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  • Big San Jose apartment complex lands key loan that enables upgrades

    Big San Jose apartment complex lands key loan that enables upgrades

    SAN JOSE — A big San Jose apartment complex has landed a key loan that will bankroll a wide-ranging upgrade of the property, which consists of affordable units.

    Monte Alban Apartments in San Jose has landed nearly $30.2 million in a refinance loan, according to JLL, a commercial real estate firm.

    The U.S. Housing and Urban Development Department provided the new loan, which was structured as a cash-out loan that provides funds to undertake renovations and improvements at the apartment complex.

    The 192-unit apartment complex is located at 1324 Santee Drive in San Jose. It consists of garden-style units within 12 buildings.

    The residential property is near one of the Bay Area’s major interchanges, where U.S. Highway 101 connects with interstates 280 and 680. It’s also fairly close to downtown San Jose and the city’s international airport.

    “The community maintains 100% occupancy with many long-term tenants and provides rents that are 40% to 60% below market rates,” JLL stated.

    The 30-year, fixed-rate loan from HUD exceeds the estimated value of the property, which was $24.8 million as of January 2024, according to documents on file at the Santa Clara County Assessor’s Office.

    San Francisco-based The John Stewart Co., the property owner and loan recipient, intends to conduct upgrades on the site.

    “The refinancing allows for $47,000 per unit in property renovations and upgrades,” JLL stated. That would equate to a total of about $9 million.

    John Stewart Co. and JLL didn’t specify whether these upgrades wiould occurr within the units, in the common areas, or both.

    Monte Alban Apartments was built in 1970 and renovated in 2006 and contains a mix of one-, two-, three- and four-bedroom units, according to the Apartments.com website.

    “Monte Alban Apartments offers a range of amenities including air conditioning, appliances, a community room, laundry facilities, an exercise room, a basketball court, two swimming pools and two playgrounds,” JLL stated.

     

     

     

    George Avalos

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  • Office vacancy levels soar to record highs in biggest Bay Area markets

    Office vacancy levels soar to record highs in biggest Bay Area markets

    SAN JOSE — The Bay Area’s three primary office markets, haunted by empty buildings, have reached forbidding new milestones of record-high vacancy levels, according to a grim new report.

    Silicon Valley, which roughly equates to Santa Clara County; downtown Oakland; and San Francisco all hit record-high office vacancy rates in the most recent three-month period, JLL, a commercial real estate firm, reported in separate surveys of those markets.

    Downtown Oakland, as seen in a July 2024 drone picture. (Jane Tyska/Bay Area News Group)

    Tenants continue to seek ways to reduce their corporate footprints, a dynamic that is keeping office vacancies at brutal levels.

    JLL measured the vacancy levels for the July-through-September period.

    San Francisco's skyline silhouettes against a scarlet sunset, Thursday, Jan. 4, 2024. Weather forecasts predict return of rain to the region on Saturday. (Karl Mondon/Bay Area News Group)
    Sunset arrives in San Francisco. (Karl Mondon/Bay Area News Group)

    Here are the details for each market in the third quarter:

    — San Francisco, which is locked in what numerous experts believe is an economic “doom loop”, posted a third-quarter vacancy rate of 34.5%.

    — Downtown Oakland’s office vacancy rate was 29.1%.

    — Silicon Valley reported an office vacancy level of 22%.

    In all three instances, the vacancy levels rocketed to record highs, according to JLL researchers for each market.

    Despite the ominous statistics, JLL researchers believe some signs of hope have begun to emerge for the battered Bay Area office markets.

    “Leasing activity in Silicon Valley is up 21.6% from the previous quarter,” JLL reported in their assessment of the South Bay office market for the third quarter. “The San Jose Airport and Santa Clara submarkets led the activity, accounting for 22.7% and 18.2% of deals, respectively.”

    In downtown Oakland, the July-through-September quarter was bleak with little room for optimism. Downtown Oakland’s office market was sluggish at best.

    Leasing activity, the number of rental deals and the average lease size declined in the July-September period compared with the April-through-June quarter in downtown Oakland.

    Downtown Oakland also faces an ominous challenge due to huge blocks of office space being vacant.

    “Two more full floors came to the market this quarter” in downtown Oakland, JLL reported. “Clorox listed another floor for sublease at 1221 Broadway and APEN’s former space at 426 17th Street was listed. This brings the total number of full floors available to 133 in downtown Oakland.”

    Put another way, if a typical Oakland office highrise is 20 stories high, 133 empty floors could equate to six or seven completely vacant office towers in downtown Oakland.

