Walmart Files Patent For Floating Warehouse.

Walmart is taking the competition up a notch, or rather, a few hundred feet. In a move that comes nearly a year after Amazon was awarded a patent for a similar concept, the retail giant applied for a U.S. patent for a floating warehouse, Bloomberg reports.

The blimp would float above the country between 500 feet and 1,000 feet and would be operated autonomously or by a remote human pilot. The floating warehouse would contain multiple launching bays and would have drones picking up and delivering products from the aircraft to the homes of shoppers.

Read more from Bisnow

A step-by-step guide to nailing your elevator pitch.

We’ve all been told to have our elevator pitch ready. After all, you never know when you’ll bump into the CEO of the company, or a major investor who just happens to be looking for new representation.

But how many of us really have something to say, besides the dry facts of what we do? We hate to say it, but no one really cares that you’re a tenant rep broker servicing the greater Seattle area…

That’s because there are many other commercial real estate professionals just like you, and simply saying what it is you do, rather than who you are and why you do what you do, doesn’t set you apart and it certainly doesn’t get you remembered.

But distilling your differentiating factors into a concise, understandable, and memorable pitch is incredibly difficult.

We recommend using the framework created by PivotDesk co-founder David Mandell to structure your pitch.

Read more from Apto

Peaking Rents, Record Supply May Spur A Multifamily Asset Selloff In These Five Markets

There remains a large disparity between the luxury apartments being constructed and the working-class Americans in need of affordable apartments.  This divide is driving companies and renters from expensive core markets with inflated rents like San Francisco and New York to more financially manageable areas, and the migration is not going unnoticed by investors.

Read more from Bisnow

Real Estate Forgot To Take A Summer Vacation

In commercial real estate, August is traditionally the slow season when business drags on as people come and go from the office to the beach, mountains or some foreign country for a family vacation. But this summer is marching to the beat of its own drum. With the first two weeks of August complete, nothing has slowed down, and the market is as active as ever.

Read more from Forbes

DisruptCRE Coming to San Francisco, September 15th

SAN FRANCISCO, CA – August 29, 2016 – The national technology and commercial real estate conference, DisruptCRE, is coming to downtown San Francisco on Thursday, September 15th. The conference will take place on the 12th floor of Tishman Speyer’s Class A office building, 333 Bush Street, a distinctive, 541,900-square-foot mixed-use tower in the heart of San Francisco’s dynamic North Financial District. Standing at almost 500 feet, the building is one of the city’s tallest skyscrapers, boasting commanding views of the nearby waterfront and surrounding skyline.

DisruptCRE sources the best industry professionals and entrepreneurs to provides educational and thought provoking discussions centered around emerging CRE technologies. Topics range from IoT (Internet of Things) that are being integrated into our commercial buildings, tenant engagement and concierge services, to newer “Tech Tools” such as virtual reality, and real estate’s secondary market.

“We take the topics that are crucial to the future of this industry, and unpack them in a way that makes it easy to digest,”says Mariel Ebrahimi DisruptCRE CEO and conference day host.

Attendees will be treated to a top notch CREtech experience from the moment they arrive. Starting with a Virtual Reality Experience Center powered by exhibiting company, Matterport, a 3D media platform creating immersive experiences to navigate and share space in 3D. Attendees will be able to connect with real estate projects through the use of virtual reality technologies via headsets, Gear VR and Google Cardboard. The educational side of the conference day kicks off with a fun, rapid-fire segment called “Meet the Disruptors” where CRE tech companies have 45 seconds to pitch their company to attendees.

Participating CRE tech companies include Building Connected, Comfy, Brevitas, Indoor Reality, Managed by Q, Matterport, MRI Software, Raisal, Real Liquidity, Reonomy, Skyline Exchange, VTS, ZoomProspector & more!

Three educational panels are provided, anchored by the popular “State of CRE & Tech: The Executive’s POV,” where some of the most recognizable and powerful executives in the industry will shed light on how technology is affecting the industry on a local and global scale. Executive’s will also explore the CRE tech products and services that are currently in the marketplace, what are they investing in or implementing now, and what is coming up on the horizon that gets them excited.

