State law requires an update every eight years that must be approved by the state and show how the city will have enough land zoned to meet its regional housing goals in that period. For Pleasanton, that’s more than 5,900 units, an ambitious number that likely reflects its great location at the intersection of two interstate freeways, the BART line and the ACE train line as well as the regional and state planners’ preference for high density development near transit hubs.
That Pleasanton sprint is designed to avoid a seldom-used state law that gives developers the freedom to build virtually anything without city input or control if there’s no approved housing element.
The effort comes against the backdrop of the changing economic situation that grew out of the pandemic and other trends such as the demise of enclosed shopping centers such as Stoneridge mall. Think of the demographics of the Tri-Valley and then imagine a shopping center designed for five major tenants with just two and one that is viable only because the owners of the shopping center—in partnership with another major mall owner—are propping it up. I suspect the factory outlet mall in Livermore was much, much busier than Stoneridge on Black Friday. The city tried to do an orderly process for the future of the mall with the various property owners, but that also will have to speed up dramatically.
Throw in the very real exodus of companies and company headquarters elsewhere and it’s a mixed picture at best. For homeowners, they can take heart in David Stark’s opinion (he’s the government affairs officer for the Bay East Association of Realtors) that homes in these corridors are always going to be desirable. The latest news, reported in the San Francisco Business Times’ afternoon newsletter yesterday, was that Oracle has put a five-story, 186,000-square-foot office building next to the BART station up for sublease. Oracle announced the move of its corporate headquarters from the Peninsula to Texas earlier this year. Oracle acquired the building when it took over PeopleSoft in 2004.
Stark spoke last month to the virtual fall gathering of the East Bay Economic Alliance for Business. He was joined on the panel by Michael Ghielmetti whose firm is focused on residential and mixed-use projects in Oakland as well as Alexander Quinn who gave an economic update on the East Bay.
Ghielmetti, who has the huge Brooklyn Basin project going on the Oakland waterfront, spoke to the challenges of trying to entitle parcels, obtain financing and then build on them. The lead times are so long that it’s almost a roll of the dice as to where the market will be when the product finally hits the market. To build townhomes, a product that he thinks will be viable going forward, he’s at $900,000 market price, a number that a decreasing number of people can reach given interest rates that topped 7% last month as the Federal Reserve marched the key lending rate upward to try and control inflation.
Mix in as Quinn did, the huge amount of space available for sublease, particularly in the core San Francisco market (more than 7 million square feet) and the reluctance of knowledge employees to return to the office, and the future of the San Francisco office market is in question. He pointed out that riders had returned to the New York subways at about 57% of pre-pandemic levels compared to 36% for BART. Commute hour bridge traffic is almost at pre-pandemic levels. A permanent shift or transitory one that will return to whatever “normal” is.
It's a holiday season with more questions than answers, but Pleasanton is pushing one answer with its full court press its housing element approved and submitted to the state.