Major Tenant Secured for RWC Powerhouse Gym Development

On April 19th of 2016, the Redwood City Planning Commission approved a proposal to demolish an existing building at 2075 Broadway (Powerhouse Gym), and redevelop it into a 93,515 S/F mixed use building, with roughly 65,000 S/F designated for office space, and the rest for ground floor retail.  The developer, Lane Partners, had been trying to get the project pushed through for quite some time, having their initial proposal of 1750,000 S/F of office space rejected back in April 2015 due to a lack of parking.  Now, with a downsized project and planning commission approval, Lane Partners plans to break ground on the project this June, with an estimated construction duration of 20 months.

With project completion still over two years out, Lane Partners have reportedly already secured a major tenant for the development.  According to Redwood City mayor, John Seybert, the development will be an expansion site for the Chan Zuckerberg Initiative, a company formed by Facebook founder, Mark Zuckerberg, and his wife Priscilla Chan.  Per the company website, their objective is to "advance human potential and promote equality in areas such as health, education, scientific research and energy".  The couple introduced the company in December of 2015 with a pledge to contribute 99% of their shared stock in Facebook (over the course of their lifetimes), which at the time totaled roughly $45 billion.  The Initiative just recently announced the hiring of David Plouffe, campaign manager for Barack Obama's successful 2008 presidential bid, and current VP of Policy & Strategy at Uber.  Plouffe will be leading the company's policy and advocacy efforts.

The Chan Zuckerberg Initiative will be another major name added to downtown Redwood City's employer roster, which is currently headlined by Box Inc, who moved their headquarters to the new Crossing/900 development in Nov '15.  While the Chan Zuckerberg Initiative may not be huge in terms of number of people they employ, it is huge in terms of the weight carried by its name.  Having the Chan & Zuckerberg names on a brand new building just one block from the Courthouse Square is bound to have some influence on how Redwood City is perceived by businesses considering relocation in the future.

Stay tuned to my blog for updates on this project, as well as other major development in the mid-peninsula.

2016 Mid-Peninsula Real Estate Market in Review

The mid-peninsula real estate market told a much different story in 2016 than it did in 2014 and 2015.  While home prices continued to grow, it was at a far slower rate than the two years prior.  The average sale price for homes in the mid-peninsula grew 17.14% from 2013-2014, and 15.14% from 2014-2015. By contrast, the average sales price in 2016 saw only a 2.74% increase from 2015.  The most obvious explanation for this slow down is that inventory was significantly higher during the busiest months of 2016 than it had been in either 2014 or 2015.  In fact, in some cities inventory was nearly double its 2015 levels through much of the summer and fall months.  With more on the market, buyers became more selective, and the bidding wars that were all too common in '14 and '15, became much less prevalent in 2016.  While I'm sure most homeowners would love to see home values continue to soar indefinitely, the slowdown we saw last year was a welcome sight for buyers who felt the market had been running away from them in recent years.

* For the purposes of this update, the mid-peninsula refers to San Mateo, Foster City, Belmont, San Carlos, Redwood City & Menlo Park.

See blow for a snapshot summary of the 2016 mid-peninsula real estate market.  All percentages reflect the change from 2015 values.

2017 Real Estate Market: A Look Ahead

With Donald J. Trump sworn in as our 45th President on the steps of the Capitol Building this morning, now seems as good a time as any to ruminate on the future (of the real estate market).  Two indicators to closely monitor this year will be the stock market and interest rates.  After taking a quick dive immediately after Trump's victory was announced in early November, the stock market surged to finish off the year.  If this trend continues, it will boost the buying power of some home buyer hopefuls, especially here in the Silicon Valley where it seems everyone over the age of 30 has a stock portfolio.  Still, despite recent stock market performance, a new president and new economic policy bring with them a degree of uncertainty.  For now, expectations of decreased regulation and taxes have investors feeling optimistic about the Trump presidency.  

Rising interest rates could be the real story of the 2017 real estate market.  The Fed finally raised rates in December for just the second time in the past decade.  And just yesterday, Fed Chair Janet Yellen said she expects a few more rate hikes throughout the year.   With this being said, the Fed will only continue to raise rates if they are confident in our economy, which to a certain degree will hinge upon policy pushed through in the early goings of the Trump Presidency.  If rates do in fact continue to rise,  the increased cost to borrow could have a stabilizing effect on home prices in 2017.  

For better or worse, 2017 is sure to be a year full of surprises!  Stay tuned to my monthly newsletter for updates on the mid-peninsula real estate market as the Trump presidency progresses.