The coronavirus pandemic has made working from home commonplace for hundreds of thousands of people in the Bay Area, which means the demand for office space has plummeted over the past year.
According to Silicon Valley Business Journal, the demand for offices has dropped so much that two large South Bay office projects from Boston Properties have been put on indefinite hold by the real estate investment trust.
The company’s vice president of development in the Bay Area, Aaron Fenton, tells the Business Journal that Boston Properties is holding off on breaking ground on Santa Clara Crossing on Peterson Way, which would be its first-ever project in Santa Clara. According to Fenton, Boston Properties has also paused the progress of Platform 16, which features 1,100,000 square feet of office space in a three-building campus on a full city block along Guadalupe River Park.
Boston Properties is looking for tenants for both properties and may not restart the construction processes on two significant tenants are ready to sign agreements to move in.
"We are evaluating market conditions each month, and when we ascertain where demand and supply are, and rents have better clarity, then we will make the decision as to whether we proceed or wait for pre-leasing," Fenton told the Biz Journal.
A building already sits on the site of Santa Clara Crossing. Boston Properties has not yet applied for the permits for demolition for that property, meaning it could be many months before construction would even begin on the project once that ball is rolling.
The Business Journal reports that Santa Clara Crossing is being marketed as a build-to-suit opportunity which means the original plans for the office buildings, which have already been drawn up, could be tossed aside if a particular tenant signs on and doesn’t like Boston Properties’ designs.
Everything appears to be hinging on whether there will be any companies that want to set up shop in Silicon Valley when a number of them are moving away.
Boston Properties had said previously in April 2020 that it expected to restart the projects “once we got through this current phase of the crisis,” but when that may happen remains to be seen.