    San Francisco is — by far — the worst of the three office markets, with a vacancy rate that is 5 to 12 percentage points higher than downtown Oakland or Silicon Valley.

    “Vacancy increased to 34.5%” in San Francisco, “largely due to continued consolidation” by office tenants in the city’s Financial District, JLL reported.

    Even worse, office rental rates are particularly weak in San Francisco. Rents are roughly 33% below the levels seen in 2019, the final full year before coronavirus-spawned business shutdowns began in 2020.

    The JLL report did offer some hope for these three key office markets — although the reports warned that any real improvement in vacancy levels won’t materialize until sometime in 2025.

    “Return-to-office rates have trended upward, 6% higher than this time last year” in San Francisco, JLL reported. “Remote job postings are also down 16% year-over-year. Both indicate that companies are shifting away from a remote-friendly work environment.”

    Some encouraging signs for downtown Oakland have emerged due to government entities seeking to rent or own office spaces in the East Bay city’s urban core.

    “Downtown Oakland has seen stabilization among its public sector tenants, including major commitments from BART PD, the FBI, and FEMA,” JLL reported. “As remote work mandates shift, so will workweek activity shift in downtown Oakland.”

    Silicon Valley is starting to see a big increase in tenant demand as companies scout for office space to a greater extent, JLL reported.

    “JLL is tracking approximately three million square feet of office requirements, a 21.4% increase” in the third quarter compared with the second quarter, JLL reported.

    Plus, more tenants scouted for much larger spaces in the July-through-September third quarter than they did in the April-through-June second quarter.

    “While smaller requirements see higher demand and activity, 100,000-plus square feet requirements have tripled this year, signaling potential new deals,” JLL stated.

     

    George Avalos

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  • Downtown San Jose economy faces fresh jolts as two tenant exits loom

    Downtown San Jose economy faces fresh jolts as two tenant exits loom

    SAN JOSE — The decision by two tenants to exit downtown San Jose might worsen the maladies that already afflict the urban core’s economy in the wake of the coronavirus.

    PwC, a professional services titan, and its recently purchased tech company, Surfaceink, are poised to leave downtown after PwC signed a lease for a big chunk of space in a new office building at Santana Row in west San Jose.

    The prospect of tenant departures comes at a time when downtown San Jose already struggles with office vacancy levels that have soared to worrisome heights.

    “This is going to raise the vacancy rate in downtown San Jose,” said David Taxin, partner with Meacham Oppenheimer, a commercial real estate firm. “With the amount of vacancy downtown, this won’t help the cause.”

    At the end of 2023, downtown San Jose’s office availability rate was at an all-time high of 35.7%, according to a report from Savills, a commercial real estate firm. Office availability measures the combination of empty office space offered directly by building owners and space that tenants are offering through sublease.

    As further evidence of a feeble real estate market in downtown San Jose, within the last four months, two large office properties were sold at a big loss compared with their prior sales.

    In December 2023, an office tower at 303 Almaden Boulevard was bought for slightly under $23.8 million — which was 70% below the price paid for the highrise at the time of its prior sale in 2017 for $80.2 million.

    In February 2024, a two-tower office complex at North Market Street and West St, John Street was bought for $34.2 million — a nosedive of 77% compared with the $141.4 million paid in 2019 for the highrises.

    While the price declines are jaw-dropping, experts such as David Sandlin, an executive vice president with Colliers, a commercial real estate firm, point out that the newly established prices at least set a current value for office buildings for office buildings in downtown San Jose.

    “We now know the price that a Class A building in San Jose will trade for,” Sandlin said in a prior interview with this news organization on the topic.

    The price for the 303 Almaden tower worked out to $151 a square foot while the price for the 111 Market Square tower was $105 a square foot. Some experts note that the 303 Almaden highrise is deemed to be of greater quality than the two-tower office complex.

    Also of interest with these deals is that the buyers of each of the office properties are separate groups that both are headed up by George Mersho, chief executive officer of Morgan Hill-based retailer Shoe Palace.

    PwC, as a result of its decision to move to Santana Row, a destination mixed-use neighborhood in San Jose, will also shift its new subsidiary, Surfaceink, into the same One Santana West office building near the corner of South Winchester Boulevard and Stevens Creek Boulevard.

    “The great thing about the PwC deal is that they stayed in San Jose,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy. “With the amenities at Santana Row, it’s understandable why PwC would go there.”

    About 1,200 PwC employees will be located at the One Santana West office building. That move is slated to occur in 2026.

