131 Townhouses Proposed Along RWC Waterfront

Maple Street Development

On Tuesday night Redwood City Council discussed a proposal to develop 131 three-story townhouses at 1548 Maple Street, a 7.9 acre stretch of land running along the city’s waterfront.   The project would be adjacent to the Docktown Marina, which currently houses about 65 floating homes that the city is currently in the process of vacating/relocating.

The proposal also includes improvements to the section of the Bay Trail that run through the site.

Tuesday night’s meeting featured the usual concerns that surround new residential development in Redwood City: affordable housing and traffic.  All 131 of the townhomes would be offered for sale at a market rate, so as it stands the project offers no consideration for affordable housing.  Commissioner Connie Guerrero asked that the developer come back with a proposal that included affordable housing, as well as an alternate proposal for a downsized project.

Another member of the Planning Commission, Shawn White, requested information on how school enrollment at Taft Elementary, and traffic along the 2.5 mile route to the school, would be affected by the development.  White suspected that since the project consists of single-family townhouses rather than apartments, it is more likely to attract young families with children.  Taft would be the elementary school that most families living at the complex would be assigned to.

The project’s approval would also require the city to grant a zoning change from tidal plain to mixed-use.  The Planning Commission has already spent quite a bit of time studying zoning changes in that area during their drafting of the Inner Harbor Specific Plan, and while the IHSP was never completed, the hopes are that they can use those reports to guide them in studying a zoning change for this project.

Comments and concerns about the environmental impact of this project can be sent to lcostasanders@redwoodcity.org through Aug. 7, with future opportunities to weigh in once an environmental impact report is prepared and subsequent public hearings are held.

Redwood City Updates/Expands Neighborhood Associations Map

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Redwood City recently announced an update to its neighborhood association map – expanding the number of neighborhoods from 11 to 17. This new map was designed to better align with the city’s natural boundaries and neighborhood characteristics, as well as recognize and blend several pre-existing maps, including the General Plan Neighborhood Map, the previous Neighborhood Association Map, and the Nextdoor Neighborhood Map.

The new map include the addition of the Bair Island and Downtown neighborhoods, where the vast majority of new residential development has been concentrated over the past several years. Also, some of the larger neighborhoods have been broken up into smaller ones. For example, what was previously the High School Acres neighborhood is now recognized as a combination of Mt. Carmel, Eagle Hill, and Edgewood. Similarly, Central Park has been split into Woodside Plaza, and Palm. These new neighborhoods might actually be more familiar than the older ones colloquially, but they are just now being recognized by the city with their own designated neighborhood associations.

Redwood City Residents: The city is currently in the process of appointing leaders to each association, and establishing regular meetings. They encourage all residents to take a look at the new map to determine which neighborhood association you belong to, as these associations are key in driving communication between city officials and the community. For information on how to register with your new neighborhood association, or how to get involved as a leader of your community, head to: http://www.redwoodcity.org/residents/neighborhoods/neighborhood-associations.

Over 55? Downsizing? Avoid Property Tax Increases With Props 60/90

When a home is sold in the state of California, the new home owner faces a reappraisal of the home’s value and a corresponding adjustment to the home’s base tax value.  Due to historically appreciating home values, this typically translates to an increase in the amount of property taxes paid by the new homeowner.  This can be problematic for older or retired people with decreasing or fixed incomes who sell their long time home looking to downsize.

For example, let’s say a couple bought a house in Redwood City in 1992 for $250,000, with a 1.25% tax rate.  This would put their annual property taxes at $3,125.  The county assessor is allowed to raise your property’s assessed value by 2% a year while you own it.  Assuming they did that every year all the way up until 2017, the property’s assessed value would now be $410,151, bringing the annual property tax total up to $5,126.

Now the couple is retired, their kids have moved out, and they’re hoping to downsize to liquidate some of the equity they’ve built up in their home.  So they sell their 3bed, 2 bath home for $1,528,600 (the average sales price in 2017 for a 3BD/2BA RWC home), and buy a 2 bed, 1 bath home down the street for $1,050,046 (the average sales price in 2017 for a 2BD/1BA RWC home).  They’ve done fantastic in terms of taking out equity from their previous home, but now they’ll be paying property taxes based on the value of their new home.  At 1.25%, that puts their new annual property tax total at $13,125 – more 2.5 times greater than what they paid before!  Over the course of 10 years they’ll be paying more than $130,000 just in property taxes.  This could be tough to swing with a fixed income, especially if you have pre-existing debts (i.e. loan for home renovation).

