The group plans to open a biotech incubator twice the size in South San Francisco, near Genentech’s campus, by the middle of 2013. They’re searching for a third Bay Area property to turn into a 200,000-square-foot space for clean-tech companies next year.

By the time they’re done, the combined incubators will hold space, for startups, greater than seven football fields, or enough to occupy about one-fifth of the Empire State Building. All these offices and labs are meant to house young companies eager to do business in China, and Chinese startups expanding to the U.S.

Hanhai zPark is scouting spaces in Boston and other cities, as well. “There’s a huge demand from cities all over the U.S. that they need investors from China to grow their industries and jobs,” says Victor Wang, president of Hanhai zPark.

The money flowing from China to buy U.S. properties and companies reached a record $6.5 billion last year, up 17 percent from a year earlier, according to Rhodium Group, a research and advisory firm.

Hanhai zPark isn’t the first China-focused incubator to open in Silicon Valley last year: InnoSpring, a Santa Clara space whose backers include Chinese real estate developers, opened a few months earlier.

Why park big new incubators in an area already packed with them? Existing ties between China and the Bay Area make Silicon Valley a natural home to ventures like Hanhai zPark. Many Chinese-born entrepreneurs go to Stanford or work at U.S. tech companies in the valley.

Stanford connection

Wang, himself a native of Harbin, in northern China, went to Stanford business school before starting his own health IT venture. About a year and a half ago, leaders from Hanhai, a privately held operator of five big business incubators in China, and zPark, a state-owned developer of the largest science and tech park in China, approached him about running a space for startups in the U.S. Xi Jinping, China’s incoming president, and Vice President Joe Biden touted the deal during meetings in Los Angeles and Washington last year.

The space available may be growing faster than demand. Hanhai zPark has about 40 tenants so far, but it has room for 100 or 200, depending on the space they need. About a quarter of the tenants are American companies, many founded by Chinese immigrants or Americans of Chinese heritage, Wang says. The rest are Chinese companies exploring the U.S. market.

On top of offering the usual incubator services, such as legal and accounting help, Hanhai zPark will invest directly in some of its tenant companies through a $5 million angel fund. It will also make introductions to people in business and government on the mainland. “We’ll connect (startups’) needs to the Chinese partners in different cities,” Wang says.

Seeking investors

Those connections, along with ample capital, are the main attraction for American companies considering seeking investors from China. “That differentiates them from other venture investors, particularly in sectors where there’s a high political risk, like digital services,” says Thilo Hanemann, research director at Rhodium Group, who tracks Chinese investment flows.

That can help startups crack a market where even multinationals such as Google have stumbled. Still, companies face risks doing business on the mainland, where the legal protections taken for granted in the U.S. and Europe don’t exist. In China, “there’s no rule of law that protects individuals and companies against the government,” Hanemann says.

Expect the pace of Chinese investment in the U.S. to accelerate. Hanemann notes that while the growth in cross-border investment gets a lot of attention, China is really playing catch up. “If you think about China as the world’s second-largest economy, the right question to ask is why have they not been more active?” he says.

Part of the reason is that the government has only recently made it easier for wealth to move beyond China’s borders. “There’s a lot of channels through which Chinese corporations and funds can shovel money into the U.S. now,” Hanemann says.

John Tozzi is a Bloomberg Businessweek reporter. E-mail: jtozzi@bloomberg.net

Article source: http://www.sfgate.com/technology/article/Chinese-incubators-growing-in-Bay-Area-4343918.php

Hammers are coming down on the high end again, as the ritziest in real estate finally come out of hiding. Vacation homes in some of the most coveted locales are seeing price gains again, so potential buyers are now looking to builders.

The question is, where are you getting the most bang for your big bucks?

Not in Hawaii, according to a new study from real estate advisory firm Chris Pollack, Ltd, which looked at project costs per square foot in some of the swankiest summer and overall vacation destinations. The total project costs include not just construction, but building materials, architectural fees, and permitting.

