The U.S. apartment market has seen elevated construction levels in this cycle. But construction activity has been concentrated in some spots more than others, and MPF Research has identified the nation’s 10 busiest submarkets for construction in this cycle. The submarkets were identified based on inventory growth since 2012, including the total number of units completed since 1st quarter 2012 and the total number of units under construction at the end of 3rd quarter 2014. Why have these spots attracted so much development? We’ll take a deeper look in this series highlighting each of the top 10 submarkets.
North San Jose/Milpitas, California
The San Jose submarket of North San Jose/Milpitas lands in the No. 2 spot on our list of the top 10 U.S. submarkets for rapid inventory growth. North San Jose/Milpitas’ inventory growth rate since 2012 is 66.6%. That rate includes new apartment supply plus units under construction at the end of 3rd quarter 2014. Turning that percentage into an actual unit count, North San Jose/Milpitas has received 3,712 new apartments since 2012 and had an additional 2,232 units under construction in 3rd quarter 2014.
What’s driving apartment developers to the North San Jose/Milpitas submarket? A big driver is the North San Jose (NSJ) Area Development Policy. The policy was born from the North San Jose Vision 2030, a plan by the city of San Jose and the San Jose Redevelopment Agency to enhance the North San Jose area as an important employment center for the region. The North San Jose Vision 2030 plan is a huge initiative to make the North San Jose area a live/work/play destination. The policy, approved in 2005 and amended in 2010, aims to transform the area through development guidelines into an urban transit community and technology hub that serves as the heart of Silicon Valley. According to the San Jose Redevelopment Agency, North San Jose Vision 2030 allows for:
- 26.7 million square feet of new research and development office and laboratory space
- 83,000 new jobs
- 32,000 new housing units
- 1.7 million square feet of retail space
- 1,000 hotel rooms
The North San Jose (NSJ) Area Development Policy covers 4,795 acres bounded by Highways 101, 237, and 880. An article written in the San Jose Mercury News Business newspaper gave an excellent visual.
One big push with the North San Jose Vision 2030 is attracting prestigious companies. One company that really helped out that effort was Samsung, which started construction a 10-story, 600-square-foot office tower. The tower will serve as a research and development center for 2,000 employees when opened in 2015. The building looks really modern and includes both “urban” and “garden” areas, says the company.
There are several other project in the works. The biggest is a 2 million-square-foot office park at First Street and Brokaw Road by Palo Alto-based Peery-Arrillaga. Plans for the 20-acre office park include 10, seven-story buildings. Who will occupy this office park remains a mystery and has been the subject of much speculation in the local media. Several large technology companies have been rumored to be in the mix.
Not surprisingly, most of the apartments underway in the North San Jose/Milpitas submarket are within the North San Jose Vision 2030 area:
1.) The Verdant: This 498-unit apartment complex is located on the corner of Tasman Drive and Zanker Road. The site is within walking distance of Cisco Systems corporate headquarters and across the street from the Baypointe Light Rail Station. The recently completed Verdant features one-, two- and three-bedroom units. These apartments feature such amenities as electric car charging stations, spa and lap pool, two-floor fitness center and a clubhouse with an eGame room.
2.) Domain: The Domain features 441 apartment units and is located on the corner of Vista Montana and North 1st Street. This apartment community was recently completed and is within close proximity to the Tasman Light Rail. The Domain features one-, two- and three-bedroom units. Amenities include a spa, hot tub and sauna, corporate units and a heated outdoor pool.
3.) Epic: This massive apartment complex, which totals 769 units, is currently under construction and is expected to complete mid-2015. The Epic is rising on Epic Way, just north of Montague Expressway and west of Interstate 880. The apartment project will consist of studio, one- and two-bedroom units. Amenities in this complex will include a spa, package receiving services and storage space.
Though the North San Jose Area Development Policy is a main driver of the current apartment construction, there are many notable large employers that also drive apartment demand in the submarket. According to the city of San Jose, the largest employers in the submarket include:
1.) Cisco Systems: computer equipment company, employs 13,600
2.) Sanmina-SCI: electronics manufacturer, employs 1,770
3.) Maxim Integrated: semiconductors, employs 1,650
4.) Brocade Communication: computer equipment provider, employs 1,470
5.) Ericsson: telecommunications company, employs 1,360
6.) Altera: semiconductors, employs 970
7.) BD Bioscience: biotechnology company, employs 920
8.) SuperMicro: Computer equipment, employs 920
9.) Micrel Semiconductor: semiconductors, employs 660
Stay tuned as we reveal our Top submarket in the nation.