This is why California passed Prop 60, which allows homeowners over the age of 55 to sell their home and transfer its current assessed value to their new home – as long as the two homes are in the same county.  Prop 90 was later passed to allow inter-county transfers, but only at the discretion of each county.  Currently only 11 counties in California have an ordinance enabling the inter county transfer: Alameda, Orange, San Diego, Tuolumne, El Dorado, Riverside, San Mateo, Santa Clara, Ventura, Los Angeles, and San Bernardino.

Are you Eligible to Apply for the benefits of Prop 60/90?  If you meet the requirements below, then yes!

  • You or your spouse must be at least 55 years of age when the original property was sold.
  • The original property and new property must be within the same county.
    You can only use the transfer once in a lifetime.
  • The new replacement property must be of equal or lessor value than the original property sold.
  • The replacement property must be built or bought within 2 years of selling the original property.
  • Your original property must be your primary residence and have been eligible for the homeowners’ exemption or disabled veterans’ exemption.
  • Your replacement property must be your primary residence and must be eligible for the homeowners’ exemption or disabled veterans’ exemption.

One Time Use – You can only apply for the benefits of Props 60/90 once in a lifetime with one exception.  If the benefits have been used once based on age, they can be used again based on disability.

For more information, visit the California State Board of Equalizations

Fed Increase Interest Rates for the 3rd Time in 6 Months

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The Federal Reserve raised their benchmark interest rate by a quarter point this morning, marking the 3rd rate increase since December of last year.  At the press conference announcing the increase, Fed Chair Janet Yellen said the rate hike “reflects the progress the economy has made and is expected to make toward maximum employment and price stability”.

The Fed’s decision to raise rates again signals a growing confidence in the American economy, which saw the unemployment rate hit a 16-year low in May.  The Fed’s Board members predict there will be one more increase before the year’s end.

What does this mean for real estate?  As it becomes more expensive for banks to borrow from the Fed, it typically becomes more expensive for consumers to borrow from the banks.  This is why people heavily monitor the Fed’s interest rates to forecast where mortgage rates might be going.  That being said, average 30-year fixed mortgage rates have actually been on a slight downward trend over the past few months, despite two recent hikes in the Federal Reserve rate.

Mike Fratantoni, Chief Economist for the Mortgage Bankers Association, speculates that interest rates abroad might be holding back our mortgage rates here.  While the Federal Reserve is showing confidence in the US economy by continuing to raise interest rates, central banks in other countries are still trying to stimulate their economies by keeping rates low.  This coupled with a strong foreign demand for safe assets (US real estate), is acting as somewhat of an anchor to US mortgage rates, according to the MBA.  Still, many economists, including Freddie Mac’s Sean Becketti, expect that US mortgage rates will begin to gradually rise as the year progresses.

If you’re thinking about buying and would like to explore financing options/current interest rates, we will gladly connect you with one of our trusted loan advisors.  Feel free to call our office at (650) 363-2808.

 

Paint vs. Stain

When finishing wood upgrades in your home, you have two general style options: paint or stain. Whether you want to enhance the natural beauty of your new Redwood fence, or cover up the flaws of your old plywood cabinets, each style has its pros and cons, and can be used to accomplish distinct goals in your home renovation. If you’re trying to brighten up an older home, but don’t want to spend the money to replace outdated cabinets, vanities, and bedroom doors – paint tends to be the way to go. It covers up imperfections in older wood, and gives you many more color options to match the rest of your home (convenient if you’re not doing a complete home remodel).

On the other hand, if you’ve just spent a bunch of money on brand new Cherry cabinets, or Redwood fencing, you’re not going to want to hide the gorgeous wood grain under a thick coating of paint. Instead, you’ll want to coat it with a stain that will penetrate deep into the wood’s pores, creating a richer wood grain appearance. Different stains will show more of the woods underlying features than others, depending on their opacity and pigmentation.

In some cases, paints and stains can complement each other quite nicely. Lighter paint tones used on trim or siding around darker stained doors and/or decking can yield some dramatic and beautiful results. Take for instance this San Carlos hills home pictured below, which masterfully pairs dark stained Brazilian Ipe decking with sleek white trim, posts and siding.

