Big north office complex eyes biotech firms amid a pandemic
SAN JOSE >> The owners of a big office complex in north San Jose are now actively marketing the project to life sciences companies amid a surge in demand for space by biotech firms and companies in related fields.
Assembly at North First, located at a choice San Jose site, is being offered as a Silicon Valley campus for life sciences companies, a move that expands its original mission as a modern tech campus.
The 27-acre office and research complex is a wideranging renovation and redevelopment that so far has created about 300,100 square feet of modern office spaces in three buildings.
Brokers Michael Rosendin, Craig Fordyce, and Shane Minnis of Colliers International, a commercial real estate firm, are seeking tenants for Assembly at North First.
“From a market standpoint, we are promoting the project as being able to accommodate life sciences companies,” said Minnis, a vice president with Colliers International.
Developers Prospecthill Group, SKS Partners, and Invesco Real Estate are leading the redevelopment of the campus, which eventually could total more than 1.3 million square feet in north San Jose.
“Ideal for medical device and life science” is how one marketing brochure touts Assembly at North First. The brochure also lists about 36 life sciences companies with operations in the vicinity of the complex, including titans such as Varian, Johnson & Johnson, Roche, Abbott, and Boston Scientific. The brochure adds, “Be in good company.”
The complex is at the corner of North First Street and Headquarters Way, and also has a frontage on Rose Orchard Way. It’s a short distance from a key junction of the light rail line at North First and Tasman Drive.
“We are marketing to both the tech and life sciences sectors,” said Fordyce, an executive vice president with Colliers.
The project is being marketed in a way that fits with the new economic realities ushered in by the coronavirus.
“Life sciences is one of the few industries that isn’t being affected by COVID, and is in fact in greater demand because of the coronavirus,” Fordyce said.
The existing buildings in Assembly at North First total, respectively, 115,200 square feet, 98,700 square feet, and 86,200 square feet.
The building sizes can potentially enable the kind of flexibility that tenants may be seeking in the era of the coronavirus.
That means the buildings feature enough wideopen spaces to allow people to mingle more closely or to separate, depending on work needs and preferences. The buildings could be leased as a complete group to one tenant, or rented individually to multiple tenants.
“The buildings all have large floor plates, which means you can be under one roof, under multiple roofs,” Minnis said. “There is a lot of flexibility.”
Multiple types of tenants, including tech firms, have decided part of their response to the coronavirus is to scale back their dramatic expansions. That reluctance is one factor behind the marketing pivot for Assembly at North First.
“Life sciences and biotech are among the few industries that are still actively looking for space in today’s environment,” Minnis said.
Contact George Avalos at 408-859-5167.
Techies flock to Silicon Valley for jobs, weather, great food, art and nightlife, but for some one thing is missing: a home they can afford.
Despite high salaries and world-class amenities, San Jose is the least affordable place for tech workers to buy a home. A new analysis by the American Enterprise Institute found the typical tech worker and his or her partner — with two incomes totaling $200,000 in the San Jose metro — can afford just 12% of the homes for sale in the Bay Area.
The picture in San Francisco and the East Bay is nearly as bad, with just 21% of homes for sale fitting in the budget of an average tech couple. The high-hurdles to home ownership are fueling a Bay Area exodus that has contributed to the state’s sluggish population growth in recent years, researchers say.
Study author Ed Pinto, director of the AEI Housing Center, said tech workers can afford their pick of homes in almost every other U.S. city. “But in those places like San Jose, San Francisco and Los Angeles,” he said, “that is not the case.”
The analysis gives another explanation for the Bay Area exodus. And it’s not only workers who are leaving. Tech heavyweights HPE and Oracle have announced moves of their headquarters from Silicon Valley to Texas.
Pinto believes the spread of remote work will only accelerate migration from the Bay Area. With new workplace flexibilities, tech workers have a choice between high-cost regions near their offices and low-cost regions with bigger houses and remote work. “Work from home is winning,” he said.
The AEI study found California has four of the top five cities in the U.S. with the lowest rates of homeownership: San Jose (52% homeownership) and San Francisco metros (52.8%) fall behind only Los Angeles (48%) and Fresno (49%).
The analysis is based on 2019 U.S. census and home sales data. AEI researchers considered the median income for tech workers in metros across the country and compared it to home prices in each market. They assumed a conservative expenditure of three times median income for purchasing a house.
In Santa Clara County, for example, the typical household income for a tech worker and their partner is around $200,000, giving a couple a $600,000 budget, AEI researchers estimate. The median home price in the county is $1.3 million.
Even if home prices declined 5% over the next five years, Pinto noted, San Jose would still be the most expensive metropolitan area in the U.S.
In the East Bay and San Francisco, the typical household with at least one tech worker has an estimated income of about $187,000, producing a $561,000 homeshopping budget, according to the analysis.
In mid-20th century manufacturing and tech hubs like Dayton, Ohio, and Rochester, N.Y., the typical tech worker could afford more than 90% of homes on the market, according to the research.
Pinto said the California housing crisis has been brewing since the 1970s, when home prices were near the U.S. priceto-income ratio of about three times annual income. But ever-tightening land-use restrictions driving up costs for land and construction have squeezed home supply even as the state economy and population has grown, he said.
The business lobby Bay Area Council has pressed state lawmakers to make it easier to develop and build new homes and apartments. But widespread efforts to overhaul zoning have failed to gain traction in Sacramento.
Matt Regan of the Bay Area Council said making housing more affordable is a key piece to keeping the region competitive. “We’ve made housing the enemy. It’s guilty before being proven innocent,” Regan said. “We need systemic change.”
The Bay Area home market has soared to record levels during the pandemic, as major tech firms announced longterm shifts to remote work and homebuyers look for more space for work and family.
The median sale price in November for existing homes reached $1.1 million in the Bay Area, the highest for any region in the state, according to agent data from the California Association of Realtors.
Despite a steady flow of techies to cheaper communities like Sacramento and out-of-state locations, local real estate agents say demand remains strong.
Contact Louis Hansen at 408-920-5043.