CeX Leases Prime Retail Space in Union Square

SAN FRANCISCO, CA – February 2016 – Mary Alam with NAI Northern California leased 1,826  square feet of retail space at 938 Market Street to CeX Ltd.

The storefront, formerly occupied by RadioShack, is located at the epicenter of Downtown San Francisco and features Market Street frontage with high pedestrian traffic.  CeX signed a 10-year NNN lease at an above market rate. The lease includes 3% annual rent increases and four, 5-year options.

CeX Ltd. is a second-hand goods chain store that specializes in technology, computing, and video games. CeX was established in the UK twenty-five years ago and has close to five hundred stores worldwide.

Mary Alam with NAI Northern California represented both the landlord and the tenant in this transaction. Alam is a top producing broker at NAI Northern California with an expert knowledge of the San Francisco Bay Area real estate market.  She specializes in leased investments with a focus on retail, office and redevelopment opportunities.  Alam is highly skilled in providing value to her clients with her superior networking and deal-making skills plus top notch execution.

About NAI Northern California

NAI Northern California is full service commercial real estate firm in the San Francisco Bay Area and part of NAI Global, the largest managed network of Commercial Real Estate Brokerage Service firms in the World. Recognized as one of the Top 25 Commercial Real Estate Firms by the East Bay and San Francisco Business Times, NAI Northern California provides comprehensive brokerage, leasing, debt, advisory, and property management services for corporate end users, property owners, developers, investors and financial institutions.

NAI Northern California Welcomes Armand Anicete

SAN FRANCISCO, CA – February 2016 – NAI Northern California announced today that Armand Anicete has joined the firm as a Senior Advisor.  Mr. Anicete joins NAI from Sequoia Realty Capital, where he specialized in office, retail, R&D, multi-family, investments and ground up development.

Mr. Anicete is charged with accelerating the growth of NAI Northern California’s leasing and investment advisory services in the San Mateo County office and medical markets. This market currently totals more than 49M square feet. Mr. Anicete will also partner with NAI’s Oakland and San Jose offices to continue to grow services in each market.

Prior to NAI Northern California, Mr. Anicete served as an associate for Sequoia Realty Capital, where in his seven years with the firm he completed over 120 transactions resulting in over $100M.  Mr. Anicete is a graduate of the University of California Santa Barbara where he received a B.A. in Global Studies and Sports Management.  Mr. Anicete is a member of the San Mateo County Association of Realtors (SAMCAR) and dedicates his extra time to the American Red Cross and Make-a-Wish foundation.

“Armand is the ideal leader for the San Mateo County market,” said Mr. Kilpatrick. “He brings to NAI Northern California an unparalleled depth of experience in both winning new business and setting the standard for exceptional client service.  With his impressive track record, we look forward to working closely with him to increase our market share across the region.

Mr. Anicete cites NAI’s unique technology and expertise as a major decision factor for joining the firm.  “NAI Northern California really appealed to me because of their unique combination of innovation and expertise. Their proprietary broker platform allows me to maximize value and provide optimal results for all clients.”

About NAI Northern California

NAI Northern California is full service commercial real estate firm in the San Francisco Bay Area and part of NAI Global, the largest managed network of Commercial Real Estate Brokerage Service firms in the World. Recognized as one of the Top 25 Commercial Real Estate Firms by the East Bay and San Francisco Business Times, NAI Northern California provides comprehensive brokerage, leasing, debt, advisory, and property management services for corporate end users, property owners, developers, investors and financial institutions.

NAI Senior Advisor Joby Tapia Closes Novato Multifamily Property for $3,020,000

NOVATO, CA – January 2016 – NAI Northern California announced the sale of 729 Cherry Street in Novato, California.

The property sold for $3,020,000, or about $300 per square foot, a 10% premium over the market rate for the area. The property is located close to Downtown Novato and consists of 15 units, including 2 bed/1 bath and 1 bed/1 bath units.  Joby Tapia represented the seller and persevered through two evictions and a fire during escrow.  Tapia was able to balance the needs of the seller along with the demands of the buyer to negotiate acceptable reconstruction terms. The diligence and service provided by Tapia salvaged the deal.

