05 Jul Matt Lituchy of Jay Paul talks Bay Area real estate
Matt Lituchy, a top executive with veteran development firm Jay Paul Co., knows all about building and leasing office buildings in the hottest Bay Area markets such as Sunnyvale. The list of the tenants of Jay Paul and Lituchy reads like a who’s who of Tech America: Google, Facebook, and Amazon. Lituchy also is guiding Jay Paul’s unexpected push into downtown San Jose’s increasingly robust development scene. Now, Lituchy is heading up a new frontier for Jay Paul: a mixed-use office and luxury residential tower, 181 Fremont, that is a striking addition to the SOMA district of San Francisco. The 181 Fremont building is the tallest mixed-use tower west of the Mississipi River, and the tower has landed a Facebook lease for all 38 stories of the office portion of the high rise. This news organization talked to Lituchy to get his assessment regarding the Bay Area commercial real estate market.
Q: What’s your current assessment of the commercial real estate market in the Bay Area?
A: It’s incredibly healthy. This is one of the strongest markets in the country if not the world. Supply cannot keep up with demand. This is a healthy and vibrant economy that is producing jobs. There is a need for more office space and housing. And that demand is generally unfilled.
Q: Do you see additional development opportunities in the Bay Area?
A: We are looking for more.
Q: What is the status of your 181 Fremont project in San Francisco?
A: 181 Fremont is so interesting to us. It’s in the heart of a transit-oriented in San Francisco. Our building is connected to the new Salesforce Transit Terminal that is closed now but will be opening in the future. It is a block from BART and a few blocks from the Bay Bridge. It is in the heart of the new financial district in San Francisco.
Q: What are some of the unique aspects of 181 Fremont?
A: It is a truly mixed-use project with both office and residential floors. It’s the tallest mixed-use project west of the Mississippi. The lower floors of the building have been leased to Facebook. Then on the top 17 floors, we have residential, including 55 ultra-luxury residences that are for sale.
Q: Will Facebook’s Instagram subsidiary be 181 Fremont?
A: I understand there will be some Instagram people in there. There could be different divisions of Facebook in 181 Fremont. The company is pretty tight-lipped on what they will put in there.
Q: How important is it to have projects near transit in the Bay Area?
A: Traditional methods of commuting have gotten so over-stressed. Our freeways are impossibly clogged with traffic. Commute durations are at all-time highs and they are frustrating. People are looking to commute by alternative methods. Trains, light rail, Caltrain, bus, BART are the alternatives. Being in a place where you can easily move around the Bay Area, and both live and work close to these modes of transportation is important.
Q: How did it come about that Google’s first Bay Area expansion outside of Mountain View was in one of your Sunnyvale projects?
A: This was back in the first quarter of 2011. The Bay Area was just coming out of the financial crisis and the recession. It became clear that Google would soon outgrow Mountain View. Moffett Park in Sunnyvale was just one freeway exit south of their headquarters location. We had the only Class A office campus available at Moffett Towers. We had all the amenities tech companies look for in a campus. Now Google has millions and millions of square feet in Moffett Park.
Q: Did you begin to see a change in the mindset of tech companies about growing beyond their main headquarters cities, such as Google in Mountian View, Apple in Cupertino, Facebook in Menlo Park?
A: Big tech companies realized that Sunnyvale was still within their geographic footprint if they were going to expand the way they needed to expand. Sunnyvale was a logical solution for them.
Q: Are technology companies taking it even further than going one city over to Sunnyvale?
A: Eight years later, they are in all kinds of different submarkets and markets all over the country. This is a natural progression for a lot of technology companies.
Q: Has the mindset changed for tech companies in terms of how they organize their physical spaces?
A: At first they all wanted to be under one roof and in one campus. Then they realized they had to operate in all different modes. The VTA light rail line connects to downtown Mountain View, then weaves its way through the heart of Moffett Park, then to First Street in San Jose, and then all the way to downtown San Jose. Moffett Park also is a few miles from downtown Sunnyvale and is a five- to seven-minute drive to the Caltrain station in Sunnyvale. We are seeing that more people are using those rail connections.
Q: Is Facebook, like the other tech companies, also trying to create spaces near where their employees live?
A: Facebook had physical limitations as to how it could grow in Menlo Park. But Facebook realized in terms of being able to recruit talent that they needed to accommodate thousands of workers. They leased one million square feet from us in Moffett Park. They also leased space in Fremont. (At least one million square feet).
Q: Jay Paul has been buying key sites and buildings in downtown San Jose. What has gotten you so interested in the downtown market?
A: We see downtown San Jose as the final frontier. It is an urban environment. All of our tech companies like to be in that environment.
Q: What are downtown San Jose’s advantages?
A: Downtown San Jose has Caltrain, there will soon be BART, other rail connections. The upgrade of Diridon station is a game changer, along with BART coming. You have a relatively pro-business government at San Jose City Hall. You have an area that is ripe for development. Downtown San Jose is a 24-hour city.
Q: How do these dynamics attract tech companies to downtown San Jose?
A: The competition for recruiting talent is so great that companies see downtown San Jose as a place where their employees will want to live, to work, to play there.
Q: What do you like least about being a developer?
A: The uncertainty, and the long-time frames that we face to get an entitlement approved for a project.
Q: What do you like most about being a developer?
A: Transforming landscapes, changing skylines, creating architecturally significant places. We will transform landscapes in downtown San Jose.
MATTHEW LITUCHY PROFILE
Organization: Jay Paul Co.
Job: Chief investment officer
Birthplace: New York City
Residence: San Francisco
Education: B.A., Connecticut College
Family: Sons Ian, 23, and Gavin, 20
FIVE THINGS ABOUT MATT LITUCHY
1 Remembers doing things like surfing and downhill mountain-biking before having children.
2 Worked full time on the construction of the de Young Museum in San Francisco for over 3 years.
3 He spent three years working and traveling in Australia.
4 He has commuted to work on his bike for 22 years.
5 He most enjoys spending time with his wife and kids outside on trails and on skis.