US Neighborhoods with the Best Property ROI

The San Francisco Business Times released this report yesterday after crunching some Zillow numbers, showing the 20 neighborhoods in the US that have delivered the best return on real estate investment in the past 10 years. 

Many of the most lucrative markets lie north of San Jose…right in our wheelhouse. 

Now granted, this list looks at residential real estate. But we’ve all heard that rumor about a rising tide lifting other boats. As the Bay Area and Northern California has grown, it has ALL grown.

Let’s walk through this logically. People want to live in the dynamic City of San Francisco, or near their jackpot job in Silicon Valley. But they don’t want to spend what it costs to live there. So they fan out into the perimeter, raising demand in Richmond, Stockton, Merced.

Well guess what? It’s not just home-buyers in that scenario. It’s renters of multifamily units too. And now those people want shopping centers and auto repair shops and chiropractic offices. 

So if you’re looking for an ideal spot for a commercial investment, you might look at where the people are. Here’s where demand has grown the most.

Want to think about buying or selling in these areas? Consult with one of our advisors. 

Transit-oriented development on the rise

Cities across the Bay Area are opening up to transit-oriented development, building high-density housing with ground-floor retail near BART stations, including on BART-owned land. Despite neighbor complaints, cities are revising their zoning restrictions to allow bigger buildings near major transit hubs.

Most of the development is happening in the East Bay, with completed projects near at least eight stations and more under construction including a 402-unit apartment complex at MacArthur Station with 13,000 square feet of commercial space; 94 units at Fruitvale Station; 200 units at Pleasant Hill Station; 410,000 square feet of commercial space at West Dublin/Pleasanton Station; and 596 units at Walnut Creek Station. Planned projects in Millbrae, West Oakland, Lake Merritt, North Concord/Martinez, Balboa Park, and Fruitvale total over 2,300 units and over 2 million square feet of commercial space.

As zoning codes begin to relax near transit, future development opportunities could open up, strengthening the local markets for existing multifamily buildings as well as retail and office assets.

Source: SF Chronicle

How are developers preparing for sea level rise?

The Bay is expected to rise up to 10 feet in the next 80 years; how are local developers protecting their waterfront projects? According to the SF Business Times, “With the right planning, project designs and innovative construction, new developments can not only survive the effects of climate change, but in some cases, can help protect the region from flooding and erosion.”

Depending on what changes the world makes (or doesn’t make) to slow climate change, California estimates that waters will rise 1.1 to 2.7 feet by 2050 and between 2.4 and 10.2 feet by 2100. Most developers and project planners aim to be ready for 2 feet of sea-level rise by 2050 and 6 feet by 2100.

One solution is to truck in dirt to raise the level of the ground before building; Brooklyn Basin, a master-planned community on Oakland’s waterfront, elevated the land 3 feet with this method, and it is also being used on Treasure Island. The Treasure Island development is also using the strategy of siting buildings farther away from the shoreline to allow room for future retaining walls or levies. Terracing is also an option; India Basin and Pier 70 in San Francisco are building homes on sites that already sit well above the water, even if it means they’re a little farther from the waterfront. A more back-to-nature approach is restoring the Bay’s wetlands and marshes, which absorb water and slow flooding.

New developments have many strategies to survive sea level rise, but it remains to be seen how older buildings and infrastructure can be protected. There are currently 48,895 homes in the Bay Area worth a total of $31.8 billion that are at risk of flooding due to sea-level rise, on 48 to 166 square miles of threatened shoreline.

Source: SF Business Times

Market Pulse: East Bay, August 2019

Welcome to NAI Northern California’s “Market Pulse” feature. We checked the pulse of the East Bay commercial real estate market to discover the ups and downs of the office, industrial, retail, and multifamily markets.  Each market has four dimensions: current inventory, 12-month net absorption, under construction, and vacancy rate.

Check out our August 2019 East Bay Market Pulse infographic. If a dimension is on the rise, the pulse goes above the baseline; if it’s on the decline or negative, the pulse will dip below the baseline.

This month the East Bay office market’s inventory is up to 112 million sq. ft., with 12-month net absorption down at 819,000 sq. ft. of office space. Approximately 1.4 million sq. ft. are under construction with an upward trend. The vacancy rate is dropping, at 8.2 percent.