Tapia is an accomplished Multifamily Executive with over 16 years of experience managing commercial and multi-family assets, including market rate and rent-controlled properties, for both private and institutional owners in Northern California.

About NAI Northern California

NAI Northern California is full service commercial real estate firm in the San Francisco Bay Area and part of NAI Global, the largest managed network of Commercial Real Estate Brokerage Service firms in the World. Recognized as one of the Top 25 Commercial Real Estate Firms by the East Bay and San Francisco Business Times, NAI Northern California provides comprehensive brokerage, leasing, debt, advisory, and property management services for corporate end users, property owners, developers, investors, and financial institutions.

 

Bay Area Retail Real Estate: 2014 Year-End Perspective

Compiled at the International Council of Shopping Centers (ICSC) Idea Exchange Meeting.

Napa, CA – November 21-22, 2014

By Mary Alam, MBA
Senior Associate
NAI Northern California



The San Francisco Bay Area continues to be one of the hottest real estate markets in the US and is the number one development market in the country. The phenomenal growth of the office sector in Silicon Valley and San Francisco, led by the high tech industry, has generated increased demand for multi-family housing. As long as millennials have not reached the age of settling down and starting families, they want to stay mobile and are not interested in buying houses; as a result, demand for new rental and condo multi-family developments will continue. In San Francisco alone, there is an overall shortage of hundreds of thousands of multi-family units. This shortage will contribute to the continuation of the development activities for some time to come and create consistently strong demand for retail space.

The area in general has experienced a marked increase in retail rents. For example, rents in the Silicon Valley have gone as high as $65-$70 for small spaces and $30 for big box space. In San Francisco, retail rents can range from $38 per square foot on average all the way up to over $125 plus per square foot for a prime location. More retail space is slated to come online with the new residential developments planned in SF but restrictions to formula retail have been further tightened to include companies with 11 stores or more worldwide.

For the shopping center sector, the construction of brand new centers has been largely hindered by prohibitive entitlement costs that include impact, permit, planning and site utility fees. These can range from $6.50 per square foot to $41 per square foot for a 15,000 SF building. As a result, investors and developers are focusing their attentions on acquiring distressed centers and repositioning them by way of adaptive re-use. This is a much less costly approach that can ensure them a successful exit strategy and the necessary upside and return their investors require.

Bay Area Sub-Markets:


San Francisco:

It is one of the hottest markets in the country. With more than 6.3 million square feet of entitled office space and over 11,382 residential units, entitled or planned, SOMA, Mid-Market and Mission Bay will witness an increase in employee count in the range of 20,000 to 40,000 people and around 17,000 new residents. With a low unemployment rate of 4.4% and very low retail vacancy rate of 2.1% in downtown San Francisco, street level retail is now competing with office space. As a result of the high demand, rental rates can be seen in the range of $38 on average, with high end pockets such as Fillmore Street leasing in the $70-$120 per Square foot and Union Square rents easily exceeding $125 per square foot. From new luxury retailers such as Christian Dior leasing approx. 10,000 SF to outlet stores sitting side by side with their flagship stores, such as Nordstrom Rack, Last Call by Nieman Marcus and Sack’s Off 5th, the demand for retail is great. There is also overwhelming demand for food locations in the city famous for its various restaurants and eateries. For example, a major Singapore restaurant firm with international ties has spent $14 million for the buildout of the Crystal Jade Jiang Nan restaurant at The Embarcadero 4 in the Financial District. Food emporiums are expected to gain traction with the concept of a store within a store like the Ferry Building or Oxbow Market in Napa. Due to its affordability over the Manhattan retail market, San Francisco will continue to attract first time international luxury goods providers looking for a foothold in the US. There are predictions that the San Francisco downtown will become more crowded, with activity in some streets resembling Hong Kong or Manhattan. This is great news for real estate in general and the retail sector in particular.