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Paint can be more difficult and time consuming to apply than stains, as you typically want to prime a surface before painting, and give it a “finishing coat” of paint after the first coat.  Also, since paint is so much thicker than most stains, more care must be taken to roll it out evenly, ensuring no droplets form and harden on the surface of the wood.   Maintaining paint can be a bit more burdensome as well, as you will need to chip away any peeling layers before applying a new one.   Stains don’t normally chip or peel if applied properly.

With stains, surface preparation of the wood is minimal and primers are not always required.  For exterior uses of stains (siding, decks, trim) a finishing coat is not normally required either.  However, for some interior uses (floors, doors, butcher block countertops) you will want to apply a clear protective coating once the stain has dried.

History Shows: Stock Market Paces the Real Estate Market

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Economists tend to disagree on whether there is a true causal relationship between the stock and real estate markets. However, recent data shows that when the stock market goes up or down, home prices follow. When tracking home prices in San Mateo County against the Dow Jones Industrial Average (DJI), between the dotcom crash of 2000-2002 all the way to today, you can see almost identical trend lines. The above chart shows clearly that for nearly every peak and valley in the DJI there is a corresponding fluctuation in home prices.

As a Realtor who has represented numerous buyers throughout my career, I believe there is at least one obvious link between the stock market and real estate markets. It is common for buyers to use stock investments to help fund down payments on home purchases. This is especially true in regions like San Mateo County, where in the month of April a 20% down payment on the average home would have been roughly $375,000. Since most people are not able to save this amount of money in a short period of time, stock based investments and company stocks are the typical source for the down payment. For these people, a surge in stock value means a surge in purchasing power. Therefore, it’s not all that surprising to see home prices ebbing and flowing right alongside the stock market.

While it’s not necessarily a proven science, the theory at the very least passes the eye test. If you’re looking for an indicator of where San Mateo County home prices could go next, keep an eye on the stock market.

The Bay Area’s Most Central Transit Hub Set for a Major Facelift

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The Millbrae Planning Commission was just given its first chance to formally review a massive mixed use development to be built adjacent to the city’s Caltrain/BART staions.  The “Serra Station” proposal calls for the construction of 440 housing units, 290,000 S/F of office space, and 13,200 S/F of retail – contained in two 10-story buildings and one 9-story building.  This project is one of two major developments proposed in a 116 acre site surrounding the Millbrae Station, part of a city-led effort to build a vibrant economic hub around one of the peninsula’s most central and connected transit centers.  The other project, “Gateway at Millbrae Station”, is proposing the construction of over 300 rental housing units, 47,000 S/F of retail, and 160,000 S/F of office space.

In February of last year, city officials approved an update to the Millbrae Station Area Specific Plan, which preemptively completed much of the environmental work necessary for the development of the 116 acres site.  Plans were submitted for both projects shortly after the update was approved by city council, but they had to go through a lengthy public review process before being put in front of the Planning Commission.

Sound familiar?  Redwood City similarly completed environmental work for land downtown when they passed their 2011 Downtown Precise Plan.  This was done in an attempt to jump start developer interest in the city’s downtown area – and it worked…. With fewer regulatory hoops to jump through for project approval, developers flocked to the city in droves.

Millbrae won’t see development on the same scale that Redwood City did.  Their focus, at least for now, is on transit oriented development built around the Millbrae station.  Plus, the environmental work was only done for two projects (albeit two very large projects), as opposed to the dozens of residential and commercial projects that had the way cleared for them by RWC’s Downtown Precise Plan.  Still, the Millbrae station certainly has the potential to become something special.  It is the largest intermodal terminal West of the Mississippi – connecting BART, Caltrain, SamTrans, and if all goes as planned, the California high speed rail.  It also happens to be the peninsula’s most central public transit hub, offering easy access to the East Bay, SFO, the Oakland Airport, San Francisco, and San Jose.  With the area around it developed, this station could become a desirable place for people to to eat, shop, work, and live, rather than just a pitstop that travelers hurriedly pass through on the way to their final destination.

Check out this marketing video for the Gateway at Millbrae Station.  The project’s developer, Republic Urban, put it together, and it offers a remarkably detailed representation of their vision for what the Millbrae station could become in several years time.