For the industrial market, 265 million sq. ft. of space is in the inventory and rising. The 12-month net absorption is almost even, dropping to -1,100 square feet. The space under construction is also dropping, at 6 million square feet, and the vacancy rate is rising to 4.9%.

There are 124 million sq. ft. of retail space available, on an upward trend, with a 12-month net absorption rate of 29,000 sq. ft. (a decreasing trend). Over 340,000 sq. ft. are under construction, with more in the pipeline. Vacancy rates continue to rise, at 3.5%.

The multifamily market is holding strong, up to 170,000 units available in the inventory. The 12-month net absorption rate is 2,000 units. Construction is on the upswing here, at 9,400 units, with a rising vacancy rate of 4.5%.

For more detailed updates or to find out how the East Bay’s submarkets are doing, contact one of our advisors; whether you’re interested in office, industrial, retail, or multifamily properties, we can help.

NAI Northern California Presents: Record-Breaking Sale of 25 Units in Lafayette

Sale of 3535 Brook Street in the East Bay Area by NAI Northern California sets record price per unit and per sq. ft.

LAFAYETTE, CA –  August 6, 2019 –  NAI Northern California is pleased to announce the sale of 3535 Brook Street in Lafayette for $12 million, which shatters the previous pricing record by more than $50,000 per unit and $44 per square foot. The Mitchell Warren Team and Berger Mandel Team represented both the buyer and seller, delivering an unsolicited all-cash offer. This 25-unit apartment building is blocks from Mt. Diablo Boulevard and from the Lafayette BART station.

“The buyer was looking for assets in the Lafayette market, and our team was able to secure a property that he had wanted to purchase for many years,” according to Vice President Tim Warren. “This was definitely a win/win transaction for both the buyer and seller.”

3535 Brook Street is a fully leased 25-unit apartment complex, a rare multifamily asset in the Lamorinda market. It features an on-site laundry, swimming pool, spacious garden, and generous parking. The site is conveniently located just a block away from Lafayette Square and the downtown shopping district and within walking distance of local schools, library, restaurants, and other amenities.

Lafayette is known for its pastoral rolling hills, good schools, and wealthy inhabitants. In 2016, the median household income in Lafayette was over $140,000, more than twice the statewide average and about two and half times the national median.

It is rated #5 in “Best Places to Live in Contra Costa County” and boasts a thriving nightlife without sacrificing the “small town” feeling and pleasant weather for the variety of outdoor amenities in the vicinity.

Lafayette is also near several local attractions, including but not limited to the Lafayette Hillside Memorial, Lafayette Reservoir Recreation Area, and Briones Regional Park.

The Mitchell Warren Team is comprised of Kent Mitchell, Tim Warren, Randell Silva, and Alex Lin. The Ethan Berger Team is comprised of Ethan Berger, Benjamin Mandel, and Garrett Blair.

 

About NAI Northern California

NAI Northern California is a full service commercial real estate firm serving the San Francisco Bay Area and beyond. 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 375 offices worldwide and over 6,000 professionals completing in excess of $20 billion in commercial real estate transactions globally.

Recently on the San Francisco Business Times Book of Lists, NAI Northern California hit the top 5 and 6 spots in San Francisco and the East Bay and top 15 Bay Area wide. NAI Northern California is part of the NAI Global network, recently recognized by Lipsey as the number 4 most recognizable commercial real estate brand.

Market Pulse: East Bay, July 2019

Welcome to NAI Northern California’s “Market Pulse” feature. We checked the pulse of the East Bay commercial real estate market to discover the ups and downs of the office, industrial, retail, and multifamily markets.  Each market has four dimensions: current inventory, 12-month net absorption, under construction, and vacancy rate.

Check out our July 2019 East Bay Market Pulse infographic. If a dimension is on the rise, the pulse goes above the baseline; if it’s on the decline or negative, the pulse will dip below the baseline.

This month the East Bay office market’s inventory is up to 112 million sq. ft., with 12-month net absorption also up at 134,000 sq. ft. of office space. Approximately 1.7 million sq. ft. are under construction with a downward trend. The vacancy rate is rising, at 8.7 percent.