Hawaii topped the list at $1300 per square foot for an ultra, high-end beach house. Malibu, California was a close second at $1,170 and Palm Beach, Florida rounded out the top three at $1,105 per square foot for the total project.

“The island locations are more expensive because of costs associated with importing materials and labor,” notes Chris Pollack. That put Nantucket, MA on the top ten most expensive list, but still lower at just $975 per square foot, according to the survey.

Labor costs are rising, up 13.8 percent from 2007 in these high-end markets, says Pollack, and that has many investors using “value engineering” to offset the costs.

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Article source: http://www.cnbc.com/id/48058654?__source=RSS*blog*&par=RSS

Jason Henry for The Wall Street Journal

Gagan and Jasmin Arneja in their 1,800-square-foot home, which attracted 22 bids and sold for $1.5 million, 40% over asking price.

San Francisco

A bidding war broke out in November when a small house in San Francisco’s tightly packed Noe Valley came on the market.

Twenty-two people, including employees of Facebook, Zynga, Google and Pixar, battled for the home. The winning offer was $1.5 million—40% higher than the asking price. The house had a great view, but it was only 1,800 square feet and came with an old kitchen which, like most of the interior, was covered in 1970s plywood paneling. Seen from the curb, there’s hardly any house at all—just a one-car garage and gate leading to small front courtyard.

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Winni Wintermeyer for The Wall Street Journal

Dolores Park, with a view of the Mission District and skyline of downtown San Francisco in the background, is a popular hangout for the new generation of tech entrepreneurs.

The inconspicuousness was part of the attraction, said Jasmin Arneja, 42, who bought the two-bedroom house with her husband Gagan, 40, a software engineer at a networking start-up. “It’s the antithesis to these outrageous bizarre Gordon Gekko-esque houses. It just incorporates so much of our values,” said Ms. Arneja, who runs a philanthropic advisory firm.

Housing prices in the San Francisco Bay area are once again soaring, thanks to an infusion of cash from the rising shares of Apple and Google and the initial public offerings by Zynga, LinkedIn, Yelp and soon Facebook, expected to be the largest in Internet history. But while a previous generation of dot-com executives opted for mansions in wealthy San Francisco neighborhoods like Pacific Heights and tony Silicon Valley suburbs like Atherton, this generation is gravitating to modest homes and condos in grittier parts of the city.

Ground zero of the current tech-fueled real-estate boom is the Mission, formerly a majority Hispanic neighborhood on the southern edge of San Francisco that’s close to the main arteries that link San Francisco to Silicon Valley. Median home prices in the Mission grew 44% in December compared with a year earlier. Adjacent Noe Valley had a rise of 31% over that same period, according to the San Francisco Association of Realtors. The average number of days homes sat on the market in both neighborhoods has almost halved over the past year.

That’s in sharp contrast to what’s happening nationally, where the housing market continues to flounder, with the Case-Shiller 20-City index down for the fourth straight month in a row. It’s even an aberration from the San Francisco area (including Oakland), which saw a 5.4% drop in home prices in December from a year earlier.

Newly minted tech millionaires in San Francisco are shunning mansions in wealthy neighborhoods and leafy suburbs in favor of modest homes and condos in grittier parts of the city. Geoffrey Fowler has details on Lunch Break. Photo: Jason Henry for WSJ

Real-estate agents say it’s a cultural shift. The new generation of Internet executives—younger than the last generation of dot-commers—eschews the trappings and responsibilities of expensive properties. They want to bicycle, walk or take public transportation. They like living near food trucks and dive bars.

“You can spend a lot of money on a great restaurant here or just $5 on a burrito,” said Christian Niles, 31, who bought a two-bedroom apartment for $585,000 in the Mission with his wife in August because he saw real estate as a good place to store the cash he’d made from selling his app called TrackerBot to Pivotal Labs last summer. He plans to never own a car.

StumbleUpon CEO Garrett Camp bought a 2,900-square-foot loft penthouse with four bathrooms and a patio for $3 million this past summer in the South of Market area. Twitter co-founder Evan Williams bought a $2.4 million house in Noe Valley in 2009.