East Bay:

This region is experiencing an extremely active shopping center development activity with major developers such as Simon properties, Carmel Partners, Merlone Geier, Hall equities and many others currently overseeing large scale projects. Among them are:

  • The Shoppes at Livermore (120,000 SF) which will increase the phase II of the Livermore outlets and yield a total of approx. 900,000 SF of retail (Armani, Prada, etc..),
  • Pacific Pearl, the Vintage and Persimmon Place (157,000 SF) in Pleasanton and Dublin.
  • City Center in Bishop Ranch in San Ramon with office, retail and hotel development.
  • In Walnut Creek, an additional 300,000 SF are under construction in Broadway Plaza with a new Safeway prototype and 200,000 SF at the Orchards and Center Place South (developed by Hall Equities, Essex Property Trust and Laconia Development).
  • The Shops at the Ridge in Oakland with 275,000 SF which include a state of the art 70,000 SF Safeway.
  • Alameda Landing by Catellus Development is underway in Alameda.
  • In Fremont, Pacific Commons, the Block and Downtown Fremont are among the major projects underway.

South Bay:

As the heart of Silicon Valley, the area has seen an overwhelming boom in real estate. There are approx. 14 million square feet of class A office developments under way in the area. This has generated more retail activity and rents in the $65-$70 per square foot on a NNN basis in certain areas. Among the retail centers being developed are:

  • Valco Mall
  • Homestead Square
  • Santa Clara Town Center
  • Brokaw Plaza
  • The Village at San Antonio Center, a mixed use project by Merlone Geier in Mountain View with retail under office and residential and a flagship Safeway Store.
  • Redwood City is also undergoing major residential developments with Caltrain accessibility.

North Bay:

Coddington Mall in Santa Rosa is experiencing major success with a newly opened Target store that has already exceeded all sale projections and the signing of the Unleashed concept by Petco, along with Whole Foods, Texas Roadhouse and a very successful Chipotle.

In Napa, the exciting Napa Center around First and Randolph is underway; it is a walkable multi-purpose urban district and leisure destination with 275,000 SF of retail, hotel and office space. Other projects in the area include Oak Knoll crossing, Napa Crossing and Riverpark Center. Retail rents range from $48-$60 in Marin, $30-$36 in Sonoma and Napa, higher in class A centers. The new Smart Train connecting Cloverdale, Santa Rosa, Rohnert Park and Petaluma to the Larkspur Ferry is expected to bring major residential and retail activity to the area.

Sacramento:

With an average home price of $340,000, the Sacramento area is extremely affordable and benefits from the major economic activity in the Bay Area. Its retail vacancy rate is still lagging at 10.4% but there are developments that indicate renewed retail activity. The Sacramento Kings entertainment complex in downtown Sacramento has broken ground and will consist of an arena, hotel and retail space. March Madness events are scheduled to take place at this venue in 2017. Rents in the Sacramento area are, as expected, lower than the Bay Area and they range from $1.00 to $2.00 NNN in B and C Centers and from $2.25 to $3.50 in Class A centers.

The San Francisco Bay Area continues to create opportunities in the real estate sector from higher leasing rates to increased property values. Major national and regional investors are undertaking investment and development projects that will continue to change the landscape of the real estate market. For real estate owners, there is an opportunity to sell assets at prices previously not possible. Owners of aging shopping centers should seriously consider selling at this time to take advantage of the high demand and investment funds available. For these investors, the repositioning of existing real estate acquisitions can create value and higher returns without the cost of new developments.

Mary Alam is a Senior Associate at NAI Northern California who specializes in leased investments with a focus on retail, office, and hotel properties, as well as redevelopment opportunities. Below are some of her most recent deals:

  • 3 High end retail condos, Mid-Market Street, San Francisco – $4,995,000
  • Mixed-use, Mid-Market Street, San Francisco – $4,850,000
  • Confidential Redevelopment Property, San Francisco – $8,500,000
  • Vacaville Town Center – Vacaville, CA – $5,135,000
  • Star Plaza – Sacramento, CA – $3,500,000

For more information, please contact:

Mary Alam, MBA

Senior Associate

CA Broker’s License

BRE# 01927340

malam@nainorcal.com

Cell: 415-297-5586

Direct: 415-358-2111

Intern Wall of Fame

Like any sales industry, a crucial part of the commercial real estate process is making cold calls. Interns at NAI NorCal are given the opportunity to hone their cold calling techniques by interacting with buyers and sellers in the industry. This week, two of our summer interns, Amy and Drew, earned places on the NAI Wall of Fame for scheduling meetings with clients. Congratulations!

