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.

How to take advantage of “Opportunity Zones”

The Tax Cuts and Jobs Act of 2017 created new rules for “opportunity zones,” underdeveloped neighborhoods, sheltering your investments from federal taxes with minimal limits and employment requirements. You only have a few more months to maximize the benefits of this program: so how does it work?

When you sell a property, you can immediately reinvest that gain, tax-deferred, into an Opportunity Zone by depositing it into a qualified Opportunity Zone fund (either one you create or a traditional one). Then you have two choices; buy a property in one of the zones, or invest in a business in the zone. We’ll focus on the property option.

You have 31 months to purchase your new property, whether it’s multifamily, retail, industrial, or office space. Eventually, you need to invest the same amount of money as the property’s structures (not land!) currently are worth; if the current building is worth $100,000, you need to spend $100,000 remodeling, rebuilding, or otherwise upgrading the building. This means if you buy a property with a structure worth very little, you don’t have to do much to get the tax benefits.

Speaking of benefits, not only is the tax on your original gains deferred until 2026, but if you hold it for seven years, 15 percent of that gain will completely avoid federal capital gains taxes. (You only get 10 percent if you hold it for five years.) And if you hold it for ten years and your new investment appreciates? None of that appreciation is taxable under federal capital gains taxes. This is an opportunity indeed!

There are 102 opportunity zones designated around the Bay Area, including in Oakland, Concord, San Rafael, Santa Rosa, and even San Francisco; visit the SF Business Times’ site for maps and stats about the zones, or contact one of our advisors to find a property that matches your investment goals.

Sources: BizJournals.com, Tax Policy Center

Read our June 25, 2019 newsletter

What’s the hold-up on housing development in the Bay Area?

Bay Area paradox: We need housing, but we don’t want to build faster.

Chronic lawsuits against new Bay Area housing developments. Loud, angry protests against pro-growth legislators and mayors. If the Bay Area has an all-season contact sport, it’s the recurring NIMBY fights against housing construction. And although almost everyone agrees housing prices are too high, few want to see faster development to tackle the problem, according to a recent Bay Area poll for the Silicon Valley Leadership Group and this news organization.

Read more on NAI Northern California’s Newsletter

John Caronna joins NAI Northern California as Vice President in Oakland

Multifamily real estate specialist joins the team in Oakland

NAI Northern California is pleased to announce that John Caronna has joined as Vice President in Oakland to focus on multifamily real estate. John’s combined experience as a multi-unit real estate specialist, property owner and manager makes the transactions stress free for his clients.

NAI Northern California’s Tim Warren named East Bay/Oakland Top Sales Broker by CoStar Power Broker Awards

Tim Warren recognized with CoStar Power Broker Award as a Top Sales Broker for the East Bay/Oakland

The CoStar Power Broker Award winners for 2018 were recently announced, and one of NAI Northern California’s top producers, Tim Warren, was named a Top Sales Broker for his work in the East Bay/Oakland market.

As a commercial real estate services company, NAI Northern California was also recognized as a Top Sales Firm in both San Francisco and the East Bay/Oakland markets.

Check out all the CoStar Power Broker Award winners here.

 

Transit-oriented development changing how Oakland grows

When it comes to the future of Oakland, a good amount of the development that will change the city has one thing in common: the transit station nearby. 

Bay Area Rapid Transit has committed to an ambitious plan to build mixed-use transit-oriented developments around its stations throughout the Bay Area, and a number of those projects will be in Oakland.

Already, the transit authority has started to transform land around MacArthur Station in the northern part of the city as well as Fruitvale Station to the southeast. Construction is underway on Coliseum Transit Village from UrbanCore Development and Oakland Economic Development Corp.

Future plans call for continued development on those sites and projects to go up around downtown BART stations.

BART’s transit-oriented development policy states that the agency will only move forward with future developments in cities that have adopted station area plans, and Oakland has been at the forefront, BART’s Sean Brooks said. Brooks, the department manager of real estate and property development for BART, will speak about TODs at Bisnow’s The Evolution of Downtown Oakland March 13.

Projects already underway have required upzoning, and the city also has been progressive about parking requirements, Brooks said.

“The city has kind of bent over backwards to help and advance some of these projects,” he said.

Case in point: the planned development for West Oakland, which got through the planning commission in record time, he said. The project was helped along in no small part because of the affordable housing it is bringing to the city.

 

Read more at Bisnow Oakland

 

If California pursues a cap on rent increases, how many tenants will it actually help?

What happened to all that talk about rent control?

Less than four months after an initiative to allow cities to expand rent control failed overwhelmingly at the ballot box, and less than four months after then-incoming Gov. Gavin Newsom talked about brokering a compromise between tenant and landlord groups, no new legislation from lawmakers or specific proposals from the Newsom administration have been introduced to cap how much rents can rise.Legislators who have backed rent control expansions in the past say they’re working on proposals to help tenants stay in their homes. Newsom, in his State of the State address earlier this month, called on the Legislature to send him tenant protections he could sign into law, although he didn’t offer any specifics.

“Everything is on the table,” said Assemblyman David Chiu, Democrat from San Francisco, who co-authored a failed rent control bill last year. “From topics like just cause eviction to Costa Hawkins and other protections, everything is being considered.”

One possible compromise: A bill to ban “rent gouging,” similar to one poised to take effect in Oregon.

That measure, expected to be signed by Gov. Kate Brown in the next few weeks, would make Oregon the nation’s first state to enact anti-gouging provisions covering the vast majority of rental properties within its borders. While often characterized as statewide “rent control,” in reality it focuses on the most flagrant rent hikes—typically 10 percent or more.

“It was surprising to see (Oregon) with that type of success. It was heartening,” said Chiu. “As California policymakers we like to think we’re leading, but in this instance, hats off to our Oregon counterparts.”

Chiu stresses that any rent-gouging bill would need to be part of more comprehensive tenant protections, and that other more stringent rent control measures are still a possibility.

A UC Berkeley housing think tank released an anti-gouging proposal last year after consulting with both landlord and tenant groups. A Bay Area regional housing plan popular with state legislators from the area offers a similar solution.

So what exactly would an anti-gouging law in California actually look like? And how many people would it actually help?

No one can say yet.

 

Read more at East Bay Times