Is proximity to mass transit becoming less of a draw for apartment renters?

In the few years since companies like Uber and Lyft began to offer their ride sharing and carpooling options to riders in San Francisco, the premium earned by apartments near mass transit has dropped.

Apartment dwellers have traditionally been willing to pay a premium to live near mass transit stops in urban markets. But fueled by the proliferation of ride-sharing services, a rise in use of electric vehicles and other factors, that allure has begun to lessen in the Golden Gate City and that effect could spread elsewhere, according to new findings from MetLife Investment Management.

“When we look at what makes real estate assets most attractive to tenants, access to transit has traditionally been near the top of the list,” says Adam Ruggiero, head of real estate research for MetLife, which recently released its new report, “On the Road Again: How Advances in Transportation Are Shaping the Future of Real Estate.”

Apartment renters have more options to get around, which may be diluting the amount of extra rent that they are willing to pay to live near a subway stop or light rail station. In the few years since companies like Uber and Lyft began to offer their ride sharing and carpooling options to riders in San Francisco, the premium earned by apartments near mass transit has dropped—but not disappeared.

“It might lower the spread but it does not erase the spread,” says Justin Bakst, director of capital markets for CoStar Risk Analytics, which provided data for the MetLife report.

The introduction of ride sharing and carpooling services in San Francisco coincided with a decline in rental premiums for on-transit apartments (defined properties within a five-minute walk of a transit stop) from a historical average of 20 percent to only 15 percent today, according to the MetLife report

 

Read more from National Real Estate Investor

 

 

Shivu Srinivasan of NAI Northern California named a Top 10 NAI Global Top Producer

Bay Area multifamily investment property top producer ranks among NAI Global’s top sales leaders internationally

SAN FRANCISCO, CA – May 15, 2018 – NAI Global, a leading global commercial real estate brokerage firm, recently announced that Shivu Srinivasan, Senior Vice President, NAI Northern California was recognized in its annual recognition program as a top producer for the organization. The award honors individuals who are handling the highest volume of multi-market business within NAI. The awards will be presented at the 2018 NAI Global Convention in Austin, Texas this September.

“This award represents outstanding performance within the organization,” said Jay Olshonsky, President, NAI Global. “We are proud of Shivu Srinivasan’s success, and the dedication and commitment to service excellence he has shown. It underscores the power of NAI Global in building business and showcases the deep local roots and professionalism of our professionals.”

Shivu Srinivasan is a Vice President at NAI Northern California, specializing in multifamily investment properties and portfolios in the East Bay market.

In 2016, just his second year in brokerage, Shivu was ranked as NAI Northern California’s number one producing broker. With a total sales volume of $38 million, he was also ranked by CoStar as third in the East Bay market as well as third in number of total transactions at 14.

In 2017, just his third year in brokerage, Shivu was again ranked as NAI Northern California’s number one producing broker. With a total sales volume of ~$90 million, he was the number one producing non-institutional broker in Alameda County. His marquee sales of the year included an 88 unit transaction in Fremont for $26.5 million,  a 70 unit transaction he listed in Hayward for $13.2 million, and a high profile portfolio sale in Oakland’s Lake Merritt district, which included three buildings for $13 million.

“Shivu came to NAI Northern California a few years ago with a talented sales background and quickly transformed that into a successful commercial real estate sales machine within our organization,” remarks James Kilpatrick, President and Founder.

On Shivu’s contributions to propelling NAI Northern California forward, James remarks, “Within his first full year he was already in our top 10 agents and dialed his way to the Top Caller of the Year Award. Now Shivu heads up a powerhouse team of agents who dominate East Bay multifamily real estate sales.”

About NAI Northern California
NAI Northern California is a full service commercial real estate firm serving the Northern California Bay Area. Our team delivers technology-enabled commercial real estate services that create value for our clients, industry, and communities.

NAI Northern California is a partner of NAI Global, the largest commercial real estate brokerage network with more than 400 offices worldwide and over 7,000 professionals completing in excess of $20 billion in commercial real estate transactions globally.

