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Bay Area competes for business

Wed, 01 May 2013 19:30:49 +0000

When it comes to attracting Chinese tech companies to the Bay Area, San Francisco is giving Silicon Valley a run for its money.

“So far, we have seen about eight Chinese tech companies choose to set up a presence in San Francisco or are here already, with more in the pipeline,” said Zhang Xintong, a program manager for economic development with China SF, the go-to support organization created by the San Francisco mayor’s office dedicated to encouraging Chinese companies to take root in San Francisco.

“When talking about high-tech jobs, San Jose, with its more affordable cost of living, might be still considered as the Silicon Valley capital,” Zhang said. “But in recent years, San Francisco has been gaining on them.”

China’s Deputy Consul General Song Ru’an said: “The relative low cost of office space has always been an important factor for Chinese companies choosing Silicon Valley over San Francisco.”

This year, real estate in the Bay Area has seen price increases from an overall recovery in leasing and purchasing.

“My apartment in Silicon Valley’s Burlingame will cost me an increase of $300 a month this year,” said Liu Qiang, a Chinese IT engineer. “An equivalent apartment in San Francisco’s SoMa District has gone up only $150 a month.”

“Neither location has great deals,” Liu added. “But in SoMa, more things are within walking distance. I stumble upon lots of hidden treasures and funky urban charm exploring San Francisco on foot.”

As the hub of Google, Twitter and Zynga, SoMa (shorthand for South of Market) is a patchwork of warehouses, parks, shopping malls, upscale superarkets, loft apartments, and tenacious start-ups that survived the tech market meltdown.

Though San Francisco’s technology sector is much smaller than Silicon Valley’s, its tech employment market has come roaring back since the region’s economic recovery that began in late 2009.

Silicon Valley’s innovation engine may be driving a recovery that leads the nation, but, according to the 2012 Silicon Valley Index, the persistent public sector fiscal crisis and other factors continue to drag on widespread economic gains.

“San Francisco is catching up and may overtake San Jose,” Janice Shriver, a labor-market consultant at the Employment Development Department, told the Wall Street Journal in 2012. “San Jose had been in the lead for information jobs and software publishing and all that kind of activity for so long.”

“San Francisco Mayor Ed Lee has been pushing for business friendly policies to lure and keep new tech companies, including Chinese companies,” Zhang Xintong said.

“And these companies, in turn, are a magnet to increasing numbers of young tech workers who enjoy the San Francisco lifestyle.”

UCWeb, a leading China-based developer of mobile Internet browsers with 400 million active users, set up its first US office in Silicon Valley’s Sunnyvale last year.

But Rick Chen, a director with UCWeb’s team in Sunnyvale, told China Daily he is already shopping for new office space in San Francisco. Why? He’s doing for the pool of young tech talent.

“The cost of office space is much higher in San Francisco,” Chen said. “But it’s an urban, thriving, dynamic city with a younger population, and young tech talent wants to live and play in the city.”

chenjia@chinadailyusa.com

Article source: http://usa.chinadaily.com.cn/epaper/2013-05/01/content_16465517.htm

Silicon Valley: Commercial real estate mega-deal by Canadian and American …

Thu, 21 Mar 2013 23:45:48 +0000

SAN JOSE — In an $800 million deal, a group of American and Canadian investors have bought 73 Silicon Valley office and research buildings, which they plan to extensively renovate.

Together, the buildings represent space equal to six regional shopping malls. The buyers are Canada-based Ivanhoe Cambridge, San Francisco-based real estate company DivcoWest and Texas-based realty investment firm TPG Real Estate.

The three companies bought the 73 buildings at the end of 2012 from Mission West Properties, a firm headed by veteran developer Carl Berg.

DivcoWest, TPG, Ivanhoe and Berg wouldn’t discuss the specifics of the deal Wednesday and didn’t provide the locations of the buildings. However, people with direct knowledge of the deal say the buildings are in prime locations in North San Jose, Sunnyvale, Mountain View, Santa Clara and Fremont. Some buildings are in South San Jose.

TPG and DivcoWest, in addition to paying $400 million in cash for the buildings, assumed $400 million in debt, according to a person with knowledge of the deal.

“This investment enables us to acquire a critical mass of assets in a rental market that is seeing one of the best growth rates in the United States,” Bill Tresham, president of global investments with Ivanhoe Cambridge, said in a prepared release.

Leasing activity has been brisk the past two years in Silicon Valley, with the charge led by major expansions of Cupertino-based

Article source: http://www.insidebayarea.com/real-estate/ci_22831654/canadian-and-american-realty-investors-pay-more-than

Guess What’s Replacing Stores in Your Local Mall?

Fri, 05 Oct 2012 00:26:58 +0000

It was a one-two punch to retail malls: The increasing popularity of online shopping and the recession.

Demand for retail space is falling again after a brief recovery, according to a new report from Reis Inc. Strip malls are faring the worst, and consequently new construction in the space declined near record-levels during the quarter.

“With the economy and labor market continuing to struggle, consumer spending remains weak and inconsistent,” notes Reis senior economist Ryan Severino.

