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Market Pulse: North Bay, July 2019

Welcome to NAI Northern California’s “Market Pulse” feature. We checked the pulse of the South 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 North 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 North Bay office market’s inventory is at 40.7 million sq. ft. and rising, with 12-month net absorption also up at 325,000 sq. ft. of office space. Approximately 17.2 million sq. ft. are under construction with a downward trend. The vacancy rate is at 6.8 percent and dropping.

For the industrial market, 105 million sq. ft. of space is in the inventory, with more on the way. The 12-month net absorption is heading up, at 164,000 sq. ft., and the space under construction is also rising, at 1 million square feet. The vacancy rate is at 4% and trending upward.

There are 65.7 million sq. ft. of retail space available and rising, with a 12-month net absorption rate nearly neutral at -4,600 sq. ft. (a decreasing trend). Less is being built, though, with 61,000  sq. ft. under construction. Vacancy rates continue to rise, at 3.7%.

The multifamily market is up to 59,000 units available in the inventory. The 12-month net absorption rate averages just 24.2 units across the North Bay area, but is rising. Construction is on the upswing here, at 987 units, with a rising vacancy rate of 3.8%.

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

Market Pulse: South Bay, July 2019

Welcome to NAI Northern California’s “Market Pulse” feature. We checked the pulse of the South 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 South 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 South Bay office market’s inventory is up to 129 million sq. ft., with 12-month net absorption also up at 1.6 million sq. ft. of office space. Approximately 6.4 million sq. ft. are under construction with an upward trend. The vacancy rate is at 8.6 percent and dropping.

For the industrial market, 198 million sq. ft. of space is in the inventory and rising. The 12-month net absorption is on its way up, at 1.1 million sq. ft., and the space under construction is dropping, at 710,000 square feet. The vacancy rate is at 5.6% and trending downward.

There are 80.1 million sq. ft. of retail space available, with a 12-month net absorption rate of 169,000 sq. ft. (a decreasing trend). Less is being built, though, with 1 million sq. ft. under construction. Vacancy rates continue to drop, at 3.4%.

The multifamily market is holding strong, up to 144,000 units available in the inventory. The 12-month net absorption rate is 2,100 units and rising. Construction is on the downswing here, at 10,00 units, with a rising vacancy rate of 4.7%.

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

Bay Area markets rank in top 5 for most expensive office space in the Americas

Downtown San Francisco and the Peninsula rank #3 and #4 for the most expensive commercial office space on the continent, according to Globe Street and CBRE. For Q1 2019, the cost per square foot per year for prime office space downtown was $130.51, with office space in the Peninsula costing an average of $116.28 per year. New York City still holds the top two slots, with the Midtown-Manhattan and Midtown-South Manhattan markets, and Boston’s Downtown is just behind the Peninsula at $106.60 per sq. ft. per year.

Office space costs in the Americas continue to rise, 3.7% higher than Q1 of last year, and they’re rising faster; Q1 2018 was only 3.2% more expensive than the previous year. Globally, rents for prime office space rose 3.6% compared to 2.5% the year before.

The most expensive office markets worldwide are Hong Kong Central, at $322; London’s West End at $222.70; and Hong Kong Kowloon at $208.67 per sq. ft. per year. Downtown San Francisco and the Peninsula rank 11th and 13th, behind Beijing’s Finance Street, Beijing’s Central Business District, Tokyo, and the City of London.

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.

Market Pulse: San Francisco, July 2019

Welcome to the first edition of NAI Northern California’s newest feature. We checked the pulse of the San Francisco 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 San Francisco 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 San Francisco office market’s inventory is up to 175 million sq. ft., with 12-month net absorption down at 2 million sq. ft. of office space. Approximately 6.9 million sq. ft. are under construction with an upward trend. The vacancy rate is rising, at 6.3 percent.

For more detailed updates or to find out how San Francisco’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.

Foreign investment rising for net lease assets

Foreign investment in commercial real estate is on the rise due to the search for yield and portfolio diversification, according to the World Property Journal. Globally, investment in net lease properties (office, retail, and industrial) averaged $3 billion per year from 2011 to 2014 and is up to more than $8 billion per year from 2015 to 2019. In the United States, foreign investments for Q1 2019 represented 15.1% of net lease transactions, totaling $1.9 billion, up 6.6% compared to Q1 last year when they only represented 12.9% of the market. In 2018, foreign investors held 30.1% more net lease properties than in 2017, an $8.8 billion increase.

Most of these investors are from Canada, South Korea, and China. Canadians invested $5.55 billion, with a focus on industrial properties; South Koreans invested $3.28 billion, overwhelmingly preferring office space; and Chinese investments of $3.22 billion also focused on industrial assets.

So far this year, New York City, San Francisco, Boston, Dallas, Columbus, and Los Angeles have received the most foreign capital, but commercial real estate investments in high-growth secondary and tertiary markets like Phoenix, Seattle, Baltimore, and Atlanta are also becoming popular.

Source: World Property Journal

The San Francisco office pipeline is overflowing

The SF office pipeline is overflowing. The city only has enough cap space to approve about 2.1 million square feet of office space, but over 8.1 million square feet are currently proposed. So what happens to the developers who want to add that extra 6 million?

The Planning Commission can only approve 950,000 square feet of office development per year, with any unused approvals rolling over into the next year. When there’s not enough cap space to go around, the commissioners get to develop their own policies to decide which projects will go forward and which will have to wait until next year. One such policy approves projects in phases, so a given project might be able to start work on half of its square footage this year and resubmit the second half for approval next year; the idea is that this helps projects get started moving forward more quickly. However, it also means that they take longer to complete. From The San Francisco Business Times: “Doing so means ‘uncertainty, and it means a longer approval process,’ said Ryan Patterson, a partner at Zacks, Freedman & Patterson. ‘Time is money. So longer approval processes mean more expense. And that means even higher office rents.’”

Some developers have been able to carve out exemptions by getting voters to approve them; the Shipyard project in Hunter’s Point got its 5 million square feet of office space approved this way. The current system doesn’t seem likely to go away, though, leaving commissioners with a lot of power and developers with a lot of waiting.

Source: San Francisco Business Times

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.

 

James Kilpatrick on Commercial Property Executive : NAI Northern California Grows San Jose Office

President James Kilpatrick quoted on Commercial Property Executive about NAI Northern California’s new leadership hire in San Jose:

“We have had great success working with a multitude of real estate investors on transactions for multifamily, retail, office, industrial, and mixed-use asset types from San Mateo to Palo Alto, Calif., to downtown San Jose and Gilroy, Calif. … Bringing a great leader like Tod Rudee on board is all about doubling down our efforts in Silicon Valley by building a first-class team of institutional brokerage professionals,” said James Kilpatrick, president of NAI Northern California, in prepared remarks.

Read the full article on Commercial Property Executive