NAI NorCal prez James Kilpatrick suited up with his teammates just for Bisnow, here with director of ops Margarita Nisthal and admin assistant Vanessa Paredes this morning. (We get the pose, but is anyone else getting Power Rangers, Blue Steel, and Spiderman vibes?) He calls San Francisco “a city and a brand” and when we’re in the world’s spotlight, talent flocks to the area (NAI is hiring, he says). The World Series title also affects real estate because more baseball equipment is sold (i.e. industrial spaceneeds), tenants want to locate in the winning city (office space), and investors take an extra look. The actual value of this win for the real estate industry is hard to pinpoint, he says, but we can all agree winning feels good. For more from BISNOW click here.
Thank you to everyone who participated in yet another successful NAI event, our Fall Volunteer Day: Habitat Restoration in the Presidio on Friday, November 7th! We had an incredible turnout, and it was a great opportunity to not only bond as a company, but also to give back to our San Francisco community. We helped enhance rare native plant habitats and maintain important wildlife corridors in the Presidio, which is home to 20 rare plant species, including five protected by the Endangered Species Act. Participating in habitat restoration by removing invasive species and re-vegetating with native plants is the most proactive way to help conserve this landscape.
Click here to see more photos from the event!
The Golden Gate Nation Parks Conservancy is a community-supported nonprofit organization dedicated to transforming places—and people—through conservation and improvement of the Golden Gate National Parks. Their mission is to preserve these remarkable national parks, enhance the park visitor experience, and build a community dedicated to conserving the parks for the future.
Please visit www.parksconservancy.org to find out how you can help.
NAI Northern California recently held a Strategic Sessions Contest, where we challenged our team members to propose the agenda for a strategic session, as well as who would attend this meeting.
The first of three groups of winners enjoyed a delicious lunch last Saturday at La Mar Cebicheria Peruana in San Francisco and discussed the future of NAI Northern California.
Click here to see more photos from this fun afternoon by the water!
On Sunday afternoon, the second group of selected team members were treated to lunch and gorgeous views at The Slanted Door restaurant in the San Francisco Ferry Building. A third strategic session is scheduled for this weekend, also at The Slanted Door.
We’re looking forward to implementing innovative new ideas and fun events in the coming months!
The Center for Elders’ Independence & PACE help aging tenants stay safe in their homes
I first learned about Center for Elders’ Independence back in 2009 through a long–time supporter whom I had met through real estate work. I was in my third year on the EBRHA Board at the time. Healthcare was becoming more of a hot button issue as the Affordable Care Act was in the nascent stage before ultimately becoming law the following year. Getting involved in volunteer work for CEI,and ultimately joining their Board of Directors, has opened my eyes to a model of healthcare that is second to none in my opinion.
As California ages — the over-65 population will double in the next 10 years — and the number of elderly renters rises, property owners are often faced with tenants who become frail and less able to care for themselves. This can expose tenants and the owner to safety hazards, such as fires when someone forgets to turn off the stove, or floods when water is left running. What can a landlord do when a tenant seems to need help?
Most brokers, property managers and owners have come across similar situations in dealing with long term, elderly tenants. Often times the owner or manager becomes the de facto “family” in assisting with issues that come up later in life. These challenges are often not widely talked about as resources are few. If the tenant does not have family nearby to turn to with these difficult decisions, what options are there for the property owner?
Most people would much rather remain at home with some level of independence, and many landlords would prefer not to evict long-term tenants if it can be avoided. In many places, moving to a nursing home may be the only option for someone with significant physical and/or cognitive decline.
In the East Bay, frail, low-income seniors have an excellent alternative: the nonprofit Center for Elders’ Independence (CEI), a Program of All-inclusive Care for the Elderly (PACE). CEI offers comprehensive, integrated health care and social services designed to keep seniors functioning at their highest possible level, so they can stay living safely and with dignity in the place they call home. Nationally, there are 96 PACE organizations in 31 states.
I joined the CEI Board of Directors in 2010 because they do such vital work caring for the most vulnerable members of our community. Later, when the Fund for Elders’ Independence (FEI) was formed to support CEI, I became a founding FEI trustee. In these roles, I have been able to observe the organization’s development and growth to its current enrollment of more than 600 seniors who might be living in nursing homes if it were not for CEI’s comprehensive care.
The three PACE Centers in Oakland and one in Berkeley serve seniors in central and northern Alameda County and West Contra Costa County, from Hayward and Oakland, to Richmond and San Pablo.
A Safe and Healthy Environment
Whenever I visit, the centers are always humming: seniors socializing, enjoying art projects and musical entertainment, playing games that exercise their brains, and getting physical exercise so they can keep moving.