Redwood City Approves 350 Unit Apartment Complex Near Jefferson – El Camino

Redwood City’s most prolific residential developer of late, Greystar Development, has been given the green light to move forward on another 350 unit apartment complex.  City council voted 4-2 last week to approve the 8-story project at 1409 El Camino, which will also include 6,000 S/F of ground floor retail, 440 parking spots, and 35 affordable units (10% of the total offering).  As a condition of the project’s approval, Greystar will also be contributing $250,000 towards Habitat for Humanity’s 20-unit affordable condo development at 612 Jefferson.

Greystar Development has been the largest beneficiary of Redwood City’s 2011 Downtown Precise Plan, which pre-emptively completed environmental work for the construction of 2,500 new residential units.  With the approval of their most recent 350 unit complex, Greystar has now accounted for just under 1,000 of the 2,500 new residential units allowed under the Precise Plan.  These 1,000 units are spread across 4 separate developments – all within a block of each other.  See below for a map showing Greystar’s development activity in downtown Redwood City.

Greystar

Despite all of Greystar’s development falling under the residential cap set by the Downtown Precise Plan, many residents feel the city has not adequately taken into account the environmental impact of green lighting so much development in such a short period of time.  The Precise Plan was initially supposed to guide development for a period of 15 – 20 years, but just 6 years since its passing the city has already almost hit the 2,500 unit residential cap (between was has been built or approved).  Further exacerbating environmental concerns is the fact that Greystar’s 1,000 units are all packed into a 4 square block area, adjacent to the already congested intersection at El Camino and Jefferson.   Citing these concerns, an organization called Redwood City Residents for Responsible Development has filed an appeal against the approval of Greystar’s new project at 1409 El Camino.

It’s possible that Greystar – in an attempt to avoid litigation – will compromise with residents by reducing the size of their project.  If not, it could be quite some time before any shovels hit ground at 1409 El Camino.  

Redwood City Residents for Responsible Development have not yet indicated whether they will file an environmental lawsuit against Greystar’s project should their appeal be denied.

Stay tuned.

Creativity and Cooperation: Financing Affordable Housing Sans State Redevelopment Funds

Since the dissolution of California’s 400 plus Redevelopment Agencies (RDA’s) in 2012, much of the burden of funding affordable housing has fallen back to the local level.  Previously, city governments and non-profit builders were able to tap into RDA’s for the funds necessary to get affordable housing projects off the ground.  Now, these projects rely much more heavily on public/private partnerships for funding.  In the SF peninsula, where there has become such a dearth of affordable housing, we are starting to see these public/private partnerships take initiative.  Take for instance, Habitat for Humanity, who has partnered with Redwood City to fund the construction of 20 affordable condos at 612 Jefferson.  Or more recently in San Mateo, where the Housing Endowment and Regional Trust of San Mateo County (HEART), a public/private nonprofit, just announced it will be lending $500,000 towards predevelopment activities for a 68-unit affordable apartment complex at the new Bay Meadows mixed-use development.

The absence of RDA funding is also part of what motivated Redwood City Council to pass an amendment to their Downtown Precise Plan in 2016 requiring that 15% of new residential construction be reserved for affordable housing.  Without RDA funding, the city knew their ability to finance affordable projects on their own was limited.  This amendment served as a way for them to pass the financial burden on to the developers of new market rate housing.  Since its passing, at least two developers have responded to the city imposed affordable housing requirement in a promising manner.

First, Anton Development put forth a proposal for a 250 unit apartment complex on Brewster, including 20% (50) affordable units.  The project received unanimous approval from the city, and council members praised the developer for taking advantage of state and federal tax credits and exemptions to finance a greater number of affordable units than what was required.  Using these opportunities provided by state and federal governments to finance affordable housing could set a precedent for developers in the future.

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Aerial view of the Broadway Plaza site, as well as the land where Sobrato hopes to build 120 affordable units

Last month, the developer trying to push through a massive mixed-use complex at Broadway/Woodside in Redwood City, the Sobrato Organization, announced a partnership with MidPen housing (a non-profit developer) to construct 120 affordable units on two parcels of land already owned by Sobrato.  These 120 units would count towards the affordable requirement imposed by the city, and when taken into account with the 400 market rate units they hope to build, make up almost 25% of their total offering.

