Scarce Housing Drives Developers to Seek Creative Avenues

SAN MATEO, CA—When housing supply is as scarce as it is in the Bay Area, land that is under-performing as one product type can be put into service as residential development. This was the case for a former office complex known as Waters Technology Park that was built in 1979.

This 11-acre parcel was purchased by Pulte Homes for redevelopment of 190 homes. Public records list the price at $106 million. The seller was San Francisco-based Strada Investment Group.

The sale is the culmination of three years of entitlement and development work by Strada, a real estate investment group that saw a 50-year-old office park encircled by single-family homes and knew it was the perfect site for residential conversion.

“When Strada goes into a project, obviously the economics matter, but we also believe it should be good for the existing community and based on sound public policy,” said Nik Krukowski, managing director at Strada, who handles development investments.  “This deal just ticked all the boxes–a chance to tackle the local housing deficit and provide new affordable housing and public open space, all while respecting the city’s blueprint for smart growth.”

The site is fully entitled under San Mateo’s general plan to encompass four neighborhoods featuring a mix of two-story detached single-family homes, as well as three-story townhomes, four-story rowhomes and condo flats. The new home community will be named One 90 and will feature Life Tested floorplans, smart home features and energy-efficient construction. Last year, the project was recognized as one of the best site plans in the country by industry experts who were looking for creative solutions to tight lots that created a sense of community.

“This is easily the largest real estate deal of the year for new residential for-sale product in the supply-constrained market of the San Francisco Peninsula,” according to Cameron Fowler of The Hoffman Company who brokered the transaction. “The developer and seller, Strada Investment Group, did a fantastic job creating a project that offers a wide selection of housing types curated to create a unique sense of place throughout the community.”

The property is centered on Borel Creek and neighbors the Lakeshore community at the intersection of the Bayshore Freeway and the San Mateo Bridge. This location provides access to transit and job markets with major employers including Sony, Oracle, Gilead, Electric Arts and GoPro in San Mateo, as well as other major tech firms in the surrounding valley.

“Given the developable land constraints in the Bay Area, redevelopment of underutilized office/industrial has gained traction in recent years. However, the majority of land use conversions have been industrial to residential,” Fowler tells GlobeSt.com. “Office parks are challenging to convert, given existing tenant relocation challenges and usually have higher as-is values. This is the largest office to residential conversion to have occurred during the current housing cycle in the Bay Area, but given the current COVID-19 fallout, I don’t think it will be the last as office vacancies increase and rents decrease.”

To enhance the surrounding area, the project will include a new section of trail along the creek, seating and native plants that will culminate at a new dog park. Common amenities will include a playground, lawn open space, communal grills, dining tables and a garden.

The Peninsula’s research and development market continues to be a sought-after location for life science companies. In fact, according to the Bureau of Labor, San Mateo County has recorded 152% employment growth in the life science industry since 2010, compared to the national average of 12% growth. The largest share of this growth comes from scientific and development services.