CEI’s pastel-colored buses are a common sight on the freeways and in our neighborhoods, bringing participants to the centers for health care, activities, and lunch, or taking them to outside appointments and then back home.
“We sometimes get calls from property managers concerned about a frail tenant,” CEI Outreach/Intake Director Marvin Gibson said. “We can quickly go out and screen the person for eligibility for CEI-PACE. If the person doesn’t qualify for our program, we can refer him to other community resources.”
For instance, if you have a tenant who is hoarding and then, because of medical conditions, may be losing her balance, afraid to go outside, not eating right because she can’t go shopping, and falling so the paramedics are constantly showing up, CEI-PACE can help stabilize things.
Providing Home Care
Home care aides can also go in and clean the apartments, the CEI occupational and physical therapists can survey the apartment and make improvements, such as installing grab bars, to prevent falls. Also, a transportation driver will come to the door and into the apartment to escort a senior to the PACE Center clinic and day center, and to deliver medications and equipment. CEI can even arrange a shopping service, meal delivery and aides to prepare meals in the apartment.
“CEI’s PACE program has been incredibly effective in stabilizing many of our residents at Satellite Affordable Housing Associates,” Director of Resident Services Shashi Jivan said. “Our residents who participate in the CEI program are receiving extensive medical care, ongoing services such as physical therapy, in-home care services, day center activities, and transportation to and from CEI, and to all medical related appointments. This incredible partnership and the services that our residents receive are integral to their ability to live independently at our properties and age in place successfully.”
CEI Program Benefits
CEI provides and/or pays for all medical care (24 hours a day) and all medications (home-delivered). Its four day centers each include a fully equipped geriatric clinic, recreational activities, hot meals, rehabilitation therapy, social services, home care and transportation.
Participants have access to a physician, specialists and nursing care; prescription drugs and durable equipment; physical, occupational and speech therapies; dental, eye and foot care; surgery and diagnostic tests; and inpatient hospital, emergency and nursing home care.
CEI social workers and home care nurses regularly visit each participant at home to assess safety factors, arrange home-delivered meals or help with managing finances/paying bills, supervise personal care aides, assist with organizing belongings, and help with medications and proper use of assistive equipment.
“If a participant’s environment changes, such as a move or return from a hospital stay, we go and check on them,” CEI Home Care RN Ellen Swords said. “If they’re having trouble with their medications, or they’re on a new medication, we’ll visit to make sure that they understand. If they’re not feeling well, we go check on them. We visit to draw blood, give shots, change bandages and teach family members. We communicate everything we see and do with the service that needs to know, and bring it to the CEI Interdisciplinary Team. And on top of that, if a participant needs supplies urgently and there isn’t a driver available, we’ll go. We also take turns being on-call.”
This intensive case management means that CEI staff knows the participant’s home environment and can intervene quickly to prevent a situation from getting worse.
Aging With Dignity
CEI believes that all seniors deserve to age with dignity. Every day, CEI provides all the care frail seniors need to continue living independently in their homes, and relieves family members and friends struggling to care for their loved ones.
CEI serves some of the toughest areas of Oakland. I began to see the stability they bring to the community in allowing seniors to stay in their home through the final years of their life. In many cases, the participant has lived in the same home or apartment most of their adult lives and do not want to move into a nursing home.
Similar to the way in which private landlords provide quality housing throughout the county, CEI plays an important role in maintaining a strong, vibrant community that should be recognized and celebrated.
I urge rental property owners who find themselves in the default role of caregiver for a tenant who becomes frail to call upon CEI to ensure the safety and security of your tenants. Whether your tenant is an advanced age with chronic health conditions, or whether your tenant lives alone or with others, I encourage you to call. For more information on CEI and PACE, visit cei.elders.org or call Dianna Garrett at 510-433-1150.
I’m proud to be part of this worthwhile organization and advise its leadership on business and fundraising matters.
Safe housing is an important aspect of independence for seniors, and CEI complements our professional interests as well.
San Francisco, CA – March 6, 2014: NAI Global, the world’s largest, most powerful network of owner-operated commercial real estate firms, earned the top five spot in the 2014 Lipsey Survey of Top 25 Commercial Real Estate Brands. The survey was conducted among 100,000 commercial real estate professionals using a combination of ballot voting, phone interviews, and focus groups to identify the top global brands. NAI Global is the only commercial real estate network represented in the top five brands. NAI Northern California is a member of NAI Global.
NAI Northern California is proud that the strength of the NAI Global network is reflected in the results of this year’s Lipsey survey. In partnership with our global management team, we look forward to using the NAI brand to help our clients strategically optimize their real estate assets.
The survey is conducted by The Lipsey Company, a leading training and consulting firm specializing in the commercial real estate industry to equip organizations and their practitioners with the skills necessary to succeed in today’s competitive environment. The 2014 survey results can be found here.