    Still, downtown San Jose appears more than capable of being a vibrant host for office tenants and conventions.

    The recent Nvidia artificial intelligence convention, in addition to compelling keynotes and packed events, was also the catalyst for lively crowds that poured into the downtown in search of meals, drinks, or entertainment.

    “The activation of downtown San Jose and the energy downtown is what is going to appeal to companies with younger employees,” Staedler said. “Having a constant stream of events and activities such as jazz festivals, live performances and other exciting events is the way to attract companies to downtown San Jose.”

    PwC is expected to vacate 80,000 square feet at an office tower in downtown San Jose, property experts say. Surfaceink leased 7,000 square feet on Stockton Avenue on the western edges of the downtown.

    “You could get a new AI company or software company that wants to be in an urban environment in the PwC spaces,” Staedler said.

    Political and city leaders will need to adjust their thinking regarding the downtown in order for the city’s urban core to truly rebound.

    “Antiquated dreams of a Trader Joe’s or a Safeway in the heart of downtown are days gone by. They are over,” Staedler said. “Downtown needs to focus on vibrancy.”

     

    George Avalos

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  • San Jose affordable homes land financing package of $100 million-plus

    San Jose affordable homes land financing package of $100 million-plus

    SAN JOSE — A big affordable housing project in San Jose is pushing ahead with a property purchase and the landing of a crucial money package for the construction of the residences, public documents show.

    The affordable residences are part of Stevens Creek Promenade in San Jose, a big mixed-use development that will feature housing, retail and a hotel.

    Pacific West Builders, acting through an affiliate, has paid roughly $3.5 million for the site where the affordable homes would be built, according to documents filed on Feb. 21 with the Santa Clara County Recorder’s Office.

    Miramar Capital Group, which is the primary developer of the Stevens Creek Promenade complex, sold the site for the affordable housing portion of the project to Idaho-based Pacific West Builders.

    In 2020, Santa Monica-based Miramar Capital Group and Machine Investment, acting through affiliate MPG Stevens Creek Owner, paid $54.5 million for the overall development site, including the just-sold affordable homes parcel. The overall development property is located on the south side of Stevens Creek Boulevard between Kiely Boulevard and Palace Road.

    The California Housing Financing Agency authorized the issuance of a bond package to enable construction financing for the affordable housing project, according to a staff report prepared for a recent meeting during which the state agency approved bonds and funding for the project.

    The affordable residential development would consist of 173 homes. Of these, 171 will be affordable apartments that will be rented to residents belonging to households making 30% to 70% of the area’s median income, according to the state housing agency’s report. Two of the units will be market-rate homes for on-site managers.

    The Santa Clara County area median income in 2023 was $181,300 for a four-person household. That would mean the income limits for the affordable homes in this project would range from about $54,390 a year to $126,910.

    The total construction package is valued at $125.6 million, according to the agenda materials for the state Housing Finance Agency.

    Of that overall amount, Citibank is providing the project with $98.6 million in construction financing through two separate loans. Bonneville Multifamily Capital is providing a third loan of $10 million, according to the California Housing Finance Agency documents.

    The 173-unit project will include 44 studio units of 422 square feet each, 37 one-bedroom units ranging in size from 563 to 573 square feet, 45 two-bedroom units of 776 square feet and 47 three-bedroom units of 1,064 square feet. Two of the three-bedroom units will be manager’s homes.

    “This is an inclusionary project and will be part of a larger development that will include two market-rate apartment buildings and a 250-room hotel,” the state housing agency documents state.

    One of the market-rate apartments will be 191 units and the other will be 216 units.

    George Avalos

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  • A Fireside Chat with Unity’s Marc Whitten

    A Fireside Chat with Unity’s Marc Whitten

    In August, we shared the news that Unity, our longtime partner and a global leader in real-time 3D technology, had selected Azure as its cloud partner for building and operating real-time 3D (RT3D) experiences from the Unity engine. This strengthening of our partnership builds on our shared commitment to expanding the creation and distribution of 3D content, to bringing relevant tools and technologies to a wider range of developers, and to making it easier than ever to bring games to players.

    Recently, Microsoft Game Dev Editorial Director N’Gai Croal had the opportunity to virtually sit down with Marc Whitten, the Senior Vice President and General Manager of Unity Create Solutions, to talk about how we’re working together to make it easier than ever for game creators around the world to publish to Xbox consoles and PC so they can better reach their existing communities and build new ones. You can watch the full video of the chat below or
    view it here on YouTube.

