As a real estate investor or developer, you need to seize big opportunities while they are still opportunities. Investing is all about seeing the big trend and leaping on it before everyone else does. While multifamily is a huge opportunity in California right now due to the price appreciation of single-family homes, it will likely become an even greater opportunity in the next five years near Silicon Valley.
According to Mercury News, tech giant Google, along with Trammell Crow, has been purchasing huge tracts of land in downtown San Jose, California to build a new campus which could employ up to 20,000. The new San Jose campus is expected to be much larger than the Mountain View Googleplex headquarters.
ConstructionDIVE reports that Google is considering purchasing real estate near Diridon Station, which is served by rail options including BART, Amtrak and Caltrain. If true, this plan indicates significant foresight on the part of Google because such a location would make commuting to work much easier for its employees.
In addition to the new Google campus, developers are proposing two additional tech campuses in the area which would likely add around a million square feet of office space to downtown San Jose. Adobe Systems is also planning a new office tower near its current downtown San Jose location.
Housing has been a serious concern in Silicon Valley. While able to provide a huge amount of jobs, the area has lacked adequate housing for the influx of tech professionals. According to ConstructionDIVE, Google is aware of the housing problem and has plans to purchase 300 modular housing units that will likely serve as short-term housing for employees.
Google’s plan to provide short-term housing for its employees suggests that it understands that at least some of them may have difficulty affording a home in Silicon Valley. According to www.menafn.com, San Jose, California has a median home price of well over 1.18 million dollars. As an average home price, San Jose has an atypically wealthy population. Compared to the average cost of a home in the U.S., at $258,300, San Jose more than quadruples the average American home.
This high standard of living hints at the housing problems in the area. An entry to mid-level employee at Google who would likely purchase a home in another area of the country finds it necessary to rent rather than purchase a home. It’s been reported that even tech billionaire Elon Musk prefers to couch surf with friend and Google CEO Larry Page rather than purchase a residence in San Jose.
Since the new Google San Jose campus is unlikely to be built and operational for five years, now may be the perfect time for real estate investors and developers to seek out multifamily opportunities in the area. This includes existing apartment complexes, tracts of land suitable for development into apartment complexes, and buildings that could be redeveloped.
Since Google appears to be shrewdly planning its new campus around mass transit, multifamily investors and developers might consider locations 50 to 100 miles from the proposed site. If this has you asking how to get in on the game, see below how Reonomy might help unlock opportunities…
Reonomy-The Indispensable Tool for Real Estate Investors & Developers
Reonomy is a mixture of highly organized public source information and proprietary data. The real power of Reonomy is its ability to search so many different parameters with such accuracy, freeing the commercial real estate investor or developer to use his imagination and insight while pursuing investing goals.
Searching In and Around San Jose for Multifamily Opportunities
Without ever consulting an agent or broker for the data, a real estate investor seeking to remedy the shortage of housing for tech workers in and around Silicon Valley can use Reonomy to find the exact type of property he is seeking, whether those properties are currently for sale or not.
A simple search of all multifamily properties in Santa Clara County where San Jose is located yields 21,346 results.
A smaller real estate investor might use Reonomy to narrow down the search results to multifamily units having 50 or fewer units. Smaller apartment complexes should be easier for a single investor or a group of small investors to garner funding for.
Further, smaller apartment complexes tend to be overlooked by real estate investors because they are more difficult to manage efficiently. An investor who purchases a 25 or 50 unit apartment complex will likely be able to find someone competent to manage his investment, but his property manager might be managing other complexes as well, so his complex could wind up neglected.
Economies of scale generally apply to complexes of 100 or more units. As a result, many investors prefer this size and the competition to purchase them can be significantly greater. However, when we limit our search to a maximum of 50 units in Santa Clara County, we find that a whopping 19,536 results fit our criteria. So, using Reonomy, we’ve discovered that approximately 91% of multifamily buildings in Santa Clara County are under 50 units.
Searching In and Around San Jose for Multifamily Development Opportunities
Large, institutional investors are unlikely to be interested in smaller multifamily properties unless they see an opportunity to purchase numerous smaller apartment complexes located in close proximity to one another. These could be potentially torn down to build something new.
Narrowing our search further to an area of Santa Clara County called Milpitas, and restricting our search criteria to a maximum of 10 units, we can see that Reonomy returns 334 results. There appear to be three or four clusters of these smaller multifamily properties which potentially could be purchased, torn down, and redeveloped.
The name of the property owner is included in the search results, facilitating direct contact by the investor or developer if he chooses not to use a broker.
Finally, developers seeking to build new apartment complexes in San Jose and the surrounding areas can easily search for vacant tracts of land using Reonomy. Building new multifamily developments can be extremely challenging in California because the developer may face zoning issues and strong political opposition from neighbors.
Nevertheless, a quick search of all vacant land in Santa Clara County, including industrial yields 7977 results:
Once you’ve searched for multifamily opportunities in Santa Clara County, consider searching the counties that surround San Jose, California including:
- Alameda
- Stanislaus
- San Joaquin
- San Mateo
- Santa Cruz
Happy investing!
Reonomy offers real-time access to detailed property data that business owners, investors and commercial real estate professionals need in today’s competitive marketplace. Try Reonomy National for free today.
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