Courtesy of Ellis Partners
Jim Ellis, managing principal of Ellis Partners.
These days, Jim Ellis and the realty firm he heads, Ellis Partners, seem to be everywhere, key players in the most robust development markets of the Bay Area.
Jack London Square in Oakland, which is undergoing a $400 million revival and renovation; The Pruneyard complex in Campbell; Town & Country Village in Palo Alto; and a big North San Jose office project where tech titan Apple has just leased a huge chunk of space, are all projects being guided by Ellis Partners, whose principal executives are Jim Ellis and his sister, Melinda Ellis Evers.
That puts Ellis in a prime vantage point to assess the state of the commercial real estate market and regional economy in the Bay Area. This newspaper recently interviewed Ellis about a wide range of topics.
Q: What is your assessment of the commercial real estate market in Silicon Valley?
A: We are seeing unprecedented growth, both in the form of leasing volumes and absorption of space in the marketplace.
Q: Do you anticipate additional development in the near future?
A: Silicon Valley is producing an impressive pipeline of office projects that are going to be coming on the market in the next couple of years. Most of the projects that are coming online in the next 12 to 18 months are already pre-leased to companies.
Q: What does that sort of leasing commitment mean to the market?
A: Not only do we have a relatively low office vacancy rate, we also have tenants that are committing to spaces that aren’t even built yet. That is all wonderful news.
Q: How do the tenants of today compare with the ones from the dot-com era?
A: It’s definitely a very different leasing environment today than in 1999 or 2000. The tenants today are much more creditworthy. The tenants today are much larger than the ones from 15 years ago. That means landlords are taking much less risk today to improve spaces for prospective tenants than before.
Q: What sorts of challenges does all of this leasing present for the region?
A: Clearly there will be infrastructure challenges as Silicon Valley converts from a research and development market of mainly one- and two-story buildings to an office market with seven-story buildings and higher.
Q: You seem to like the challenge of doing complex projects.
A: It goes to the ethos of Ellis Partners. We consider ourselves a value investor in commercial real estate. We have a long track record in office and retail properties, among other things. We quite honestly enjoy retail and office mixed-use projects. They are challenging but I believe that mixed-use projects are becoming more of the norm.
Q: Would Town & Country Village in Palo Alto be an example of a challenging project?
A: We were fortunate enough to gain control of Town & Country almost nine years ago. That is a great example of what Ellis Partners is good at doing. Taking a property that has many wonderful intrinsics to it but also has shortcomings.
Q: What were the shortcomings of Town & Country?
A: Town & Country was literally falling down. It hadn’t been renovated or maintained in decades. We were able to bring large amounts of capital to transform it into what it is today. We had to deal with a lot of different tenants, not all of which wanted to see it upgraded. We had to replace components in every building. We replaced every square foot of the common area. We put about $30 million into that project.
Q: Why did you decide to take on an upgrade of The Pruneyard?
A: The Pruneyard is another really extensive undertaking. We are leveraging our experience with Town & Country to take on another shopping center in need of renovation. It’s a shopping center that hasn’t been rethought in about 20 years. We are going to reimagine The Pruneyard and make it something much more vibrant and relevant and attractive to the community.
Q: What will The Pruneyard become?
A: We want to make The Pruneyard a real community gathering place. We want people from nearby towns like Willow Glen and Los Gatos to visit on a regular basis. It will be a major renovation. We’ll add some really cool plazas, a town square, open spaces. The addition of some smaller retail buildings. The addition of an office building, and of course, more parking. It will take a few years for it to become apparent.
Q: How has Jack London Square evolved through your renovation?
A: Jack London Square has been one of the major efforts of Ellis Partners. It has been very challenging and at the same time, very rewarding. There are so many community benefits associated with what we are doing there.
Q: Do you see that the big changes and the big improvements at Jack London Square parallel what is happening in downtown Oakland overall?
A: We’ve added a lot of new restaurants, including Plank and Overland, and we recently got the headquarters of Sunset Magazine. We’re planning to add a residential tower. And downtown Oakland is going through a new phase of its evolution and we envision a lot more exciting things happening downtown from both a retail perspective and new businesses leasing office space there.
Q: Why are things improving in downtown Oakland?
A: The economic recovery puts the wind at your back. The demographics of Oakland and the workforce living in Oakland makes it an attractive place for companies to locate. Downtown Oakland has a unique urban feel. And it’s a lot less expensive to do business in downtown Oakland than San Francisco.
Q: Your father, Hal Ellis, was the first major developer in downtown Oakland. How does it feel to continue the family business into another generation?
A: My sister and I started Ellis Partners with our father 23 years ago. It seems like just yesterday. It is still very exciting every day. The wonderful thing about the development business is it presents challenges every day. It keeps your mind stimulated. I’m still amped and ready to go.
Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos.
JIM ELLIS
Organization: Ellis Partners
Title: Managing principal
Age: 50
Residence: Piedmont
FIVE THINGS ABOUT JIM ELLIS
1. I’m a Dead Head
2. My favorite memory of my father, Hal Ellis: Being strapped into a 1973 Lincoln Continental every Sunday to look at property. I started at a very young age in this business.
3. Real estate observation: The East Bay and South Bay are being increasingly interconnected as one tech mega-region like no other in the world.
4. I’m most thankful for being partners with my sister and having had the opportunity to work with my dad for 15 years.
5. Something you don’t know about me: I still have all my Lego sets from childhood.
The post Q&A: Commercial realtor Jim Ellis, on the office-space boom appeared first on Bay Area Homes.