Our Core Markets
Silicon Valley and its Growth Paths
Targeted markets; unique opportunities
As a medium-sized firm, we aim to create advantage by focusing our efforts on a small number of outstanding markets. Our focus begins with our core market, Silicon Valley. Based on the most recent Zillow 25 year data, home prices in Silicon Valley have been rising between 5% and 7% a year. This is higher than any other major US Metro market. With the continued economic vibrance of the technology industry, we see few signs that this is likely to abate.
As a real estate firm with a broad set of operational skills, we also target markets that offer outstanding opportunities to employ our skills. We believe Silicon Valley is replete with transformation opportunities consistent with our focus. Over past decades, its land uses have been in the midst of material change. Silicon Valley has gone from orchards and R&D centers to offices and burgeoning residential communities. The transformation themes include: (i) the shift to denser land use to accommodate growth in land-constrained markets; (ii) the creation of housing and related land uses around emerging communities proximate to transportation hubs; (iii) the modernization of the house stock; (iv) the transformation of excess retail to residential and mixed use; (v) the emphasis on more middle and lower income housing; and, (vi) more work-from-home suitable housing.
And Challenges
Changing land use needs for Silicon Valley has brought disruption. Complicated regulation, concerns around neighborhood gentrification, preservation of environmentally sensitive land, and availability of affordable middle and lower class housing are some of the challenges faced in our core market. In a practical sense, the existence of these challenges has been helpful to us. They create barriers to entry. We believe that our ability to manage the challenging aspects of our markets has been a key enabler of our success.
Many of the challenges we face add purpose to what we do. The “California housing crisis” is real. The state’s own analysis concludes that there are far from enough homes. How to accommodate anticipated future growth remains a meaningful conundrum. From the point of view of our investing activities, we believe the implied demand vs supply imbalance is favorable to our activities. But as members of these communities experiencing the pressures that come with change, we are sensitive to community issues, operate within the requirements and spirit of complicated regulation, and support solutions to problems within our scope.
