Meg Whitman.
Scott McNealy did not respond to efforts to reach him for comment by phone or email after the fundraiser.
Trump touched down at 11:02 a.m. at Mountain View’s Moffett Field, where several dozen supporters had gathered on the tarmac, some wearing red Make America Great Again hats and carrying a big Trump 2020 banner.
Trump waved to his fans, who were chanting “USA,” as he descended the steps from the jet. He shook hands with RNC committeewoman Harmeet Dhillon, her spouse Sarvjit Randhawa, and Robin Aube-Warren, the associate director of NASA Ames Research Center, before getting into his car as the motorcade sped away. He did not take questions or talk to reporters.
“There’s such a thrill in being here,” said Rick Carraher, 71, who with his wife, Janis, got up at 4:30 a.m. and went to Moffett Field from their Antioch home to greet the president. “We finally have somebody who’s doing a great job for Americans, and we wanted to show our support.”
About a mile from the fundraiser, a crowd that at one point grew to about 100 people gathered at Rossetti Field on Alpine Road along the motorcade’s route to the fundraiser. A balloon shaped like a baby Trump, mounted by the protesters, flew overhead.
Yolando Sanchez, of Sacramento, joined four friends from the immigration advocacy group Abuelas Responden, or Grannies Respond, to protest. The five women spent the night in Newark, then drove around Tuesday morning until organizers told them to go to Alpine Road in Portola Valley.
There they joined others who held signs and chanted slogans as officers stood sentry between the crowd and the road where Trump’s motorcade drove past.
“We wanted to send him a message with how unhappy we are with him,” Sanchez said.
The motorcade arrived at the McNealy’s home at 11:40 a.m. Along the street, more than a dozen protesters standing behind secret service officers held banners depicting Trump as a baby, as Pinocchio, and in a straitjacket. Kira Od, a local artist who made the banners, urged her fellow demonstrators to keep things civil.
“This isn’t going to change the world, don’t get me wrong,” Od said. “But he’s so protected from criticism that I really wanted to be here so that he couldn’t avoid me and see this.”
Ralph King, a filmmaker who lives up the street, held a hand-written sign declaring, “You are not welcome here” and said, “It’s offensive that Trump is bringing his toxic message into our backyard.”
A few feet away, three Trump supporters unfurled an American flag and a Trump campaign banner.
“People think that to be conservative, you’ve got to be racist or rich,” said Kenny Camacho, 24, who came from Union City to catch a glimpse of the president. “It’s the complete opposite — we’re a silent majority in this country that supports him.”
The event was closed to the press. The White House pool report said attendees were served salmon and vegetables, there was a golf hole in the backyard with a Stanford flag, and at one point a cheer went up from inside the house.
But Dhillon said in an interview afterward that Trump “was incredibly funny and relaxed.”
“People were on their feet several times during his speech,” she said, adding that she thought the event went so well because the secrecy around its location prevented larger protests. Trump didn’t seem to notice the demonstrators, she said.
“He didn’t even make eye contact with any of that garbage,” she said.
She added that Trump talked about how he was fighting for Americans and responded to several questions from attendees. He said California is “a beautiful state” but claimed its elections are unfair, and he blamed Democrats for homelessness that is bringing back “medieval diseases,” according to Dhillon.
Trump’s motorcade swung out of the Portola Valley estate at 2:32 p.m. as a small group of protesters who had been waiting across the street for more than an hour chanted “shame on you!”
Protesters representing the Backbone Campaign, Resistance SF and Vigil for Democracy inflate a Baby Trump Ballon at Rossotti Field in Portola Valley, Calif., on Tuesday, Sept. 17, 2019. President Trump is visiting the Bay Area for the first time as president to attend a fundraising event. (Anda Chu/Bay Area News Group)
Protesters representing the Backbone Campaign, Resistance SF and Vigil for Democracy inflate a Baby Trump Ballon at Rossotti Field in Portola Valley, Calif., on Tuesday, Sept. 17, 2019. President Trump is visiting the Bay Area for the first time as president to attend a fundraising event. (Anda Chu/Bay Area News Group)
PORTOLA VALLEY, CALIFORNIA – SEPT. 17: Activists protest along Alpine Rd in Portola Valley, Calif., on Tuesday, Sept. 17, 2019 as they wait for President Trump to arrive at a fundraiser held nearby. (Photo by Anda Chu/MediaNews Group/East Bay Times via Getty Images)
A protester, who did not wish to give her name, helps to inflate a Baby Trump Ballon at Rossotti Field in Portola Valley, Calif., on Tuesday, Sept. 17, 2019. President Trump is visiting the Bay Area for the first time as president to attend a fundraising event. (Anda Chu/Bay Area News Group)
PORTOLA VALLEY, CALIFORNIA – SEPT. 17: Activists protest along Alpine Rd in Portola Valley, Calif., on Tuesday, Sept. 17, 2019 as they wait for President Trump to arrive at a fundraiser held nearby. (Photo by Anda Chu/MediaNews Group/East Bay Times via Getty Images)
Protesters representing the Backbone Campaign, Resistance SF and Vigil for Democracy inflate a Baby Trump Ballon at Rossotti Field in Portola Valley, Calif., on Tuesday, Sept. 17, 2019. President Trump is visiting the Bay Area for the first time as president to attend a fundraising event. (Anda Chu/Bay Area News Group)
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His last visit to the Bay Area was for a June 2016 campaign rally in San Jose, during which protesters attacked and scuffled with Trump supporters, leaving some bloody. Several Trump supporters attacked at the event have sued the city for not providing adequate police protection, and the case is still working its way through the courts.
Before that, protesters surrounding an April 2016 Trump campaign event in Burlingame forced him to jump over a highway median to get into the hotel where he was speaking.
Traffic was snarled along Alpine Road following Tuesday’s presidential visit, annoying several residents.
“I realize this is a First World problem — I live in Portola Valley,” said one Portola Valley woman who did not want to be identified. “This will be over in a couple of hours. But this is a terrible inconvenience.”
Staff Writer Elliott Almond and Linda Zavoral contributed to this report.