Interested in a position at NAI Northern California? Contact Scott Przybyla, Vice President of Sales & Recruiting, for more information.

Who Let the Dogs Out?

One of the secrets to success for legendary real estate agent Grant Chappell? The cute factor.
Here he is with Dixon, his Borador puppy, demonstrating his sales technique:

 

Grant Chappell is the Senior Vice President of NAI Northern California and specializes in East Bay multifamily properties.

On Site Managers

You Can Pay Them (Right) Now, Or You Can Pay Them (A Lot!) Later

by Joby Tapia

INTRODUCTION

One of the most important people involved in the success of your property’s performance is the on-site manager (Resident Apartment Manager). This person is often the face of your property in your absence and may even be THE face of the property. The duties of this individual can range from that of a ‘key-holder’ to that of a full blown property manager that collects rents, performs maintenance and leases vacant units. When it comes to compensation, there are myriad ways that these individuals are paid; cash, rent credit, partial rent credit, bonuses, or some combination thereof, etc. However, in the eyes of the law, there are only two ways that the resident apartment manager can legally be compensated without putting the owner in danger of a wage claim suit. These suits are starting to gain some traction in California, especially San Francisco, with several resulting in six-figure payouts to the (former) employee.

THE LAWS

The regulations regarding the compensation of resident apartment managers are not easily located in the Civil Code. In fact, the only reference that is readily found in the California Code of Regulations on the topic of resident apartment managers is Title 25 section 42: [Caretaker (25 CCR § 42)]A manager, janitor, housekeeper, or other responsible person shall reside upon the premises and shall have charge of every apartment house in which there are 16 or more apartments, and of every hotel in which there are 12 or more guest rooms, in the event that the owner of an apartment house or hotel does not reside upon said premises. Only one caretaker would be required for all structures under one ownership and on one contiguous parcel of land. If the owner does not reside upon the premises of any apartment house in which there are more than four but less than 16 apartments, a notice stating the owner’s name and address, or the name and address of the owner’s agent in charge of the apartment house, shall be posted in a conspicuous place on the premises. This is the part of the law that we’re all familiar with; any building with 16 or more units must have a responsible person living on the premises. However, there are Labor and Wage Code Orders that fill out the rest of the picture when it comes to crediting rent against the earned wages for labor performed.

SO HOW DO YOU PAY THEM?

When it comes to compensation, the body that governs how you pay resident apartment managers is the Industrial Welfare Commission. Resident apartment managers are considered part of the public housekeeping industry. In its directive to govern the public housekeeping industry, Industrial Welfare Commission issued Order No. 5-2001, the Section 10 that provides:

10. Meals and Lodging

(A) “Meal” means an adequate, well-balanced serving of a variety of wholesome, nutritious foods.

(B) “Lodging” means living accommodations available to the employee for full-time occupancy which are adequate, decent, and sanitary according to usual and customary standards. Employees shall not be required to share a bed.

(C) Meals or lodging may not be credited against the minimum wage without a voluntary written agreement between the employer and the employee. When credit for meals or lodging is used to meet part of the employer’s minimum wage obligation, the amount so credited may not be more than the following: Apartment – two-thirds (2/3) of the ordinary rental value (emphasis added), and in no event more than $451.89 per month (one employee); where a couple are both employed by the employer, two-thirds (2/3) of the ordinary rental value, and in no event more than $668.46 per month.

(D) Meals evaluated, as part of the minimum wage, must be bona fide meals consistent with the employee’s work shift. Deductions shall not be made for meals not received nor lodging not used.

(E) If, as a condition of employment, the employee must live at the place of employment or occupy quarters owned or under the control of the employer, then the employer may not charge rent in excess of the values listed herein.

So as of January 1st, 2008, the maximum amount of rent which may be credited against wages is $451.98 per month (or $668.46 if a couple is employed as the resident apartment managers), but may not exceed 2/3rds of the market rate of the unit. That is an important fact to consider if you have a couple in a studio and the market rent is not at least $1,002.69 or more. Also consider the minimum wage in your city; in San Francisco, the minimum wage is $10.74 per hour, so if $451.98 of rent credited against wages per month, the maximum number of hours the on-site employee can work is 42 hours during the period. If the employee works more than that, there is risk that the employee is making less than minimum wage!