If these affordable housing projects had been built in to all new residential development from the inception of the Downtown Precise Plan back in 2011, they likely would have had a much more significant impact.  Now, building 120 affordable units into yet another huge market rate complex just feels like damage control, as the cost of living has already soared far out of reach for countless locals.  Still, 120 additional below market rate units means 120 low-income families get to stay in place.  Let’s hope this trend of developers and public/private partnerships leading the charge to build affordable housing continues.

RWC: Broadway Plaza Proposal Amended to Add 120 Affordable Units

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Earlier this week, Redwood City council voted 6-1 to approve a study that will look at how amending the General Plan to allow for residential in one of the city’s light industrial areas would impact nearby businesses and traffic.  This comes on the heels of the Sobrato Organization announcing a partnership with MidPen Housing to build 120 affordable housing units on two parcels of land currently owned by Sobrato, located in the southeast corner of Woodside and Bay Roads.

These 120 affordable units are part of an amendment made last month to Sobrato’s massive Broadway Plaza redevelopment proposal, and would help fulfill that project’s city-imposed affordable housing requirement.   Sobrato’s “Broadway Plaza” proposal calls for the redevelopment of the aging shopping center located at Broadway and Woodisde Road, currently home to CVS, Big Lots & Foods Co.   It would replace the existing retail strip mall with 400 market rate residential units, 420,000 S/F of office space within three 5-story buildings, and about 19,000 S/F of retail space (which will include a new storefront for the existing CVS).

City Council was enthusiastic bout Sobrato’s partnership with MidPen Housing, a non-profit affordable housing developer with a great local reputation.  Just a few weeks ago MidPen purchased a 55 unit apartment complex on Rolison in Redwood City for $17.1 million in order to maintain them at below market rate.

Still, even with the MidPen partnership, this project raises some concerns.  After you take into account the 120 affordable units, Sobrato’s proposal would introduce 520 new residential units around the already highly congested Woodside Rd/Highway 101 junction – where there was no residential previously.  Add a busy 420,000 S/F office complex into the mix and you’ve got yourself a recipe for a permanent Woodside Road parking lot.

Janet Borgens, the one Redwood City council member who voted against the study, expressed concerns that going forward with Sobrato’s proposal would set a precedent for “spot-zoning”, which over time could replace our industrial spaces with residential.  The southeast corridor of Bay Road, where Sobrato hopes to build the affordable housing, is a light industrial area, but it has also become something of a startup incubator.  Borgens worries that introducing residential along that stretch of Bay could threaten the incubator environment, which brings something unique and difficult to replace to our economy.

Do you have concerns about this project?  If so, you’ll have plenty of opportunities to voice them.  City staff confirmed that between the citizen committee, Planning Commission and City Council meetings required for a general plan amendment, there would be seven to eight more public hearings where community feedback could be considered.

Stay tuned!

Delivery Robots Out in Force in Redwood City

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In December of last year, London based Starship Technologies rolled out a 9-month pilot program of their robotic delivery service in Redwood City. Masterminded by Ahti Heinla, co-founder and former Chief Technical Architect of Skype, Starship Technologies hopes to provide autono-mous food and grocery delivery that can be implemented by existing third-party delivery services like Door Dash and Postmates (both of which became the Starship’s first official US partners this year).

At this point, Starship reports their robots have reached 90% automation, only needing remote assistance while crossing streets. However, if you happen to run into one in the streets of Redwood City, it will likely have a human “handler” in tow. This is in part to ensure safety while the robots are still mapping out the city, but also to help with community engagement.

We recently caught up with Starship’s Head of Operations in California, Justin Hoffman, who filled us in on his company’s mission and future in Redwood City. He informed us that while the robots currently only operate within about a 2-mile radius of their office at 234 Marshall, they hope to expand their service area by setting up additional charging hubs at various points throughout the city. As of right now, Redwood City residents cannot specifically request robotic delivery, but Hoffman did say there’s a possibility Doordash will offer that feature by the end of the 9-month pilot. For now, keep an eye out for these robots as you pass through Redwood City!

Read below for a complete transcript of our brief interview with Justin Hoffman:

How far do the robots deliver from your office on Marshall?

–2 mile radius is what we are initially beginning with

Are there plans to open additional charging hubs to allow a greater service area?