For the industrial market, 265 million sq. ft. of space is in the inventory and rising. The 12-month net absorption is almost even, dropping to -1,300 square feet. The space under construction is also dropping, at 5.3 million square feet, and the vacancy rate is rising to 5%.

There are 124 million sq. ft. of retail space available, and more coming, with a 12-month net absorption rate of 5,000 sq. ft. (an increasing trend). Less is being built, though, with only 345,000 sq. ft. under construction. Vacancy rates continue to rise, at 3.5%.

The multifamily market is holding strong, up to 16,900 units available in the inventory. The 12-month net absorption rate is 1,300 units. Construction is on the downswing here, at 9,800 units, with a rising vacancy rate of 4.6%.

For more detailed updates or to find out how the East Bay’s submarkets are doing, contact one of our advisors; whether you’re interested in office, industrial, retail, or multifamily properties, we can help.

NAI Northern California Presents: Record-Setting Sale of Multifamily Building in San Pablo

Sale of 2394 Road 20 in the East Bay Area by the Ethan Berger Team sets record price per unit

SAN PABLO, CA –  July 16, 2019 –  NAI Northern California is pleased to announce the sale of 2394 Road 20 in San Pablo for $4.495 million, setting a new record for price per unit for San Pablo multifamily properties. The Ethan Berger Team originally represented the seller, a local multifamily private equity group based in the Bay Area, when they purchased the apartment building in June of 2017 as a value-add opportunity in need of significant renovation and improved management. After successfully renovating and rehabbing the property, the units were re-tenanted, yielding nearly a 110% increase in the gross rents. The seller then enlisted the Ethan Berger Team (Ethan Berger, Benjamin Mandel, and Garrett Blair) to determine a value and market the property. They quickly developed multiple competitive offers and identified a buyer, achieving a record-setting price per unit of $249,722 and a total return on investment for the seller of nearly 95%. “After we identified the opportunity, we leveraged our local-market expertise and knowledge to help our client throughout the process of buying the property, improving it, and completing the sale.” said Ethan Berger, Senior Vice President at NAI Northern California. “Our relationships and extensive marketing platform were key in maximizing our client’s ROI.”

2394 Road 20 consists of fifteen large 2 bedroom, 1 bathroom apartments and three 1 bedroom, 1 bathroom apartments in a core Bay Area location. A complete renovation of the property and all of the units was completed in 2018. Each unit features laminate-wood flooring throughout the living spaces; brand-new kitchen and bathroom cabinetry; and new countertops, fixtures, and stainless-steel appliance packages. The exterior of the property was also upgraded with new paint, outdoor design features, landscaping, sewer lateral replacement, and parking lot striping. The building has on-site coin-operated laundry and is located within 10 minutes of El Cerrito Del Norte and Richmond BART Stations and less than one mile from Contra Costa College.

 

About NAI Northern California

NAI Northern California is a full service commercial real estate firm serving the San Francisco Bay Area and beyond. 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.

Recently on the San Francisco Business Times Book of Lists, NAI Northern California hit the top 5 and 6 spots in San Francisco and the East Bay and top 15 Bay Area wide. NAI Northern California is part of the NAI Global network, recently recognized by Lipsey as the number 4 most recognizable commercial real estate brand.

San Jose and Oakland challenge SF in private equity real estate market

California’s largest cities for real estate investment, San Francisco and Los Angeles, are now being challenged by San Jose and Oakland. California holds almost 20% of the private equity real estate (PERE) in the country and 12% of global PERE assets under management, according to a study by accounting and advisory firm EisnerAmper and Preqin. PERE properties include office buildings (high-rise, urban, suburban and garden offices); industrial properties (warehouse, research and development, flexible office/industrial space); retail properties, shopping centers (neighborhood, community, and power centers); and multifamily apartments (garden and high-rise). Less common but still an option are senior or student housing, hotels, self-storage, medical offices, single-family housing to own or rent, undeveloped land, and manufacturing space (via Investopedia). 

So how do the Bay Area cities compare?