To wit, California Labor Code section 1182.8 provides that:

No employer shall be in violation of any provision of any applicable order of the Industrial Welfare Commission relating to credit or charges for lodging for charging, pursuant to a voluntary written agreement, a resident apartment manager up to two-thirds of the fair market rental value of the apartment supplied to the manager, if no credit for the apartment is used to meet the employer’s minimum wage obligation to the manager.

This means that in order for you to credit any rent against wages OR charge any portion of rent, that it is mandatory to have a ‘voluntary written [employment] agreement’ and that there is an explicit amount of rent credited or charged. You also have to ensure that you are meeting the minimum wage obligation with the rent credited.

Many landlords and their agents still rely on both informal and non-compliant agreements with their on-site staff. Recently, there has been an uptick in back wage claims (including a major class-action suit in San Francisco against a well known owner), where aggrieved former or current on-site staff have sought damages in the way of unpaid or underpaid wages (including overtime) and any credits taken as well as the one month delay penalty. Given the employee friendly nature of California laws, without extensive documentation and compliance, an owner could face thousands, if not tens of thousands in back wages and penalties.

EMPLOYMENT AGREEMENTS, TIMESHEETS

So, from the legalese above, we can see the most critical element in employing a resident apartment manager – the Written Employment Agreement. This document is required to be compliant with Wage Order 5 and Labor Code 1182; there is a case (Brock v. Carrion, Ltd. (2004)) where a resident apartment manager and an owner ‘agreed’ to value an apartment at a certain rate and to compensate the employee at the same rate. Missing was a written employment agreement that defined the terms and duties; the decision of the court left owner unable to credit any rent against wages in the labor dispute. The employment agreement is your touchstone document. It should clearly delineate what the expected duties are to be performed, excluding anything not clearly written in the agreement or subsequently assigned in writing. It should also include the expectation of how many hours per month or pay period the tasks should take and what the compensation will be. Since any agreement that would result in the employee being compensated less than minimum wage in violation of Labor Code 1194(a) and would be void, this is an extremely important exercise to complete, especially if crediting rent against wages. The lesson here is to always memorialize your employment agreement with duties and compensation in writing.

Furthermore, the employee(s) must be required to turn in periodic timesheets that they sign and date each pay period. If the employee is entitled to actual wages above and beyond the rent credit, you must pay the employee (at least minimum wage) for all the hours claimed to have worked. If you have a question if the employee actually worked the hours recorded, you should seek advice from an employment attorney or HR consultant to navigate through this tricky situation. Even if you dispute the hours worked, you will still have a record of paid hours in order to limit back pay issues.

What isn’t mentioned in the Wage and Labor orders is the companion document that is STRONGLY recommended: the License Agreement. This document is very important in controlling tenancy in the unit that the on-site staff uses as a condition of employment. Since the license is revocable when employment is terminated, the former employee has a pre-defined period of time to vacate the unit. This will avoid a costly eviction of the former employee; in rent controlled districts, this document will avoid granting tenancy rights to the employee. Always use a license instead of a lease as it will better protect your rights. You can always convert an ex-employee to a tenant, but if you write a lease with below market rates as the compensation, you are stuck with that rate for a minimum of 60 days (if more than 10% under market) and potentially for life if in a rent-controlled district.

CONCLUSION

Where California law requires a responsible person to live on-site, it is important to ensure that any terms of employment are in writing and clearly defined. When it comes to compensation, it is extremely important that the resident apartment manager is legally compensated to avoid putting the owner in danger of a wage claim suit. There has been increasing numbers of wage claim suits filed against owners; with some relatively simple documentation, you can reduce exposure to large settlements and protect your rights as an owner. Just remember that when it comes to on-site managers, you can pay them (right) now or you can pay them (a lot!) later.




Joby Tapia is a Senior Associate
at NAI Northern California. He can
be reached at jtapia@nainorcal.com
or 415-329-4623.



Disclaimer: The information contained in this article is general information and should not be construed as or relied upon for legal or tax advice in any particular circumstance or specific factual situation.

NAI Global Ranked Among Top 5 Commercial Real Estate Brands

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.