• Excess supply of commercial and residential spaces have persisted for years as evinced by the following:

  - The “For Lease” signs abound all across the community.

  - The last three development projects that sprung in the 2000’s,namely, Marlin Cove Apartments, Miramar, and 
     Inktomi Building have very low occupancy rates. 

  -  Applied Biosystems which has its office compound on Third Avenue was recently acquired by Invitrogen. It is  
     expected that a significant number of Foster City operations will move to the Invitrogen corporate location in
     Carlsbad, California. As a result, numerous buildings currently rented by Applied Biosystems will be vacated,
     adding to the excess supply in commercial and office spaces.   

• It does not make sense to add more buildings when there is a glut of supply in the market..

• Law of supply and demand dictates that with oversupply, rental prices will come down and impact the revenue stream.

The last three high-density buildings approved by the City Government (Marlin Cover Apartment, Miramar, and Inktomi Building) have not been as successful as envisioned with their low occupancy rates. There are lessons to be learned from these projects, among them are as follows.

• Not because a developer builds and create the supply, the corresponding demand will be there.  Many factors bring demand. It is presumptuous to assume it will automatically come.

• Quality matters. Good quality buildings increase the desirability of rental units. Sadly, in the goal to maximize units,quality of these 3 buildings have been compromised. More rental units does not translate to higher revenue. If fact, lesser number of rental units of high quality but with high occupancy rates will generate more revenue than a multitude of low-quality units that are barely occupied.

(Note: Marlin Cove and Miramar have below average ratings in feedbacks.)

• It pays to be considerate of the community and to make sure to blend with the surrounding residences not only in design, but also in  purpose.
  
  Hopefully, our city officials and planners will learn the hard lessons to be derived from these three projects.

• The solution which city officials are embarking to solve the low occupancy Rates in the Chess-Hatch and Pilgrim-Triton office and commercial complexes is to tear down the current low-rise buildings and replace them with high-rise and higher density buildings.This is the wrong solution to the problem. One just has to look at the Inktomi Building which is almost empty, to recognize that building towers will not solve the problem.   
  

• The key to increasing occupancy rates in commercial and retail spaces is to make Foster City an attractive place to do business.  It must be a vibrant community.

• Unfortunately, the focus of our city officials have been on planning more high-rise development projects like the Mirabella, Pilgrim-Triton, and Chess-Hatch instead of promoting and making Foster City a great place to do business.

• Foster City has a relatively high revenue per capita, compared to many towns in the Bay Area and in California.  Yet it has serious revenue and budgetary concerns. Why? Things do not seem to add up.

• City officials account for the revenue that will be generated by the proposed development projects.  However, they have not thoroughly factored in the costs. These projects will entail massive cost which can wipe out all the expected gain and even result in overall loss.  (Please see Section on Cost-Benefit Analysis of this website for further details on this topic.)

• There are alternative measures to increase city revenue that are not detrimental to the community and residents as discussed below.