     

    The discussion was wide-ranging, touching on everything from the ways that the game industry and Hollywood are alike (and how they differ) to Unity’s addition of Weta Digital and Ziva Dynamics to the Unity Create Solutions toolset. Naturally, the lion’s share of the chat revolved around how the movement to the cloud has changed game development and how Unity’s partnership with Azure will allow them to provide developers with even more impactful tools and greater flexibility.

    Here are some relevant quotes from the discussion, lightly edited for clarity.


    Marc Whitten on whether games or movies put a bigger demand on technology:


    I believe that game creators and game players have typically been on the leading edge of pushing what is possible with any technology forward, and then that typically filters back in through a lot of other use cases. I think as humans we like to be entertained and we like to play games. And so, if you give any piece of technology to a creator, they’re going to make a game out of it. And if you give that to a player, they’re going to ask that creator to make it a little bit better.


    Marc Whitten on the importance of making cloud-native game development tools:


    Undeniably, in a hybrid world, creators themselves, when they’re in teams, are going to be more and more in different locations. So making it easy for them to collaborate together, to work on assets that are in the cloud, to be able to access hardware regardless of where that hardware is, is pretty critical to the creation experience.


    Marc Whitten on why Unity chose Azure as its cloud partner:


    In talking to Azure’s leadership and some senior engineering talent, we saw a shared vision. They were very helpful in helping us understand some potential blind spots and were as excited as we were about the potential of the partnership. They’re a great partner for us as we look at how to accelerate how we can add value through the cloud and increase the impact of products and technologies like this.

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  • Pathfinding: Changing lives with Xbox Game Studios Game Camp

    Pathfinding: Changing lives with Xbox Game Studios Game Camp

    For some, the journey into the games industry takes years of persistence and career building in another field before networking and passion lands them that job in gaming. This month, we’re featuring the stories of Xbox employees that started their careers in Retail and explore how they transitioned into their current roles in Xbox. Last time, we met Albert Dankwa III, a Content Program Manager for Xbox Support. Today, we’re happy to share the journey of Chris Douglas, a Business Program Manager for Xbox Game Studios (XGS) Game Camp.

    Backstory

    Chris grew up playing video games with his family, and from a young age was intrigued by how they worked. He remembers playing his first video game and thinking, “I don’t understand what’s happening. When I move these arrows or press this button, the character on screen moves and jumps, but how? What is going on between the controller and the system and the screen to make all these things happen? That started my journey and got me excited about technology and gaming.”

    When he began talking to advisors and teachers about his plans after high school, Chris remembers being told “there’s no money in technology and video games, you won’t be able to do that.” As he got closer to graduation, Chris told his parents that he wanted to be part of the gaming industry, whether that was in development or marketing or some other capacity. He remembers them telling him “I don’t believe that is something for you. We don’t see a lot of people of color, especially black men, with these jobs.” Chris knows his parents weren’t trying to kill his dreams but rather wanted to protect him from failure. Growing up in a black household, Chris says “you don’t have the ability to fail. You don’t have the same privileges as other people and you only get one shot.” Now that he has learned more about the importance of having a growth mindset, Chris understands the benefits and opportunities that come from learning from your failures. Still, he acknowledges that the experiences of other black people often match his parents’ expectations.

    After graduating high school, Chris began attending Xavier University of Louisiana in New Orleans, the only historically Black, Catholic university in the United States. Still, many of the computer science professors were white men. Chris continued to meet adversity, but with the recent launch of Xbox from his dream employer Microsoft, he was determined to continue his pursuit of a career in gaming. Shortly after, Chris’ personal life took a turn when his mom found out she had breast cancer. Chris realized he could not work two jobs, support his family, and attend school.

    After a series of warehouse and retail jobs, Chris became a store manager at GameStop, where he was promoted several times. While he enjoyed learning about new gaming features, in particular the Xbox 360, Chris realized that brick and mortar stores were not the future of retail. He left GameStop for AT&T, and after 5 years there had almost given up on his dream of gaming and working for Microsoft. Then Microsoft began opening retail stores.

    As soon as they announced the store in New Orleans, Chris applied and became a learning specialist working with schools. As he worked with K-12 schools, he realized that many of the students had never seen a computer, so he started working with community development specialists and other groups in Microsoft to bring Surfaces, Minecraft Education, and coding workshops to local schools.

