Hacienda provides fertile environment for startups, companies priced out of San Francisco and Silicon Valley
Real Estate Investors: Access to educated workforce, BART, and major highways at Hacienda is increasingly attractive to employers
In classic Silicon Valley style, Leaf Healthcare started with two people tinkering in a garage, hoping to create something that would make the world a better place.
The first product from the venture capital funded startup helps prevent painful, life threatening bedsores in bedridden hospital patients. Their low cost solution is a wearable sensor that wirelessly monitors a patient’s position and movements.
Two years after the company incorporated, they found the perfect spot in Hacienda: an office with light manufacturing space in the East Bay, close to restaurants, with a reverse commute from Larson’s Silicon Valley home.
As prices in San Francisco and Silicon Valley continue to rise, local real estate investors agree companies like Leaf that eschew the urban core in favor of places like Hacienda is a trend that should continue to grow.
“Well, historically, that’s what we’ve seen,” says Andrew Brown, director of leasing at Embarcadero Capital Partners. The office property investment and management firm owns five assets in Hacienda totaling 600,000 square feet, including Leaf’s office.
Hacienda is a lively mix of restaurants, retail, housing and office space in Pleasanton, California. It is ideally situated near BART and major freeways, with easy access to the rest of the Bay Area and local communities. The mix of amenities available at Haciendas creates a rich environment uniquely suited for working and living.
“I’ve worked in the [Bay Area] for about 30 years and have always thought that this was one of the better markets to own real estate,” Brown says.
There are very few opportunities for tenants to lease space in San Francisco or the South Bay at reasonable rates, but Pleasanton is still a great deal, he says.
In the 1st quarter of 2015, average asking rents for Class A office space in San Francisco were approximately $53 per square foot, while Class B office space cost more than $46, according to a report from Kidder Mathews.
In the same quarter, average asking rents for Class A office space in Pleasanton were less than $2.70 per square foot, while Class B office space was less than $2.30 per square foot, according to a report from Colliers International.
“I think over the long-term businesses have to expand in Pleasanton, in the East Bay, because of cheaper
occupancy costs and the availability of the labor pool,” Brown says.
More than 65% of Alameda County residents attended college. Nearly 42% have a bachelor’s degree or higher, compared to 30% of California residents.
But nearly 40% of employed residents in Alameda and Contra Costa Counties leave the area each day for work, fighting gridlock for jobs in San Francisco, Santa Clara, and other counties, according to a recent report by the East Bay Economic Development Alliance, a public-private partnership dedicated to improving the East Bay economy.
Outbound commuters tend to be among the most highly skilled residents of Alameda and Contra Costa Counties, concentrated in industries that include information, science, and professional and technical services.
As rents increase, Brown expects larger companies who cannot afford San Francisco or the Peninsula to expand into Pleasanton, where employers can take advantage of one of the most well educated labor forces in the country, and a location in Hacienda near public transit, I-580, and I-680.
Hacienda also provides a better work/life balance with a quicker commute than higher profile markets in San Francisco and Silicon Valley. The development offers diverse housing stock and a reverse commute from San Francisco, 2nd most congested city in the country.
Despite a promising future in wearable medical devices, Leaf CEO Barrett Larson never really considered office space in San Francisco or Silicon Valley. A higher profile location would have cost more and created a nightmare commute for the team. Most of Leaf’s employees live in the East Bay, making Hacienda a convenient destination.
“At this point, there are only a couple of us commuting from this direction, and everyone else is already out there,” Larson says. “And to be perfectly honest, the rent is cheaper out here as well. You get a lot more for your money.”
|Type of Investor||Value-add|
|Length of Hacienda Relationship||2010|
|Assets||Arroyo Center: 104,741 square feet, office/R&D complex
Gale-Schenone Hall of Justice: superior Court of California
Hacienda Terrace: 303,266-square feet, Class A office
Las Positas Office Plaza: 105,044 square feet, Class A
Park Plaza: 51,235 square feet, office
|Occupancy Highlights||Diverse tenant base, primarily technology, financial, insurance, and sales and service.|