Market Study Does Not Support Two Million Square Feet of Office at Vallco, by BC

From: Better Cupertino
Date: Fri, Oct 2, 2015 at 3:38 PM
Subject: Market Study Does Not Support Two Million Square Feet of Office at Vallco
To: City Council <citycouncil@cupertino.org>

Dear Mayor Sinks, Vice Mayor Chang and Councilmembers,

   We would like to share this information based on the GPA Market Study. It is important to look at the data in each report and not just read the conclusion, which is very often misleading and without jusitified reasoning.

   We hope that you make decisions that affect the lives of 60,000 residents based on accurate data.

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Market Study Does Not Support Two Million Square Feet of Office at Vallco
http://bettercupertino.blogspot.com/2015/09/market-study-does-not-support-office-at-vallco.html

The Market Study done in 2014 for the GPA in fact shows only a demand of 805,428 square feet of office by the year 2035. The estimated demand for office space in Cupertino is 43,300 square feet per year. The 2,000,000 square feet is the equivalent of 46.2 years of office growth in Cupertino. Not only the proposed Hills at Vallco will devastate the traffic condition, it will kill any chance of another major corporation to settle down in Cupertino. The capacity of our traffic infrastructure is very limit since there is literally no mass transit.

During the General Plan Amendment (GPA) Process, the City of Cupertino hired the consulting firm BAE Urban Economics to conduct a Market Study. Like reading all such consultant reports, ordered by the City, wise readers look at the data collected in the report and derive informed conclusions on their own. The conclusion derived by these consultant reports are often quite biased, and one should read it with caution. The office demand analysis is one such example.


On Page 83 of the Market Study, it shows that the "estimated demand for office space in Cupertino averaging approximately 43,300 square feet per year. After accounting for projects currently entitled or under construction, this suggests that minimum net office demand will total approximately 156,000 square feet by 2020 and 805,400 square feet by 2035, as shown in Table 34."

ABAG projection is regarded as aggressive by many already. However, the Council directed the staff to add "2-3 million square feet of office" when the GPA process was initiated from Aug. 21, 2012 Council Meeting. Therefore, the consultants have to find a way to deliver the expected "office demand".

The Market Study argues:

Table 34 factor in the capacity to accommodate the proposed Apple Campus 2 along with another new corporate campus equivalent in scale to the recent projects shown in Table 33, in addition to the minimum demand estimates that were developed based on projected employment. As shown, this results in a net new demand of approximately 2.9 million square feet by 2020 and 3.6 million square feet by 2035. Given the recent shortage of office spaces in Cupertino containing more than 10,000 contiguous square feet, a new recommended office allocation could also allow for multi-tenant office developments, which could create the space needed for mid-size companies to grow in Cupertino as well as accommodate a new major technology company or future expansion of an existing firm.

Even if a new corporate campus is expected, Table 33 (below) shows the office square footage is mostly under 1.5 million. Even though there is only a shortage of 10,000 contiguous square feet of office, the consultants from BAE Urban Economics concluded that Cupertino has an additional office demand of 2 million square feet, which is quite a stretch. And Table 34 shows the ballooned total office demand of 3.5 million. Take away the 2 million for an non-existent corporate office. Take away the 750,000 square feet already allocated to Apple and under construction. The true office demand is only 805,428 square feet by 2035.

 

Besides Cupertino City Council can always initiate a new GPA process to grant an additional 1.5 million or 2 million square feet of office space if ever another company wants to settle down in Cupertino. There is no need to pre-allocate it in the General Plan.

 

And there is certainly no way to justify giving this 2,000,000 square feet of office to Vallco at all. A major corporation headquartered in Cupertino brings in sales tax plus property tax and a brand name recognition, like Apple brings to Cupertino. Yet, 2,000,000 square feet of office at Vallco merely brings in property tax.

 

Two million square feet is the equivalent of 46.2 years of office growth in Cupertino. (2,000,000/43,300=46.2) All cramed in one location within one block from the 3.5 million square feet of office in Apple Campus 2, which include 750,000 extra square feet on top of the original allocation for HP. That's another 17.3 years of office growth. (750,000/43,300=17.3)

 

More than 60 years of office growth all squeezed into one block area to be built within the next 5 years. Will Cupertino ever have the capacity for another major corporation in the near future? Not likely.

 

The capacity of the traffic infrastructure is limited in Cupertino since there is no true mass transit. VTA doesn't have any plan in the next 25 years to introduce light rail or any other transit that can transport tens thousands of people. Therefore, the amount of office space that Cupertino can accommodate is also limited since Cupertino already has insufficient housing.
 

Allocating 2,000,000 square feet office to Vallco is essentially grabbing the space from other property owners in town, whose properties are already zoned for office. These other property owners won't even be able to build a small amount of office as a result since roads leading into Cupertino would be extremely congested. It is simply not fair to other property owners.