Real Estate

Greystar Uses Builder’s Remedy to Add 140 Units to Menlo Park Project, Total 495

Greystar adds 140 units to Menlo Park project, leveraging builder’s remedy due to city’s housing plan failure.

By Doug Elli

7/11, 11:03 EDT

Key Takeaway

  • Greystar Real Estate Partners uses builder’s remedy to add 140 units to its Menlo Park project, increasing the total to 495 units.
  • Menlo Park's failure to meet state housing deadlines allows developers like Greystar to bypass local zoning rules.
  • Silicon Valley's high demand for apartments, driven by tech employment, has pushed average rents in Menlo Park to $3,138 per month.

Greystar's Strategic Expansion in Menlo Park

Greystar Real Estate Partners, a prominent South Carolina-based developer led by Bob Faith, is leveraging a legal provision known as the builder’s remedy to expand its Menlo Park project. Initially approved for a 355-unit apartment complex and a 35,500-square-foot office building, Greystar now plans to add an additional 140 homes to the site at 104 Constitution Drive. This move comes as a result of Menlo Park's failure to certify its state-mandated housing plan, making it susceptible to the builder’s remedy, which allows developers to bypass local zoning rules if they include at least 20 percent affordable housing.

The Details of the Expansion

The Menlo Portal Project, originally set to include a seven-story apartment building and a three-story office building, will now see a significant increase in residential units. Greystar's new plan involves adding a second apartment complex to the 1-acre site, located approximately 2 miles from Meta’s headquarters. This expansion is facilitated by the builder’s remedy, a provision in state housing law that enables developers to circumvent local zoning restrictions in cities that have not met their housing development targets. Greystar had previously paid an in-lieu fee of $9.4 million to build affordable housing off-site, but the new plan will incorporate additional affordable units directly within the project.

Silicon Valley's Housing Dynamics

The demand for apartments in Silicon Valley, driven by the region's robust tech employment, has led to a significant decrease in multifamily vacancy rates, which have hit a seven-year low of 8.5 percent. Cities like Menlo Park, home to major tech firms such as Meta, Google, and Apple, boast some of the highest apartment rents in the region. Menlo Park's average monthly rent has risen to $3,138, up from $3,040 last year, and is higher than the national average of $1,689. This trend underscores the acute need for more housing in the area, making Greystar's expansion particularly timely and relevant.

Broader Implications for Housing Policy

Greystar's use of the builder’s remedy highlights a critical aspect of California's housing policy. The provision, designed to address housing shortages by allowing developers to bypass local zoning laws, is becoming increasingly relevant as cities struggle to meet state-mandated housing targets. This case exemplifies how developers can play a pivotal role in alleviating housing shortages, particularly in high-demand areas like Silicon Valley. The addition of affordable housing units within these projects is crucial for ensuring that the benefits of development are more equitably distributed.