About NAI Global
NAI Global is a leading global commercial real estate brokerage firm. NAI Global offices are leaders in their local markets and work in unison to provide clients with exceptional solutions to their commercial real estate needs. NAI Global has more than 400 offices strategically located throughout North America, Latin America, Europe, Africa and Asia Pacific, with over 7,000 local market professionals, managing in excess of over 425 million square feet of property.  Annually, NAI Global completes in excess of $20 billion in commercial real estate transactions throughout the world.

NAI Global was acquired in 2012 by C-III Capital Partners, a leading commercial real estate services company engaged in a broad range of activities, including primary and special loan servicing, loan origination, fund management, CDO management, principal investment, online capital markets, title services and multifamily property management. C-III’s principal place of business is located in Irving, TX, with additional offices in New York, NY, Greenville, SC and Nashville, TN.

To learn more, visit www.naiglobal.com and www.naiglobalnewslink.com

 

 

Silicon Valley growth spurs huge office, R&D building boom

A huge wave of commercial property construction is underway in the Bay Area, and Silicon Valley’s economic boom is fueling the growth, according to a report released Wednesday.

Construction of new buildings for offices, research and development and industrial uses is galloping ahead at a “feverish” pace, a report stated.

“This is a construction boom like no other,” said Russell Hancock, president of San Jose-based Joint Venture Silicon Valley, a private-public organization. “There is a lot of confidence in the Silicon Valley economy. People who are developing buildings are quite sure that they are going to get leased up. And they are getting leased up.”

Read more from The Mercury News

 

 

Builders, Developers Focus On Ways To Save Costs, Build More Housing Units In Oakland, Bay Area

With rising construction costs, a costly entitlement process and labor shortages, Bay Area developers are looking into new ways to build housing more cost-effectively.

Developers are utilizing density bonuses, adding more efficiencies into construction, exploring modular units and prefab and experimenting with new techniques to keep costs down and get more projects off the ground.

Even though there are 17,000 units at different planning stages in Oakland, many of these units rent in the $3K to $4K range, which is not affordable for a majority of people in the Bay Area, oWow founder Danny Haber said during Bisnow’s Alameda County Multifamily and Mixed-Use event in Oakland.

His company’s focus has been on creating macro-units with efficient design that lead to three- and four-bedroom units that are more cost-effective to build and end up being 50% more affordable than their market-rate counterparts.

“The biggest amenity today … is affordable housing and access to jobs and opportunities to work,” Haber said.

Read more from Bisnow

 

 

How to Find Continued Value in Apartment Acquisitions

With concessions ticking up and rent growth slowing, is it time to question or finetune allocation levels and strategies in multifamily investing?

The stability, durability and continued capital flows into multifamily investing permeate today’s headlines, with industry pundits believing apartments to be the most popular product type with real estate investors in 2018, second only to industrial. Mixed signals abound among varying markets, and it’s important to dissect and triangulate the real data as the analytics don’t always tell the full story.

A first quarter report from Fannie Mae cited:

  • Positive, but slowing net absorption in 2018 compared with 2017 (CoStar)
  • Surging apartment development, peaking at over 440,000 units nationwide and up 16 percent from 2017 (Dodge Data & Analytics)
  • Rising nationwide vacancy rate predicted to approach recent historical average of six percent by year-end (Fannie Mae)

With concessions ticking up and rent growth slowing, is it time to question or finetune allocation levels and strategies in multifamily investing? Two principal factors are worthy of consideration here: geography and investment horizon.

Nationally, development is projected to keep pace with net absorption, as Fannie Mae projects net rental demand of 380,000 to 460,000 units in 2018. However, parsing geographies more discerningly reveals that new multifamily construction has been heavily concentrated in America’s largest cities, where pockets of oversupply are projected. New York, Boston, Washington, D.C., Chicago, Los Angeles and San Francisco present some of the highest unit construction per capita in the country, yet are all projected by Moody’s Analytics to experience job growth in 2018 that lags the national forecast of 1.5 percent.

