Five big Bay Area residential projects face challenges in 2024

High interest rates could put the kibosh on projects from Concord to San Jose

Five Big Bay Area Housing Projects Face Challenges in 2024
Brookfield's Northern California Land and Housing division's Josh Roden and Concord Naval Weapons Station, Concord (LinkedIn, Wikipedia/Daniel Schwen)

UPDATED JAN. 5 at 11:15 a.m.:

Five large projects in the Bay Area face headwinds in the new year.

A plan by Brookfield Properties to build tens of thousands of new homes at a former naval weapons station in Concord leads the list, the San Jose Mercury News reported.

Other projects include a stalled Google project to build a mixed-use village with thousands of homes near Diridon Station in Downtown San Jose.

The list of challenging projects also includes a utopian city proposed by billionaires from Silicon Valley facing potentially hostile voters in Solano County; a legal battle over a high-rise residential project on San Francisco’s Treasure Island; and a builder’s remedy initiative to build apartment and office towers as tall or taller than the Statue of Liberty in suburban Menlo Park.

Louis Mirante, vice president of public policy at the Bay Area Council, a regional pro-business group, said the biggest challenge for megaprojects like the weapons station is financing, as borrowing costs have exploded

But he said simplifying the byzantine local approval process for large housing projects would slash costs and attract more investment as construction timelines become more certain.

“Right now, it’s really difficult to demonstrate you can make a return on 8 percent interest rates,” Mirante told the Mercury News.

After rotating through three developers over 20 years, Concord hopes the latest plan to turn the former Concord Naval Weapons Station into a master-planned community with up to 16,000 homes may be headed to completion.

In September, the city inked a deal with Brookfield to outline project timelines and other details in a term sheet, which the City Council could approve early this year. The New York-based developer aims to then work with city officials to have a finalized plan by January 2026.

This year, Google was supposed to start construction on its massive mixed-use neighborhood with thousands of homes and offices in downtown San Jose. But in February, the tech giant revealed it was “assessing how to best move forward” with the project.

Google maintains it’s committed to the Downtown West development, though it has yet to provide an updated construction timeline.

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In November, Solano County voters may decide the fate of Silicon Valley billionaires’ utopian vision for a new city between Travis Air Force Base and the Sacramento River.

California Forever, funded by a handful of tech executives and investors, spent at least $800 million in recent years quietly snapping up properties until its plans were revealed this summer. This month, California Forever plans to gather signatures for a ballot measure to approve the project.

Some neighbors view the project as a pure land grab that would destroy the area’s rural character. If the measure fails, California Forever CEO Jan Sramek told the Mercury News last month that “there are other ways to proceed” — but declined to elaborate.

The ongoing redevelopment of Treasure Island into a high-rise neighborhood with more than 8,000 homes hit a snag this year when the companies behind the development sued each other over their future returns from the former naval base project.

It’s unclear whether the legal wrangling pitting Sonoma-based Kenwood Investments against Stockbridge Capital Group and Wilson Meany in San Francisco could jeopardize the planned 2026 completion, according to Kenwood.

Sam Singer, a spokesperson for Kenwood, said in an email it’s “likely that construction will be impacted by the litigation.”

P.J. Johnson, a spokesperson for Treasure Island Community Development, the project’s master developer, said in an email that “the litigation among investors has had no impact whatsoever on the project, and is not expected to.”

In Menlo Park, N17 Development triggered the builder’s remedy for what was initially a mixed-use project at the former headquarters of Sunset Magazine. 

The firm led by Oisin Heneghan, a former executive at Dallas-based Trammell Crow, then trumped itself with new plans for 421-, 371- and 305-foot towers, containing more than 800 homes.

While legal questions remain, the rule is designed to force cities that fall behind on their state-mandated housing plans to automatically accept projects of virtually any size, provided the project meet affordability thresholds.

Addition: Previous story did not include comment by Treasure Island Community Development regarding the impact of litigation.

— Dana Bartholomew

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