The hottest properties are near corporate shuttle bus stops—where employees for companies like Google, Facebook, Genentech, LinkedIn and Apple line up daily for the ride to Silicon Valley. Real-estate agent Amanda Jones calls it the “Shuttle Effect” and said proximity can command as much as a 20% premium. Some real-estate agents said they’re dying for a map of where the buses pick up. “When a listing gets deluged with people—that tells me it’s close to a stop,” said Ms. Jones.

Some companies share a few of the same stops, occasionally leading to employees getting on the wrong bus. Discussions can get animated about adding or moving a stop, said Jessica Herrera, Facebook’s transportation coordinator who controls the stop locations for Facebook’s eight shuttle busses, including a new glass-topped double-decker the company rented to make space for the growing crowds. “Everybody wants a stop that’s next to their house that comes every five minutes,” she said, adding that discussions have remained civil.

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Winni Wintermeyer for The Wall Street Journal

The Mission apartment building where investor Michael Barton bought a condo: ‘You can tell there is an upsurge going on here.’

Stephanie Pocino, 28, makes the 45-minute trip to Facebook every day from her rented apartment building in the Mission. She has no garbage disposal and no dishwasher, but the Victorian building has lots of charm and bay windows. She carries a wireless Internet card, which she uses to answer emails and work on presentations while on the commute, and her laundry, which she gets done free at the company’s headquarters.

Soaring rental prices—up more than 10% in the Mission and Noe Valley in the past six months alone—are also making buying more competitive, said Vanguard Properties broker Craig Waddle. He’s seen bidding competitions for rentals and rental offers coming in higher than the asking prices. At an open house for a one-bedroom offered for $1,400 a month, 40 people were filling out applications on the spot. One person walked up to the owner, offered $1,700 and got the place.

“It’s been kind of shocking,” said Raj Gajwani, 36, who has been looking for a house in Noe Valley for around $1.5 million for the past few months. A founder of two online companies, he and his wife are expecting twins and want a house close to a shuttle-bus stop for his wife’s commute but with “culture, interesting people and activities.” They also want something they will be able to sell for more money in five years, when they might have to move to the suburbs for better schools.

Mike Shaw, a real-estate agent who has worked for 15 years in the San Francisco market, said buyers often want something already renovated or vintage because they don’t have the time or the interest to hire designers and architects. “That person in jeans and a sweatshirt could be low on the totem pole or a multibillionaire. They haven’t realized the value of good design either in architecture or fashion,” said Suzanne Tucker, a San Francisco designer who has remodeled many of the most lavish homes in the Bay Area.

Buyers argue they have a different sensibility. Ms. Arneja, who snagged the sought-after house in Noe Valley, said she was drawn to the interior, which is covered almost entirely by dark redwood and brick, lending it a feel that lands somewhere between a den and a tree house. “This is clearly a ’70s house,” said Ms. Arneja. “I would like to think of it as a shining example of good architecture during a bad period of design.”

Pop-up restaurants with long lines, coffee shops that brew one cup at a time and shops selling curiosities like local honey have followed the influx of cash. Apple employee Amandeep Jawa, who takes the company bus to work, covered the driveway of his Victorian with a “parklet,” a public space registered with the city featuring seating and greenery. His crowning achievement: a topiary triceratops, dubbed Trixie, made of succulent plants.

But the gentrification is far from complete. A surge in violence between feuding gangs called the Norteños and Sureños claimed two lives in less than 24 hours in the Mission in August, and there was a shooting in front of a coffee shop. Noe Valley saw a rash of sexual assaults; residents there have also reported attempted carjackings and armed robberies.

“The key word is coexistence,” said David Campos, a member of the city’s Board of Supervisors representing the Mission and Bernal Heights.

Blogs popular with tech workers keep track of the violence, and one UC Berkeley student produced a map called “Gangs and Cupcakes,” which overlaid Norteño and Sureño territory with the Mission’s most popular cupcake cafes. In recent years, somebody spray-painted “cafe gentrification” on the sidewalk in front of popular coffee shops.