All markets do not bear these metrics though, especially in select secondary markets where Fannie Mae reports the ratio of projected population and employment growth to rising apartment inventory is more favorable. Cities such as Houston, Dallas, Austin, Texas, Salt Lake City and Portland, Ore., even while seeing brisk construction, are forecast to increase job growth between two to three percent amid continued rental escalation. Two markets worth investigating include Phoenix, where projected 2.6 percent employment growth forecasts the demand for 10,000 units against projected 2018 delivery of 8,000 units, and Las Vegas, where projected 2018 absorption is double the number of units under construction.

Development nationwide should peak in 2018, as planned units in comparison to those under construction taper off, even in cities with the most active pipelines. This suggests that investors with a longer hold horizon may see their patience rewarded when new supply is absorbed and vacancy rates level off. Several long-term demographic trends also bode well for multifamily absorption and rental rates:

  • Householders continue to delay marriage and childbirth, thus tending to remain in apartments
  • Population growth in many areas, particularly in the Southwest, is being fueled by immigrants who tend to be renters
  • Real household income growth is occurring only in the upper 20 percent of earners, rendering home ownership less affordable for many
  • Student loan debt, which doubled as a percentage of GDP between 2006 and 2012, stymies home ownership for younger households
  • Conversely, the 65+ baby boomer generation, America’s most rapidly growing domestic cohort, is demanding more rental housing as they age out of owned homes and reevaluate their investment and retirement options

In our view, investors who choose their geographies wisely and take a long-game approach should see their properly selected multifamily investments buoyed by these market and demographic trends, while enjoying relatively predictable cash flows in the interim.

Read more from National Real Estate Investor

 

San Francisco evictions in decline, less than two-thirds of state average

Only half of eviction notices lead to actual ouster, according to Princeton database

San Francisco landlords evict tenants at less than two-thirds the rate of the average California city.

That’s the conclusion from Princeton University’s recently launched Eviction Lab, which compiles data from 48 states and Washington DC to get a bird’s-eye view of what eviction in the U.S. looks like. In 2016, Princeton recorded roughly 2.3 million evictions coast to coast, around one per every 140 citizens.

Compared to that, California’s rate of one eviction per 933 residents—41,178 evictions total in 2016—looks almost rosy; however, it’s not wise to use those kinds of terms when talking about tens of thousands of people losing their homes.

And in San Francisco the news is even more potentially comforting for renters. A few takeaways from the data:

  • Eviction Lab reports 593 SF evictions the same year, one per every 1,417 people (Eviction Lab uses an estimated SF population of 841,000 for 2016, which is actually on the low side), a rate of about 63.5 percent of the state average.
  • The database also records some 1,176 eviction filings the same year, meaning that the success rate of attempted evictions in SF was just over 50 percent. In the rest of the state it was more than 87 percent.
  • Overall, California had 112.51 evictions per day in 2016. SF had just 1.62, or just less than 1.44 percent of the state eviction rate.
  • Although Eviction Lab records a median rent in SF more than $300 pricier than the state average, the city’s median income also outstripped California average by over $19,000.

Before uncorking the champagne, note that there are some discrepancies between Princeton’s and San Francisco’s data sets.

Read more from Curbed SF

 

 

 

San Francisco’s homeless crisis is driving tourists away

San Francisco’s hotels are facing a serious problem.

The city’s idyllic image of the Golden Gate bridge and grandiose views of the bay are being replaced by concerns about needles and feces littering the streets, homeless citizens sleeping on sidewalks or in Bay Area Rapid Transit stations and aggression toward visitors by people with untreated mental illness. Visitors are noticing and rethinking booking events and vacations at hotels around the city.

San Francisco’s homeless population was down by 0.5% in 2017 compared to 2015, but is about 17% higher compared to 2013, according to SFist. While homelessness is nothing new for the city, hoteliers and local business say street conditions have worsened.

Within 153 blocks in downtown, there were over 300 piles of feces, 100 drug needles and trash on every block, a recent report by NBCBayArea revealed. Complaints of poor street conditions to 311 have skyrocketed in recent years. In 2016, 311, a city agency where visitors and residents can report issues or seek information about the city, received 44,000 complaints of encampments, human waste and needles, up from 6,300 complaints in 2011, according to the San Francisco Chronicle.