    Chris says “the best moment of my entire life was when I walked into a school, and I was wearing my colorful Microsoft shirt, jeans, and Jordans, and this kid said that he had never seen anyone from Microsoft before – he didn’t think Jordans and working at Microsoft could even go together. That’s when I realized these kids were seeing themselves in me and it was incredibly humbling. I have a big responsibility to the kids in my community to help them get to where they want to be.”

    Chris began bringing gaming into the outreach programs, inviting streamers and others to talk about games, marketing, and esports. Word got around the city that if you wanted to do something gaming related, talk to Chris at Microsoft.

    Near the beginning of the pandemic, Chris was approached for help with a new project called XGS Game Camp, which focused on finding new ways to reach underserved communities interested in creating games. His managers were very supportive and let him split his time between retail and volunteering with XGS Game Camp, and when Microsoft decided to permanently close the retail stores Chris was offered the job of production assistant at inXile Studios, one of the local XGS Game Camp partners.

    Chris spent a year learning about production, which touches everything from audio to animation to engineering, and had a great experience in his first real gaming role. But he felt like something was missing without the chance to regularly give back to his community. When Xbox Game Studios decided to further invest in XGS Game Camp and wanted Chris to join the team full time from his home base in New Orleans, he knew it was a perfect fit.

    Big Dreams: Basketball or Gaming?

    Around age 12, Chris started playing basketball, football, and track. As he focused more on athletics, he discovered a real talent for basketball and his family and friends began encouraging him to pursue a career in the NBA. Chris says, “There are 15,000 Men’s Division 1 NCAA athletes in the United States but only 60 people get drafted into the NBA. That’s a .004% chance, but my family believed I had a better chance of making it to the NBA than of working in the gaming industry!” Not convinced a basketball career was realistic, Chris continued to keep his other goals of being a chef or a game designer in mind as he went into high school. He cut grass and washed cars to pay for games and gaming magazine subscriptions and read everything he could about emerging industry and technology trends. Still, his family and friends urged him to continue playing basketball through high school and college, convinced a career in the NBA was more attainable than a job in gaming.

    Chris reflects, “I love basketball more than anything, I really do. It’s one of the most exhilarating things to watch or play. When I used to play basketball, everything else stopped. There is this poetry about it when it’s happening. But there is something even more magical about being able to connect to a character in a game and go through that world and feel connected to the narrative, music, and environment. It’s a surreal experience. If you allow yourself to be open, games will transport you to a different place. You can experience a different reality and for a little bit you can forget about everything that’s happened and be focused on this other moment. For me it’s therapeutic.”

    Despite the pressure from his community to give up on gaming, Chris says that “growing up I had to realize that sometimes even the people who love you the most don’t support you because they are trying to protect you, not because they don’t love you. You can’t allow anything to stop your dream.”

    What a Business Program Manager does

    Chris says that “Xbox Game Studios Game Camp is a program that’s built to prove that extraordinary talent resides everywhere. We try to meet people and talent where they are and help any budding game creators from traditional and non-traditional backgrounds. We want to add diverse voices to gaming – people of color, women, people from underrepresented communities and tough socioeconomic backgrounds. Our goal is to reach everyone interested in making games and demystify the gaming industry and help them with tools and resources. We want to help them realize their dream by building a network of subject matter experts inside Xbox they can learn from.”

    As the Business Program Manager for XGS Game Camp, Chris’ job is to strategize the delivery of tools and resources for campers while building a rapport and getting to know them on a personal level. He maintains relationships with marketing, media, brand management, legal, mentors, engineering, non-profits, and more to stay on the bleeding edge of creation tools, engine advancements, and knowledge sharing to empower campers to deliver their vision.

    Chris shares, “I really have an ability to change people’s lives. I get to be the person that I wanted to have in my life, to believe in them and their dreams when others don’t. I am thankful I can be that encouragement to keep people from giving up on their dream.”

    Gaming History

    Chris grew up playing games and he remembers the first Nintendo his parents bought clearly. “I was 7 or 8 and we had just come back from a family vacation at Disney World, which was a really big deal. When we got home, I wanted to play with my friends who I hadn’t seen in a week, but my dad told me I needed to come inside and spend more time with the family. I went to my room and lay on my bed, upset, and he came in and put a Nintendo on my bed – and suddenly it was the greatest day again. We hooked it up immediately and started playing together.”

    Chris is currently playing Destiny 2, Deathloop, Overwatch 2, Moonscars, Prodeus, and Halo Infinite.

    Xbox Game Studios Game Camp is a two-to-four-month program that is hosted in different cities around the world. Learn more at Xbox Game Studios Game Camp.

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