–In the mid-to-long term we aim to have automated charging/delivery dispatch hubs in a given city to broaden service areas and enable greater efficiency amongst the network of robots

Which elements of the delivery process have not become fully autonomous? When do your handlers have to step in to help?

–When a robot reaches a crosswalk, for example, the robot will ping a robot “operator” (a remote operator who sees through the robot’s cameras to guide it in difficult situations) to assist it when crossing the road. Handlers currently help us engaging with the community, assisting with mapping, and managing day-to-day operations

Are Redwood City residents within your service area currently able to request robotic delivery? If not, will they be able to at any point during the 9-month pilot?

–We currently operate through partners such as Doordash (and very soon Postmates), and at some toward the end of the pilot, you may be able to request a robot specifically for your order.

Will Starship’s delivery service ultimately be integrated into existing third-party delivery services like Door Dash?

–We actually are currently integrated already with third-party commercial partners such as Doordash. As we build more partnerships, we will be available for a variety of types of deliveries, including groceries and (e-commerce) packages as well.

Do you have plans to expand into other Bay Area cities any time soon?

–Yes, we are currently in talks with a variety of other cities in the Bay Area. We shall announce names over the coming weeks/months.

Rent Control Update: Burlingame, San Mateo, Mountain View

At the time our last newsletter was released, residents of San Mateo, Burlingame, and Mountain View were about to cast their vote on rent control measures. Let’s take a look at how each of those measures fared:

BURLINGAME – MEASURE R: DID NOT PASS
67.44% of Burlingame voters said no to rent control in the November election. Measure R would have tied annual rent increases to the consumer price index, but no more than 4% and no less than 1%. The rent control restrictions would apply to only multi-family homes built before Feb. 1, 1995. Also included in the measure was a just cause eviction provision which would have applied to all rentals other than owner occupied duplexes.

SAN MATEO – MEASURE Q: DID NOT PASS
60.44% of San Mateo voters rejected Measure Q, which which would have applied the same restrictions on rent increases as Burlingame’s Measure R, and a similar just cause eviction provision. No new construction, single-family homes or owner-occupied duplexes would have been subjected to either rent control or just-cause eviction.

MOUNTAIN VIEW – MEASURE V: PASS
Mountain View’s rent control measure passed with 53.6% of the vote. HOWEVER, city council has since put a temporary hold on the measure after the California Apartment Association challenged its constitutionality. The CAA subsequently filed a preliminary injunction against the measure, which will be heard by a judge March 19th. If the injunction is approved, the measure will not be enforced. If it is not approved, Measure V will take effect, tying annual rent increases to the Consumer Price Index (between 2-5%), and rolling current rents back to what they were October 19, 2015.

Rent control may have failed by a fairly large margin in both Burlingame and San Mateo, but it succeeded in gaining significant grass roots momentum. Should housing issues persist, I would expect the movement to return in force by the next election.

For the sake of full disclosure, we were contributors to the $1 million+ that was spent collectively by SAMCAR and the CAA opposing Measures Q & R leading up to the election. If you follow our newsletter, you’re probably familiar with our stance against rent control by now. But it bears repeating that while we are sensitive to the social issues driving the argument for rent control, we strongly believe it only serves to exacerbate the underlying causes of the housing crisis. For an elaboration on our argument against rent control, read our previous newsletter at:

www.realsmartgroup.com/fall-2016

RWC Approves 250 Unit Apartment Complex, Including 50 Affordable

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The Redwood City Planning Commission unanimously approved a proposal to construct 250 apartment units at 801 Brewster, just a few blocks from the heart of Downtown.  The project was granted an exemption from current building height restrictions in order to account for 50 affordable on-site units.  The Developer, Anton Development, found that if they increased building heights to 4 and 6 stories instead of the 3 and 5 currently allowed, they would be able to take advantage of state and federal tax credits and tax-exemptions to offer 20% (50 total units) of the total project at below market rent.  In all, the project calls for the construction of a 379,502 square foot, 4-6 story building, offering a mix of studio, 1 bedroom, & 2 bedroom apartments. The architectural design will incorporate Craftsman elements common among buildings in the neighboring Mezesville Historic District.