The high prices and the changes in the neighborhood are only going to intensify, predicted Lawrence Coburn, 42, who first moved to the Mission in 1999 to found a start-up and has lived in an 1,100-foot rental loft there since 2003. “A lot of my friends are trying to hustle to buy a place before all the Facebook people get liquid,” he said.

Investor Michael Barton, 48, recently decided to buy because he wanted to lock in his investment before Facebook’s IPO money hits town. The area around his 950-square-foot, two-story loft is “kind of funky, and gritty and dodgy,” said Mr. Barton. But an industrial building next door has been taken over by Internet start-ups. “You can tell there is an upsurge going on here,” he said.

A version of this article appeared Mar. 16, 2012, on page D1 in some U.S. editions of The Wall Street Journal, with the headline: The Hot Spot for the Rising Tech Generation.

Article source: http://online.wsj.com/article/SB10001424052970204781804577271491070580960.html

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Potrero Launch is slated to be completed
in the third quarter of 2012.

(Mark Your Calendars: RealShare REAL ESTATE 2012, March 22^nd in Los Angeles).

SAN FRANCISCO-Los Angeles-based CityView, a real estate advisory firm founded by former HUD Secretary Henry Cisneros, has just closed on its first asset from the Bay Area Fund. The new $300-million fund will be used to invest in multifamily housing communities in the Bay Area region.

The class A mixed-use asset, called Potrero Launch, is located in the Mission Bay area of San Francisco’s waterfront and is slated to be completed in the third quarter of 2012 with 196 rental apartment units and 28,000 square feet of office and retail space.  

According to Cisneros, executive chairman of CityView, “There is a critical shortage of quality rental properties in the Bay Area. For those who cannot afford the high cost of owning a home in the region, it is imperative that they have access to high quality multifamily housing.”

Tony Cardoza, formerly of Real Estate Capital Partners, has been named as managing director of the Bay Area Fund and David Martin, formerly the founder, chairman and CEO of the Martin Group, and vice chairman of CityView is chairman of the fund’s investment committee. Cardoza and Martin have extensive experience in the Bay Area and collectively have worked on a number of notable projects, such as One Market, 1000 Van Ness, Hamilton Field, EmeryBay, and Downtown Pleasant Hill.

Martin says that “Patrick McNerney, principal of Martin Building Co. and the developer of Potrero Launch, has a long history of building high quality projects in the City.”

McNerney says in a prepared statement that the transaction was “complex” and “took place over a condensed timeframe.”

Cardoza points out that “We’ve raised a significant amount of capital for an area we think is very promising for new construction in the multi-family sector and we intend to continue to seek similar urban, infill development opportunities with strong partners.”

Cisneros adds that “This region is a focus for our equity dollars because of several factors—it’s one of the focal points of the nation’s business and professional services, its artistic and cultural opportunities, its transportation, its educational and scientific talents, and its foreign trade activities. The area is a big draw for people, jobs, and the capital necessary to justify large-scale investments in housing. We certainly hope that more housing options will help ease the high cost of rental housing for Bay Area residents.”

Cardoza tells GlobeSt.com that the amount for Potrero Launch is $437,000 per residential unit. In addition, he says, the project has 20% affordable units reserved for those earning 30% and 50% AMI.

Categories:

West,
Multifamily,
Acquisitions/Dispositions,
San Francisco

Natalie Dolce Natalie Dolce, editor of the West Coast region for GlobeSt.com and Real Estate Forum, is responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, Natalie was Northeast bureau chief, covering New York City for GlobeSt.com. Dolce?s background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats Arthur Frommer?s Budget Travel magazine, FashionLedge.com, Co-Ed magazine, and has also freelanced for a number of publications including MSNBC.com and Museums New York magazine. Contact Natalie Dolce.

Article source: http://www.globest.com/news/12_278/sanfrancisco/multifamily/CityView-Closes-on-First-Asset-from-300M-Fund-318340.html