Some have described the Business Journal’s Structures Awards as being the place where the “Who’s Who” Valley real estate gather. Top brokers, developers, architects, builders and subcontractors all in one room is a commercial real estate reporter’s dream and Tuesday night at the Fairmont in San Jose was no exception!
One of the newer aspects of the event was a Q&A session held at the end with a panel of executives from Cupertino-based Hunter/Storm LLC, who were also honored as Developer of the Year.
Business Journal Publisher James MacGregor moderated the panel, made up of: Derek “Deke” Hunter Jr., managing member of Hunter/Storm LLC and president of Hunter Properties Inc.; Chairman Ed Storm and Curtis Leigh, director of development.
The trio provided some insights on the future of the commercial real estate scene here in the valley.
Storm said he didn’t expect his company to be affected by the potential elimination of redevelopment agencies in many parts of the Bay Area. For example, he pointed out that the company received no RDA money for the development of the @First project in North San Jose, which is home to the 560,000 square-foot Brocade Communications Systems Inc. headquarters in North San Jose. But he did point out that Brocade, which bought the land from Hunter Properties, was reimbursed about $4 million from the city for the purchase of specific equipment needed to support their local operations. That was where the RDA dollars came in.
Looking forward, Hunter predicts there will be “limited growth” on the retail side in Silicon Valley but that demand is still great from tenants seeking space in the 50,000 to 100,000 square-foot range.
“There’s a lot of demand for large campuses and for very small spaces, but not as much for buildings in the middle,” Leigh said, adding that overall, he was very “bullish” on the area.
The lower interest rates are one reason it’s a good time to buy property, Hunter said, despite uncertainty.
“It’s still a good time to invest,” he said.
I, for one, found it noteworthy that finalists for “Deal of the Year” were Facebook Inc., signing a 15-year lease with Rreef for 1 million square feet on 79 acres in Menlo Park, and VMware Inc. buying nearly 1 million square feet of space in Stanford Research Park from Roche Pharmaceuticals for $225 million.
Besides the sheer size of these deals – mind you, occurring when much of the rest of the country is still trying to recover from the recession – it speaks volumes for the strength of the Silicon Valley market. What’s also interesting to note is both companies are in the sectors that were unheard of about 15 years ago. Publicly traded VMware, a cloud computing company, was founded in 1998 and is hiring like crazy. Facebook Inc. was founded in 2004 and pretty much led the whole social media craze that is only getting more frenzied.
This year’s Structures Awards event proved that even in a challenging national climate, some of the most exciting deals continue to happen in Silicon Valley.