San Francisco’s strength is in its office market, with $3.2 billion PERE deals in 2018 (a $1 billion increase over 2017) and another $1 billion already invested this year as the Bay Area’s largest tech companies continue to expand. The overall PERE total for last year was $4 billion,down from $4.8 billion in 2017; according to an article in the San Francisco Business times, “the drop-off in the quantity of large mixed-use transactions compared with recent years is at the heart of the decrease.” San Francisco is also running out of space, which limits growth.

While San Francisco is still the largest market for office transactions in the Bay Area, San Jose is leading in growth. Their office transactions in 2017 and 2018 both reached $1 billion, with a record in 2018 at $1.2 billion. In Q1 of 2019 alone, these transactions reached $500 million, putting San Jose on track to quadruple its PERE deals this year. The overall PERE total for 2018 was another record of $2.7 billion, almost 60% more than 2017 and a sharp contrast to San Francisco. 

Oakland may be emerging as a competitor, with more reasonable housing options for tenants; the tech company Square announced at the end of last year their intent to move 2,000 employees into an Oakland office. Even as a smaller city, it is on track to reach a total of $1 billion in PERE deals this year, with $560 million in Q1 2019 already; $493 million of that was just two office space deals by Starwood Capital Group. The city also has more Opportunity Zones than either of the other two cities.

With San Francisco as the “benchmark,” San Jose as the “growth leader,” and Oakland as the “up and comer” (according to the SF Business Times), all three cities are going strong.

Source: SF Business Times

 

NAI Northern California sale of 888 Vermont Street featured by Multi-Housing News

NAI Northern California’s sale of the Vermont Apartments in Oakland was featured by Multi-Housing News in a recent article, “Oakland Community Trades in All-Cash Sale.” The article covered how the Mitchell Warren Team of Vice President Tim Warren, Senior Vice President Kent Mitchell, Investment Analyst Alex Lin, and Investment Advisor Randell Silva both represented the seller and found a buyer for the 44-unit community in a $14 million all-cash sale.

Located at 888 Vermont Street in Oakland’s Grand Lake neighborhood, the Vermont Apartments features a mix of 2-bedroom, 1-bedroom, and studio units plus two penthouses. The community’s amenities include four laundry rooms, a pool, view balconies, and a 43-space parking garage.

NAI Northern California Presents: $14 Million Sale of Trophy 44-Unit Project in Oakland, CA

Leader in multifamily, retail, and office investment transactions closes major deal in the heart of Oakland’s Grand Lake neighborhood

OAKLAND, CA –  June 27, 2019 –  NAI Northern California is pleased to announce the sale of Vermont Apartments, a 44-unit property constructed in 1968. Tim WarrenKent MitchellRandell Silva, and Alex Lin represented the Seller in the transaction, and were able to generate an all-cash offer over the list price during pre-marketing. In addition, after securing a buyer, they were able to find a replacement property for their client to satisfy 1031 exchange requirement.

Vermont Apartments was situated on a 19,700 SF lot and consisted of two (2) 2 bedroom/2bathroom penthouse units, nine (9) 2 bedroom/1 bathroom units, twenty-eight (28) 1 bedroom/1 bathroom units, and five (5) studio units. The project also sat above 43 garage spaces, offering a nearly 1-to-1 parking ration, and offered four (4) on-site laundry rooms, a beautiful pool, and balconies with sweeping views. Over the years, it was very well maintained and provided the new owners with the potential of significant upside upon unit turnover.

It was centrally located, with easy access to the 19th Street BART station and several city bus lines, just blocks away from Trader Joe’s, the Oakland-Grand Lake Farmer’s Market, various cafes, and Lake Merritt, providing tenants convenient access to all daily amenities. Furthermore, many of Oakland’s best restaurants and nighttime attractions were also within walking distance, including the Grand Lake Theatre and shopping opportunities such as Gap, Urban Indigo, and others.

 

About NAI Northern California

NAI Northern California is a full service commercial real estate firm serving the San Francisco Bay Area and beyond. 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.

Recently on the San Francisco Business Times Book of Lists, NAI Northern California hit the top 5 and 6 spots in San Francisco and the East Bay and top 15 Bay Area wide. NAI Northern California is part of the NAI Global network, recently recognized by Lipsey as the number 4 most recognizable commercial real estate brand.