Publication Date: Wednesday, February 16, 2005
Housing outbidding office?
Housing outbidding office?
(February 16, 2005) Construction, demolition and home offices reflect transition
Office space has always beena fluctuating market, but since the dot-com bust vacant Palo Alto office properties have been particularly vulnerable to conversion for other uses.
"Housing's outbidding office. Retail's outbidding office. Office (space) has almost become a thing of the past," said Roxy Rapp, a longtime Palo Alto developer, who has been watching the sector change.
In south Palo Alto, the 12-acre former Sun Microsystems headquarters at San Antonio and Charleston Roads is poised to become the new Campus for Jewish Life, a housing development and community center.
Nearby along East Meadow Drive, a 77-condominium complex is planned for land where Space Systems/Loral, Pacific Graduate School of Psychology and game-development company Centerscore used to do business.
Both properties had been zoned for light industrial use, which includes office space.
Likewise the Mayfield agreement between Stanford University and the City of Palo Alto proposes to add a net total of 38,000 square feet of housing and soccer fields where commercial development once stood in the Stanford Research Park. That deal has yet to win the city's approval, however.
On the flip side, there are still some property owners willing to bet the other way -- on stronger demand for offices in the future. The new owners of the Craig Hotel in downtown Palo Alto, for example, are applying for permission to turn the hotel into a 10,300-square-foot office building.
Besides the conversion issue, the decisions of individual business owners are nibbling away at the need for office space.
With cell phones, Internet and fax, Rapp said, more businesspeople find it perfectly acceptable to work from home.
"They don't need the space," he said. "I think you're going to see a lot more of that."
Ruth Soforenko is one such businesswoman who has changed with the times. A veteran of the office wars, the interior designer rented space for her business for 25 years. She held on as the market raced like a roller coaster and leases swung from reasonable-for-Palo-Alto to out of this world.
Finally, last October, she called it quits -- not from her award-winning interior-design business, but from renting downtown. Instead, she opted to move her company home.
"I just thought it would be nice to have a residential atmosphere," said Soforenko, who converted one wing of her house into offices and in the process gave up half the amount of space she'd had on High Street.
She had to trade in visibility in the public eye and being near Peet's Coffee and Whole Foods Market, but she said there's an upside: the sounds of birds and a pleasant, quiet environment in which to work.
Her former office space on High is still vacant.
-- Jocelyn Dong
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