Fourteen months after winning a fierce bidding contest for a prime city-owned development parcel, Hunter/Storm and Kilroy Realty’s Redwood City office project is good to go.
The development team got the green light on July 22 to move forward with the largest office project ever in the city’s downtown core, which is now being dubbed “Crossing/900.”
The development at 950 Middlefield Road will transform a 2.3acre parking lot, identified as Block 2, to include roughly 300,000 square feet of Class A office space and 5,000 square feet of retail. City officials hope its workers will spill over to help drive business activity in the reviving downtown area.
“It’s going to be an enormous impact,” said Dan Zack, downtown development coordinator for Redwood City. “This is going to add a lot of space, right by the Caltrain stop. And you’re going to have office workers in the heart of the action, hopefully looking for lunch.”
Green light ready
The city council’s sign-off on a slate of approvals — including a development agreement, planning permit and an environmental document — paves the way for Hunter/Storm to submit for engineering and building permits. The project is split between two buildings of roughly 200,000 square feet and 100,000 square feet. The city has agreed to sell the parcel to Hunter/Storm for $17 million.
Hunter/Storm’s financial partner in the deal is Kilroy Realty Corp., the Southern California-based real estate investment trust that exploded onto the Silicon Valley development scene last year with a slew of deals on the Peninsula for LinkedIn Corp., Audience Inc. and Synopsys, not to mention high-profile projects in San Francisco.
Deke Hunter, president of Hunter Properties Inc., the umbrella company of Hunter/Storm, said in an email the company intends to break ground in September.
Kilroy’s Mike Sanford said ideally a single tenant would take the entire project, but more than one tenant is also possible. But the company will build the project without a tenant in tow. Mike Moran and Ben Paul of Cassidy Turley are marketing the project.
“We’ve had really good activity on the preleasing side, with interest split about 50/50 between professional services and tech,” Sanford said. “We’re really excited to get started, and are looking at second-quarter 2015 for delivery.”
Plans shift slightly
Contours of the project have changed somewhat since the city selected Hunter/Storm last May over four competitors. Most notably, the city no longer plans to construct a traffic circle near the intersection of Hamilton and Winslow that was originally envisioned. The change is the result of the state’s decision not to “grade separate” the Caltrain line. That also has scuttled, for now, the city’s hopes to build a surface connection from the circle to the other side of the tracks.
Still, activity in the downtown area continues to steam ahead. The city is also now negotiating with developer Lowe Enterprises on a smaller city-owned lot across the street, which could include residential.
Regardless of what happens there, the office project promises to completely change the character of the entrance to downtown. It is located at the corner of Middlefield Road and Jefferson Avenue, across from the On Broadway development that includes a Cost Plus World Market and 20-screen Century Theatres.
Demand for space in the submarket is exceptionally strong. The downtown office market’s vacancy was just 2.7 percent in the second quarter, according to Colliers International’s latest quarterly numbers. That’s just more than 19,000 square feet available of a 717,000-square-foot building base. Average asking rents were $3.48, according to Colliers.
“I think that downtown Redwood City is on its way to becoming the next great business hub on the Peninsula,” said Mike Cobb, a Colliers senior vice president who is based in Redwood City. “It’s a shorter Baby Bullet trip to (San Francisco), and I think that the bucket of amenities competes pretty favorably with Palo Alto and Mountain View. The Hunter/Storm project will be a great catalyst.”
The new development represents roughly 42 percent of the current building base in that area, but Zack said the new office will be a class apart from the existing stock.
“There’s currently a lot of small office space spread out,” he said. “This will all be in one spot right in the heart of things. In terms of having a big floor plate and the really high ceilings (today’s office tenants are seeking), it’s going to be pretty unique here.”
Nathan Donato-Weinstein covers commercial real estate and transportation for the Silicon Valley Business Journal.