According to Ebrahimi, panels are filled with CRE and investment industry titans including Deborah Boyer, Executive Vice President and Director of Asset Management at The Swig Company; Jordan Nof, Head of Investments at Tusk Ventures; James Kilpatrick, President at NAI Northern California, Stuart Appley, Managing Director GWS Technology Solutions at CBRE, Lindsay Baker, President at Comfy, Kevin Guy, CEO at RealLiquidity among others.

The conference closes with a casual “cocktails and nosh” networking event where attendees can re-visit the showcase for networking and demos in a casual atmosphere to engage personally with the tech companies, sponsors, VC’s, and other real estate industry leaders.

For more details: http://disruptcre.com/cities/sanfrancisco/

Continued Success for New NAI Agents

 

Alex Orloff (L) and Shivu Srinivasan (R) with President James Kilpatrick

Congratulations to two more NAI Northern California agents who just closed their first deals!

Alex Orloff recently closed the Desert Sand Motel, a 42-room independent motel in a prime downtown Sacramento location for $2,000,000. The 11,276 square foot motel includes a cafe and two-bedroomowner’s apartment. According to Alex, “This hospitality investment gave an experienced operator access to the growing downtown Sacramento market in a rare value-add opportunity.”

Alex’s professional career spans both real estate investing and digital advertising. His background brings a uniquely well informed and strategically thoughtful advisory to clients from ownership, operations, and portfolio management perspectives.

Shivu Srinivasan‘s first deal was a multi-family property located on Regent Street in Alameda for $1,400,000. He “represented both the buyer and seller in this off-market transaction. The transaction is only one of three ever recorded in the city of Alameda to sell at or over $280,000 per unit. This was an excellent opportunity to acquire a stable asset  with high rental upside and a market CAP of 5.42%.”

After beginning his career as a commercial analyst with the U.S. the Department of Commerce, Shivu began working for the sales team at LoopNet, CoStar’s marketing platform, immediately establishing himself as the top producer. As a resident of the Bay Area for 7 years, he has an intimate knowledge of the regional market.

Congrats on your first deals at NAI! Interested in a career at NAI Northern California? Click here for more information.


Congratulations on Closed Deals!

We’d like to highlight the accomplishments of two recently-licensed NAI Northern California agents who just closed their first deals!

Brian Skavdahl recently closed 150 Birch Street, a 5-unit Redwood City multi-family property, for $1,950,000 ($150,000 over ask) at 3.03% CAP. According to Brian, “150 Birch Street was a rare opportunity for an investor to own within close proximity to an up-and-coming downtown Redwood City. The location of the property, as well as a lack of inventory in the area, led to extremely competitive offers and a close of escrow after on 33 days on the market. With all leases well below market rents, the new owners can expect immediate upside in cash flow.”

Born and raised in the Bay Area, Brian has grown to become an expert in both the Peninsula and South Bay Markets. His knowledge of the area allows him to provide valuable insight and intelligent advice to both buyers and sellers in these markets.

Peter Hong listed a 3-unit multi-family property located at 43563 Ellsworth Street in Fremont, CA. The 3-bed, 2-bath townhomes in an award-winning school district closed for $1,775,000 at 2.02% CAP! Insight from Peter: “The purchase and sale of 43563 Ellsworth Street was just one of only a handful of multi-unit residential sales in the Mission San Jose neighborhood over the last ten years. The buyer had a rare opportunity to obtain a property in an area where word of mouth helps keep vacancies at consistently low rates. All inspections and contingencies were completed in a timely manner, leading to closing of escrow within forty-five days.”

Peter received a Master of Business Administration degree from the University of Michigan, helping him to better understand the world of commercial real estate.

Congrats on your first deals, gentlemen! We can’t wait to see what the future has in store for you both.
Interested in a career at NAI Northern California? Click here for more information.

Brian Skavdahl (L) and Peter Hong (R) with President James Kilpatrick

Market Still Pushing Higher

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.

Loans

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.

5+ Units

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.


Grant Chappell
is the Vice President
of NAI Northern California. He can be
reached at grant@nainorcal.com
or 510-972-4941.