The proposal was met with enthusiasm from the Planning Commission for the creative approach that Anton Development took to increase the project’s total offering of affordable units. The hope is that their use of opportunities provided by state and federal government to incentivize below market rate housing could lay the groundwork for future developers to do the same.  These tax credits and exemptions are in place so that developers can offer a greater public benefit without taking a significant hit to their bottom line.  If this proves to be a lucrative project for Anton Development, even with 20% affordable units, perhaps other developers will follow suit.

Redwood City has authorized the construction of a considerable amount of housing since passing the Downtown Precise Plan in 2011, but the vast majority has been market rate housing – a mark that has grown out of reach for many longtime residents.  As a consequence, City Council has been facing increasing pressure to pause development and retool the Downtown Precise Plan to address the need for affordable housing.  With this in mind, developers looking to invest in Redwood City might find it worthwhile to use these state and federal tax breaks to finance a greater portion of affordable housing.  It could save them time and effort in the approval process – as evidenced by the quick and unanimous approval of 801 Brewster.

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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.
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2017 Real Estate Market: A Look Ahead

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With Donald J. Trump sworn in as our 45th President on the steps of the Capitol Building last week, 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.

RWC: Major Tenant Secured for Powerhouse Gym Redevelopment

Broadway Station

Conceptual Design for “The Broadway Station”, at the current site of Powerhouse Gym

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.

Despite 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.  According to the company’s 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 of 99% of their shared stock in Facebook, which at the time totaled roughly $45 billion.

The Chan Zuckerberg Initiative will be another big name added to downtown Redwood City’s employer roster, which is currently headlined by Box Inc, who occupy the majority of the new Crossing/900 development.  While the company is not big in terms of number of people they employ, It is huge in terms of the weight carried by the Chan & Zuckerberg names.  Putting those names on a building just a block from the Courthouse Square will impact how downtown Redwood City is perceived by businesses looking to relocate in the future.

Stay tuned!

San Carlos to Put a Stop to Lot Splits

In response to concerns about increasing neighborhood density, the San Carlos Planning Commission recommended last week that the city revert to pre-2011 development standards, which were much more stringent on minimum lot sizes.  This change would increase the minimum lot sizes from 5,000 S/F to 10,000 S/F, and lot width from 40 to 65 feet.  It also puts restrictions on flag lots, which are parcels of land at the end of a long driveway with no road frontage.  The Planning Commission voted 5-0 in favor of this recommendation.

Zoning changes made in 2011 allowed construction of larger homes, and for homeowners of lots 10,000 S/F of more to split their lots in order to increase the city’s supply of housing.  They allowed for homes to cover 50% of the total lot square footage, rather than the 40% permitted under pre-2011 zoning laws.  In addition to allowing for the construction of larger homes, the increased lot coverage makes constructing accessory dwelling units possible for more homeowners.

The city had already placed a moratorium on the 2011 zoning changes back in June.  This was in response to resident complaints that homes were being built too large on lots that were too small, and that lots splits were leading to too much neighborhood density.

San Carlos, like most cities on the peninsula, has seen a recent surge in housing demand due to nearby job growth.  This has attracted the attention of developers and builders who see that there is money to be made in San Carlos.   But increasing density is hardly ever a popular idea in small close-knit communities like San Carlos, so it’s not much of a surprise to see residents push back against more relaxed zoning laws.

Facebook Pledges $20 Million to Affordable Housing

Last week, Facebook announced they will spend $20 million to help alleviate the housing shortage in their neighbor cities of Menlo Park and East Palo Alto. About $18.5 million will go towards building new housing, mostly targeted at low/middle income families, while the rest will go towards job training programs and providing legal assistance to tenants facing eviction. This announcement comes as Facebook and other tech giants have been facing growing pressure to partner with local governments and community organizations to find solutions to the region’s housing shortage – a problem which many feel has been exacerbated by unchecked tech growth.

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Bird’s eye view of Facebook’s recent campus expansion. Chilco Street is the only thing separating it from East Menlo Park’s Belle Haven community (visible in the top left)

Facebook’s rapid expansion into East Menlo Park, a historically low-income region, has been a point of contention as of late. Early in 2015, they opened up a brand new 430,000 S/F Frank Gehry designed campus expansion within shouting distance of East Menlo Park’s Belle Haven community. Almost immediately after they cut the ribbon on that building, they submitted plans to the City of Menlo Park to redevelop an adjacent property into roughly 1 million square feet of additional office space. That project – also Frank Gehry designed – was promptly approved, and construction has been underway for over a year now. With all of this new office space to put to use, Facebook has estimated that they will bring 6,500 new employees to the area in the coming years.