About NAI Northern California
NAI Northern California is a progressive full service commercial real estate firm serving the Bay Area. We provide comprehensive brokerage services, advisory services for corporate end users, property owners, developers, investors, and financial institutions. By staying in touch with all aspects of the real estate market, we are able to add value to any transaction within our area of expertise. Our agents each have their own niche focus, both with respect to geographic area and product type, enabling them to truly be experts in their respective fields. Our membership in NAI keeps our firm on the leading edge of the industry, while allowing us to maintain our local ownership and hometown loyalty. NAI is the largest brokerage affiliation in North America, and is rapidly growing to become the largest in the world.
Visit nainorcal.com to learn more about our unparalleled services.
About NAI Global
NAI Global provides a full-range of corporate real estate services, including brokerage and leasing, property and facilities management, real estate investment and capital market services, due diligence, global supply chain consulting, and related advisory services. NAI Global Member firms, leaders in their local markets, are actively managed to work in unison and provide clients with exceptional solutions to their commercial real estate needs. Founded in 1978, today NAI Global Member firms span 55 countries, with 400 offices and more than 5,000 local market experts on the ground, completing $55 billion of transactions annually. Supported by the central resources of the NAI Global organization, member firms deliver market-leading services locally and combine their in-market strengths to form a powerful bond of insights and execution for clients with multi-market challenges.
NAI Global was acquired in 2012 by C-III Capital Partners, a 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, title services, and multifamily property management.
Find out more at naiglobal.com.
Multifamily property sales prove a growing market in the East Bay
By Grant Chappell
In wrapping up another strong year on multifamily property sales, the numbers show that the market is still pushing higher. Alameda, Berkeley and Oakland all posted strong numbers on activity, total volume and average sales price.
Since mid to late 2012, we have consistently reported that the market clearly had turned, and the worst was behind us. Fierce competition on market deals continues to push bids over the asking price – a practice traditionally less common in the 5+ unit segment.
Historically low interest rates and the perception of higher rents on unit turnover seem to justify the low cap rates paid all over the Bay Area.
Al Stephens, a veteran broker and property owner, views this practice as “rolling the dice” when obtaining a 5-year fixed loan in acquiring a property. Low rates are also a catch-22 for owners with adjustable loans, because payments are lower than a fixed rate on today’s rates. A fixed rate loan on a 5+ unit property will entail a penalty to pay it off early or before the fix rate period expires. With values still rising and rents strong, there are compelling reasons to sit back and “see what happens” with respects to interest rates and property values.
In speaking to Nils Ratnathicam of The Rincon Group, an independent commercial real estate banking firm, he sees more options for property owners in 2014.
“The trend so far in 2014 has definitely been the influx of new multifamily lenders into the Bay Area and Los Angeles markets,” Ratnathicam said. “These markets have been hyper-competitive for a few years now, so it’s been interesting to see the creative terms and features these new lenders are offering to earn business and market share.”
Whether that means lenders are more aggressive on debt coverage ratios, loan to value or interest rates, clearly many banks want a bigger piece of the market.
Compared to other parts of Northern California, the Bay Area continues to attract capital from around the world.
I recently spoke with Eli Cohen, a principal at Cohen Rojas Capital Partners, a private investment firm with holdings all over Northern California, about their take on the market in Northern California.
“As distressed opportunities are few and far between in Sacramento, we shifted our strategy to the East Bay in the last 18 months, primarily picking up value add assets in Berkeley and the walkable neighborhoods in and around downtown Oakland,” Cohen said. “While rent growth has been sluggish at best in Sacramento, we have seen our rents in the East Bay pick up, along with the quality of tenants we are able to attract.”
According to Property Radar, Notice of Defaults are down 33% from a year ago in Alameda County and down 44% over the same period in California. Notice of Trustee Sales are down 70% in Alameda County over the last year and approximately 60% over the same period in California. Finally, REO inventory is down about 32% in Alameda County over the last year and down about 53% in California.
2 – 4 Units
In Oakland, we saw the average price increase by 20% from $399,000 in Q4 of 2012 to $477,000 in Q4 of 2013. Even more remarkable, the number of transactions increased to 122, compared to 112 a year ago, and up 20% compared to last quarter.
When I first started writing this column back in 2006, it was normal to see stagnant or declining activity going from Q3 to Q4. Aside from 2011, every year since 2008 has bucked this trend and seen activity increasing to finish the year.
In Berkeley, the average sales price jumped about 12% to $827,000 from $739,000 a year ago, and a slight dip from $850,000 last quarter. Strikingly, Berkeley saw a big increase in number of transactions in Q4 of 2013, recording 34 property sales, compared to 21 a year ago and 19 last quarter.