Regional malls, however are outperforming the neighborhood strip malls, with vacancy rates declining in the third quarter of this year. What may be helping some of these larger properties is an influx of big chain restaurants taking over retail space. Darden
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] restaurants, which includes the Olive Garden, LongHorn Steakhouse and the Capital Grille, to name a few, is increasingly moving into retail mall space. Chipotle
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] is following suit.

The amount of mall space being leased by restaurants is rising steadily at 15.8 percent through August of this year, up from just over 10 percent in 2006, according to CoStar Group.

Percentage of Retail Leases Signed by Restaurants by Square Footage:

While vacancy rates are dropping from their record highs during the recession, according to Reis, mall owners are and will be increasingly challenged by the move to online shopping. That’s why the fundamental face of shopping malls is beginning to change; rather than just retail with a food court, malls are now becoming entertainment destinations.

“We have seen restaurant and what I’ll call ‘other entertainment venues’ drive that mall growth and malls have become a gathering place for people and the, Panera’s
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] of this world help make that happen,” says Bob O’Brien of Deloitte Commercial Real Estate.

So-called “entertainment retail centers” are now the focus of real estate investment trusts (REITs) like Entertainment Properties Trust
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], which has invested over $600 million in eight such centers, according to its website:

“Sometimes called ‘the new mall of the new millennium,’ entertainment retail centers attract a wide range of businesses because consumers have a wide and deep thirst for fun and rejuvenating leisure experiences… now also it’s dinner and shopping, dinner and ice-skating, dinner and bowling, dinner and miniature golf, or dinner and sports events on the tavern big screen with friends.”

(Read More: Why Brick-and-Mortar Stores Will Trump Online in End: CEO)

Higher end malls are seeing the biggest benefits of economic recovery and of higher end chain restaurants moving in. Mall owners want these tenants because the hope is they will drive traffic back to the retail surrounding them. Strip malls have a harder time, as patrons don’t always have to walk past another store to get to the restaurant.

SECTOR WATCH: U.S.-Based REITS

Host Hotels Resorts
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Simon Property Group
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Equity Residential
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Apartment Investment Management Co
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Vornado Realty Trust
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Boston Properties
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FelCor Lodging Trust
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AvalonBay Communities
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American Capital Agency Corp
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UDR, Inc
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Camden Property Trust
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Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/49288896?__source=RSS*blog*&par=RSS

Silicon Valley’s commercial real estate market expected to remain hot

Wed, 25 Jan 2012 06:10:56 +0000

With the tech boom building momentum, Silicon Valley companies are on the hunt for space equal to nine shopping malls.

That was the highlight conclusion of a conference Tuesday organized by realty brokerage Cornish Carey Commercial Newmark Knight Frank. The gathering heard brokers present a robust outlook for the Bay Area economy and the region’s commercial real estate sector.

“We had a lot of tenant demand in 2011, and there is still more tenant demand coming,” said Phil Mahoney, an executive vice president with Cornish Carey.

At present, tenants are seeking a combined 9.6 million square feet of office and research space in Silicon Valley, estimated Cornish brokers, who update tenant demand estimates every three months.

Demand in early 2012 follows a spike at the end of 2011 that saw tenant demand reach 11.1 million square feet of office and research space, the highest level in the past five years.

When San Francisco and San Mateo County are added to Silicon Valley, estimated tenant demand is 15.6 million square feet of office and research space.

“This is a strong recovery,” Mahoney said. “The hiring rebound is continuing.”

About 9,400 openings for tech jobs are currently listed in the Bay Area, according to Cornish Carey.

The South Bay during 2011 posted a 3 percent gain in total payroll jobs, more than twice the hiring pace for the U.S. overall, which reported a 1.3 percent gain.

“The

Bay Area will continue to be an outlier for job growth,” said Erik Doyle, an executive managing director with Cornish Carey.
To be sure, tenant demand won’t translate at a 100 percent rate into new leases. Tenants often decide to remain where they are and renew their leases. Still, Mahoney estimates that in a decent economy — which appears to be the case in Silicon Valley and the San Francisco metro region — about two-thirds of the demand winds up as a new office space lease.

That could mean 6.4 million square feet of leases in coming months in Silicon Valley alone. And it might result in 10 million square feet of leasing activity in the South Bay, Peninsula and San Francisco markets before long.

The amount of prime office space available in Silicon Valley has been chopped nearly in half, due to the strong demand. At the end of 2010, the region had a 20.6 percent vacancy rate. One year later, Class A office vacancies had dwindled to 11.9 percent, Cornish Carey reported.

Brokers suggested that recent activity in Palo Alto, Cupertino, Menlo Park, Sunnyvale and Mountain View is poised to spread to nearby regions.

The hottest spots in the short term are South San Francisco, San Mateo County and North San Jose.

Further out, the next waves of expansion are expected to reach Milpitas, downtown San Jose, central San Francisco and Fremont.

The East Bay will also benefit from the upswing if companies can’t find space in their primary target areas of Silicon Valley and San Francisco, said Thomas Fehr, a senior vice president with Cornish Carey.

“There is not enough existing space to fill all that demand,” Fehr said. “Historically, when there has been an overflow, it has come to the East Bay. We expect that overflow again.”

Contact George Avalos at 925-977-8477. Follow him at twitter.com/george_avalos.

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Article source: http://www.mercurynews.com/real-estate/ci_19812931