With $750M worth of projects in the pipeline, these East Bay Developers gravitate to infill
With more than $750 million worth of projects in the pipeline, Blake|Griggs Properties LLC has quietly become one of the busiest developers in the Bay Area. Led by Brad Blake and Brad Griggs, Danville-based Blake Griggs has more than 1,150 units and over 250,000 square feet of retail under development. That’s impressive in such a challenging funding environment. We recently sat down with the pair to discuss how they went from peers to partners, and learn about their strategy for growth.
How did you two, Brad and Brad, come to work together?
Blake: We worked together off and on in an informal capacity at different companies. I had my own company, Blake Hunt Ventures, that mostly did retail development while Brad (Griggs) was chief investment officer for BRE Properties. We collaborated on mixed-use projects that we could come across, and worked together on a consulting basis. At one point, we co-developed a project together and that led to a more formal relationship in forming our own company four years ago.
Why did you focus on the East Bay initially, with eyes on Bay Area and California growth markets?
Griggs: Our investment strategy is Bay Area-focused, except for downtown San Francisco. We’re looking to go into and compete in markets with any size developer. Our niche is more focused on transit-oriented and mixed-use developments, mainly near major employment centers in the Bay Area. Since we both come from institutional backgrounds, we’re able to continue to parlay that experience into developing sites around the Bay Area where institutions want to invest.
Griggs: When we build, our range is from 50 to 130 units per acre. We’re looking at primary markets within the Bay Area such as Walnut Creek, Berkeley, Palo Alto, San Mateo and Fremont. We will consider certain secondary markets depending on the location and opportunity.
Why is that?
Griggs: The Bay Area is such a supply-constrained market and there’s always capital wanting to get into the marketplace. Through our relationships, we have been able to find sites that are in those areas and go in and actually design projects of a certain size. We’re able to attract institutional capital and get good potential exits in terms of selling the projects. From a pure supply-and-demand perspective, we look for locations where people want to be, and where investors want to invest.
Blake: In tier-one locations, rents go up more strongly and cap rates decline to more attractive levels. This is more important when the market turns and rents decrease quickly.
Griggs: Yes, essentially we look for better risk-adjusted returns — locations where there is less volatility.
You’ve got more than $750 million worth of projects in the pipeline. That’s quite a bit. What exactly do you have going on?
Griggs: Yes, that includes three projects under construction that are not yet in leasing mode. We do have projects in Foster City and Pleasanton in which the retail is leasing. Then we have other projects currently in predevelopment or finishing entitlements. Our first projects are nearing completion.
The first ground-up construction to finish, later next year, is The Landing in Walnut Creek. That includes 178 units of apartments and no retail. It’s located directly across the street from the Walnut Creek BART station. Meanwhile, Walnut Creek BART Village is fully approved and in pre-construction. It’s set for construction next year and will be made up of 596-units, and 30,000 square feet of retail between two phases of development. We will be building a replacement parking garage at the site.
We also have Artist Walk in Fremont, which includes 185 units and approximately 29,000 square feet of retail. It’s a combination of three and four stories on grade with parking around the project. It’s a larger site – about 6.2 acres. That’s the one where we’re delivering our first units in April 2017. We are currently leasing the retail portion there.
There’s also 1900 Fourth in Berkeley that includes 155 units of apartments over 30,000 square feet of retail. That’s in development, next to popular Fourth Street retail and near the Berkeley Capitol Corridor station. It’s currently going through the entitlement phase. That location at the corner of Fourth and Hearst is one of the premier locations in the Bay Area.
How have you been able to align so quickly with institutional capital partners like Northwestern Mutual, UBS and others?
Blake: It’s a combination of factors – both Brad and I have had a long history of institutional backgrounds. We’ve worked for institutions as public company executives and with institutional partners previously as our investors.
Plus, our long-term established relationships that we’ve built being in the business for 30-plus years have helped. We’ve demonstrated a good track record and institutions find that attractive. The team we’ve put together is very capable and high quality. Lastly, our projects both in terms of location, size and quality are of institutional caliber.
We serve as a bridge for institutions with large sums investing wisely. Finding regional experts is really important for them.
Griggs: Yes, we’re in the markets every day and have relationships with brokers, cities and property owners. We’re able to identify attractive deals that institutions might not otherwise come across. They rely on us to determine if something is institutional quality so they are not wasting their time. We know how to speak their language.