We saw one of the highest sales in the last year on a 4-plex at 2712 Stuart Street, selling for $2,050,000. Comprised of four 4-bedroom, 2-bathroom units and not subject to rent control due to 1988 construction, this demonstrates a “flight to quality” for assets in core markets.
In Alameda, we saw a slight dip in transactions with 11 properties trading hands, compared to 14 in Q4 of 2012 and 13 last quarter. The average increased nearly 28% to $684,000 from $536,000 a year ago, and a minor decrease from $697,000 last quarter. Similar to Berkeley, a few high sales north of $1 million dollars will skew the average price. As you will read below, the market 5+ unit properties in Alameda has drawn substantial attention from investors.
In Oakland, total volume decreased approximately 15% to $39,600,000, compared to $46,350,000 a year ago. This is an even larger drop of 25%, compared to the $51,975,000 last quarter. We saw almost no change in price per unit at $107,000, and about a 10% increase in price per square foot compared to a year ago. Compared to last quarter, we were down 3% on price per unit and 12% down price per square foot.
I reacted positively to these figures initially, as the last two quarters very closely mirrored 2012’s Q3 and Q4 figures, when the expiration in federal capital gains rate was due to expire. I sense many owners are seeing prices at which they are happy to sell, in spite of capital gains, as prices are much higher than 2011 and 2012.
In Berkeley, total volume substantially increased by 50% to $22,465,000 from $12,600,000 a year ago. Price per unit also increased about 20% to $192,000 per unit. Berkeley also saw modest increases in price per square foot, to $267 per square foot, compared to $236 per square foot a year ago.
Three properties traded north of $300 per square foot, and one just over $500 per square foot. A 25-unit building at 2747 Haste, directly across from the Berkeley campus, sold for about $276,000 per unit and $325 per square foot, but also in the neighborhood of 15 – 16 GRM on actual income at time of sale. I give a range, as there were some vacancies at time of sale and upside in utilizing common area for additional income.
A building at 2537 Fulton Street sold just above $500 per square foot and $361,000 per unit, further attributing to the all-time highs we are seeing on both 2 – 4 unit and 5+ unit segments in Berkeley. The building on Fulton Street was completely gutted, fully remodeled and seismically retrofitted. It truly was an impressive project and reflects the high demand for assets near the Berkeley campus.
In Alameda, there was a dramatic jump in volume of nearly 237%, with $16.5 million in sales, compared to 6.9 Million a year ago.
Just over $10 million in sales was allocated to two transactions: 1704 Central Avenue (30 units) and 400 Marion Court (20 units). Both of these properties traded at just over $200,000 per unit and in the high $200 per square foot to low $300 per square foot range. There was also a 30% jump in average price per unit to $175,000 and a 20% increase in average price per square foot to $244.
The Future of the Market
Moving forward, I continue to maintain my excitement for where the sales market is heading. Tight inventory of properties for sale and low interest rates will continue to push values higher.
1031 buyers faced with paying higher capital gains will continue to accept lower returns on properties. Competition for existing buildings will remain fierce until more inventory in the form of new units hit the market, or demand for existing housing wanes.
Until then, we are likely in for another exciting year of record sales.
NAI Northern California is pleased announce that Vice President Jeff Gates was our Top Producer in 2013. Since joining NAI in March 2013 as a nationwide Net Leased investments specialist, he has closed thirteen transactions for a total consideration of nearly $27,600,000.
As for 2014, Jeff is already off to a great start. His newest listing is an Outback Steakhouse in Tuscaloosa, Alabama. This property is priced at $1,905,000 with a CAP rate of 6.75% and 11.5-year lease term.
Recent transactions include a Buca di Beppo restaurant in St. Paul, Minnesota for $4,880,000, Springhill shopping center in Vallejo, CA for $3,400,000, and Citibank in Citrus Heights, CA for $3,000,000.
Recently our President James Kilpatrick in his involvement with the Wharton School of Business had a chance to meet with a number of high level companies in Beijing and Shanghai.
Among those was Tishman Speyer. Why has Tishman been so successful in China? They require all permanent workers in all countries to speak the local language and bring a culture of discipline and calculated decisions that is unparalleled. China has ominous government regulation and anything less than Tishman’s deep local relationships would not be prudent. How big is the market? Last year Tishman raised $190 Million from investors to build a 1.23 Million square foot development http://goo.gl/PkvKJo1 Million + foot developments are quite common as an increasing portion of their $1.35+ Billion people are in major metropolitan areas.
There was time for a little R & R as well. The Great Wall was among the attractions and has a less celebrated but worthwhile attraction. A Toboggan ride down. James was not dissuaded by workers telling him to use his brake to slow down, due to the fact that he was going too fast to care.