“[Visitors] are noticing it and hearing about it and saying, ‘well, why would I bring my conference here?’” Hotel Council of San Francisco Executive Director Kevin Carroll said.

Visitors often have rave reviews for the local restaurants and hotel service, but say they will not come back or will not bring their families here, he said.

San Francisco is not the only major West Coast city dealing with issues of homelessness and street conditions impacting tourism and hospitality. Anaheim, home to Disneyland with its spotless, litter-free Main Street, U.S.A., has the stark contrast of homeless people who live just outside the park. The city has been looking into ways to help its homeless population, such as providing emergency shelter and employment opportunities. Honolulu also took action in recent years on cleaning up the streets, including around its popular Waikiki area.

Read more from Bisnow

 

 

 

San Francisco’s largest office landlord to break ground on $265 million Oakland tower

Boston Properties, San Francisco’s largest office landlord, will break ground on May 2 on a 402-unit apartment tower next to Oakland’s MacArthur BART station.

The 260-foot project at 532 39th St. will be the tallest building in North Oakland and the company’s first residential project on the West Coast.

The project in the Temescal district will be among a half-dozen Oakland towers to start construction in the last two years, an unprecedented real estate boom that’s drawing some of the country’s biggest developers to the city. Other developers include Lennar Multifamily Communities, Shorenstein Properties and Carmel Partners.

Read more from San Francisco Business Times

 

 

Wiener scales back bill that would allow taller housing near public transit

State Sen. Scott Wiener scales back a controversial housing proposal.

The proposed bill would strip local governments of their ability to block construction of taller and denser apartment and condominium buildings near public transit stops, and conceded the bill might not make it through the Legislature this year.

The San Francisco Democrat introduced amendments to his SB827 late Monday that would lower the maximum height of buildings that could go up as a result of the bill to five stories from eight. Also, the bill would take effect in 2021 instead of 2019.

Wiener made the amendments ahead of the bill’s first hearing April 17 in the Senate Transportation and Housing Committee. If passed, the bill will then head to the Senate Governance and Finance Committee.

“The bill is not guaranteed to survive either committee,” Wiener said Tuesday. “It’s a hard bill. Hopefully, we pass through these committees and live to fight another day, but if not, then we will try again next year. It’s very common in the Legislature that for hard bills, sometimes you have to try multiple times.”

The measure would override local height limits on proposed four- and five-story apartment and condo buildings in residential areas if they are within a half mile of major transit hubs, such as a BART or Caltrain station. It also would limit cities’ ability to block denser buildings within a quarter-mile of highly used bus and light-rail stops, but amendments eliminated new height requirements.

Read more from San Francisco Chronicle

 

 

SF settles with landlord who rented ‘substandard housing’ to veterans

A Bayview district landlord accused by City Attorney Dennis Herrera of banking millions of dollars by squeezing formerly homeless veterans into cramped illegal dwelling units has agreed to pay the city a $2 million fine and bring all the buildings she owns into compliance with the law.

The terms of the settlement, which was reached last week on the eve of a trial of a city lawsuit, requires husband-and-wife landlords Judy Wu and Trent Zhu to bring 12 properties up to San Francisco building, fire and planning codes.

In a statement, Herrera said that Wu and Zhu “trafficked in substandard housing that endangered their residents and neighbors alike.”

“There is a reason we have building codes,” Herrera said. “They exist to prevent dangerous situations, like an improperly installed stove exploding and starting a fire that tears through a neighborhood.”

The lawsuit against the property owners identified 12 buildings with 15 legal units that were chopped up into spaces for 49 individual tenants. The leases, which brought in about $1 million a year in rent, contained jerry-rigged natural gas and water lines. Neighbors complained of over-crowding, noise, and sidewalks and backyards that became littered with mattresses, discarded furniture, stray cats and mounds of old clothing.

Read more from SFGate