A coalition of local community organizations had planned to sue Facebook over the stress 6,500 new employees could put on an already overburdened housing market. However, after a series of meetings with Facebook representatives, they agreed not to. Tameeka Bennett, executive director of Youth United for Community Action, one of the groups in the coalition, said she is convinced that Facebook is committed to partnering with the community to address the housing shortage. And more so than any of their Silicon Valley peers, their actions have demonstrated as much.

Facebook’s recent $20 million announcement isn’t the first commitment they have made to combat the housing crisis. Last year, in partnership with St. Anton Development, they broke ground on a 394-unit apartment complex at 3639 Haven Avenue. Those units will be offered to non-Facebook employees, and 15 of them will be subsidized by Facebook for low-income families. They extended their commitment to constructing publicly available housing earlier this year, when they unveiled a proposal to build 1,500 total units, 15% of which would be reserved for low to middle income families. This hands on approach to tackling the housing shortage is completely breaking the mold of how Silicon Valley tech companies offer support to communities impacted by their growth. While it is fairly common for companies to pay “impact fees” to help fund affordable housing, it is unprecedented for them to actually build the housing themselves.

To be fair, this isn’t a completely altruistic effort on the part of Facebook. Housing costs in the Bay Area have made it increasingly difficult for companies like Facebook to recruit the talent they want, so adding to the supply of housing serves their interests by driving those costs down and making it easier for them to recruit.

Perhaps others will follow Facebook’s lead. There are certainly plenty of eyes on Google in Mountain View, and Apple in Cupertino, hoping they will make similar efforts. Stay tuned!

New Wine Bar & Cafe Open at Box HQ, Redwood City

Donato Scotti, owner of Donato Enoteca in downtown Redwood City, has opened a wine bar, retail store & cafe at the new Box Headquarters at 900 Middlefield Road.  Cru Wine Bar & Merchant offers hard to find wines from around the world, as well as an international and domestic craft beer selection.  A European style menu featuring charcuterie plates, pizza by the slice, sandwiches and other treats are served as well.

The first day of service was November 2nd.  The cafe opens at 8am, and lunch service begins at 11am.

We sopped by there earlier today to do some reconnaissance – check it out!

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New Redevelopment Proposal Submitted for Old Redwood City Theater

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SyRes Properties, LLC – the company that owns Redwood City’s defunct Century 12 Theater – recently submitted plans to redevelop the 15-acre property into 336 residential units and a 100,000 S/F luxury sports club.  This is a revision of a plan they submitted to the city last year which originally proposed 550 residential units.  At the time, city officials told SyRes that 550 units needed further review and would require the land the be rezoned for high density development.  Previous attempts to redevelop the land into rental units and auto dealerships have all fallen through.

“We’ve received a revised application and it’s currently considered conceptual at this point”, said Lisa Cost-Sanders, the city planner assigned to the project.  “We’ll be providing the developers with additional comments and will be restarting the Environmental Impact Report process shortly.”

SyRes is the real estate branch of the Syufy family, who are known for their chain of Century Theaters.  In recent years however, the family has begun redeveloping their older cinemas into luxury VillaSport athletic clubs, as they are in the process of doing with an old theater in San Jose, and are currently hoping to do in Redwood City.  They currently operate three active VillaSports in Texas, Colorado, and Oregon, with single adult monthly dues ranging in price from $92 – $138 (expect that to be higher at Bay Area locations).

Follow this link to view a Villasport marketing video.

Other than serving as extra parking for neighboring auto dealerships, the property formerly occupied by Century 12 Redwood City has remained mostly vacant since the theater closed in 2003.  Should the recent SyRes proposal pass, it will become the second major development along Redwood City’s bayfront, with One Marina Homes just a stone’s throw away. However, even with the reduction in proposed residential units from 550 to 336, this project is sure to be put under heavy scrutiny by city officials for it’s potential to further congest the Highway 101/Whipple junction.  It also comes at a time when city hall is facing growing pressure from the community to put the brakes on development.

This proposal is by no means a slam dunk for the Syufy family, who have had no luck getting anything approved for their property at 557 East Bayshore.  Stay tuned to our blog for further updates on this project.