Posts

5 US cities with the highest cost of living

According to a recent report by Move.org, the Bay Area’s major cities continue to rank in the top five for the highest cost of living nationwide. San Francisco holds the top slot, with New York City close behind, followed by San Jose, Oakland, and Boston. The report measured the average monthly cost for rent (a 1-bedroom apartment), food (groceries and some restaurant meals), gas, utilities (electricity, water, etc.), and internet for each city.

Surprising no one, San Francisco, California is the most expensive, with rent among the highest in the nation; rent makes up 80% of the $4,210.60 monthly cost of living in the city. The city also has some of the highest gas prices at $197.88 per month, though residents who commute via bike or public transit can avoid these costs. Food is expensive, around the 80th or 90th percentile, but utilities are comparably cheap at $123.22 per month, about 30% of the national average. Internet costs are pretty middle-of-the-road compared to other cities, averaging about $66.62 per month.

New York, New York is just $250 behind SF, with an average cost of living of $3,956.11. Food is the problem here, costing over twice as much as San Francisco, at $468.60 per month. Rent is also extremely high, at $3,126.35. Gas is more expensive than the national average, around the median value, at $155.55 per month, and internet is just about average at $62.77. Utilities cost a little less than elsewhere, around $142.84 per month.

San Jose, California is the third most expensive city to live in, with lower rents than SF or New York but high gas prices and above-average food costs. The $3,289.07 cost of living includes $2,555.85 for rent, $186.15 for gas, $359.85 for food, $63.36 for internet, and $123.86 for utilities (significantly cheaper than the national average).

Despite Oakland’s reputation for being cheaper than the City, its cost of living is still fourth-highest nationwide, at $3,212.14 per month, only about $1,000 less than San Francisco. Rent and gas are the highest costs compared to the median, at $2,481.65 per month and $175.95 per month. Food is just a little more expensive than the national average, around the 30th percentile, at $347.33 per month. Internet and utility costs are pretty average, at $65.00 and $142.21.

In the last spot of the top five is Boston, Massachusetts, with New York’s high rent and food costs. An average cost of living of $3,211.51 includes $2,420.26 for rent, $435.78 for food, $145.35 for gas, $62.97 for internet, and $147.15 for utilities.

Source: Move.org

Bay Area cities rank in top 10 for most LEED units

California has more LEED-certified multifamily properties than any other state, over 57,000 units worth, and the Bay Area has over 12,000 of these green apartments and condos, with three cities ranking in the top ten statewide. Just behind Los Angeles, San Francisco ranks #2 for the most LEED units, at 8,090, and San Jose is just two spots behind at #4 and 2,545 units. While Oakland hasn’t quite caught up to these levels, it still ranks in the top ten, at #8 with 1,648 units. 

According to Multi-Housing News, “While LEED certification positively impacts the health and well-being of people, as well as the planet, it’s a valuable feature for investors, as it translates to faster lease-up rates and higher resale value.” Owners of LEED multifamily buildings are primarily real estate investment trusts; AvalonBay Communities, owner of the various Avalon, AVA, and eaves complexes in the Bay Area, and the Essex Property Trust, owner of over 80 Bay Area buildings, hold over 9,000 units between them.

The green housing trend really took off in 2008, jumping from 315 LEED-certified apartments and condos statewide in 2007 to 1,947 the next year. The numbers continued to grow through 2017, with a slight dip last year from 7,378 in 2017 to 6,185 in 2018. The developments still are mostly an urban trend, clustered in and around California’s major population centers, though the report only included communities with at least 50 residential units.

Source: Multi-Housing News

Top investment sales firm NAI Northern California continues expansion in first half of 2019

Leader in Bay Area multifamily, retail, and office investment sales and leasing transactions has aggressive growth plan

SAN FRANCISCO, CA – August 21, 2019 – As the second quarter of 2019 has come to a close, Bay Area commercial real estate brokerage NAI Northern California has continued its expansion with an aggressive growth plan. President James Kilpatrick remarks, “We are well on track to top our total sales volume this year as we expand our team and continue to develop tech-forward strategies to serve our clients.”

NAI Northern California and its brokers were recognized both locally and nationally in the first half of the year. The brokerage was ranked as a Top Sales Firm by CoStar in both the San Francisco and East Bay/Oakland markets, and vice president Tim Warren was named a Top Sales Broker for his work in the East Bay/Oakland market. Investment advisor and rising star CJ Brill was awarded a scholarship for the International Council of Shopping Centers’ RECon conference in Las Vegas. The company’s top-producing agent for Q1 through Q2 was senior investment advisor Rudas Gebregiorgas, followed closely by Mary Alam, Grant Chappell, Alex Barker, Doug Sharpe, Joby Tapia, Tim Warren, Kent Mitchell, Jordan Geller, and Joshua Ballesteros.

The company expanded into the greater Silicon Valley area with the hire of Tod Rudee as Executive Vice President in San Jose. Tod brings nearly 30 years of extensive experience in commercial real estate strategy, transaction services, and brokerage performance management in Silicon Valley. His previous background includes leading the San Jose office as Managing Director for CBRE as well as management roles with Colliers International and Premier Properties. 

The majority of the company’s business was multifamily investment sales for Q1 and Q2. Notable sales included Joby Tapia’s $18 million sale of the Central Valley Homes Apartments, a 24-unit complex in Mill Valley; the Mitchell Warren Team’s $14 million sale of 44 units at 888 Vermont Street in Oakland; and the $11.3 million sale of the Terrace at Fair Oaks complex in Carmichael by Rudas Gebregiorgas and Grant Chappell.

For the first two quarters of 2019, single tenant NNN and multi-tenanted retail center sales were a close second. The $25 million in sales completed by the Mary Alam Team included a $6.7 million Walgreensa $3.8 million retail complex in Tracy, and a $3.65 million Regal Cinemas sold by the Mary Alam Team and Ganga Balebail.

Industrial and office properties rounded out NAI Northern California’s sales for the first half of the year. The most notable assets were a $12 million mixed-use development site in South Beach, San Francisco sold by Alex Barker; a $2 million office/warehouse building in West SOMA, San Francisco sold by the Geller Williams team; and a $2.5 million medical office redevelopment deal in San Jose sold by the Mary Alam Team. Vacant land and mixed-use buildings made up the rest of the properties sold by the brokerage. 

Commercial leasing is an increasing part of the company’s business, with leases to boutique and multinational businesses from a range of industries. Spaces leased by NAI Northern California during Q1 and Q2 ranged from 1,100 square feet to 35,000 square feet, for both office and industrial uses. 

Coming into the second half of the year, NAI Northern California has an aggressive growth plan and is currently hiring commercial real estate agents and senior investment sales advisors for all their offices (San Francisco, Oakland, and San Jose) as well as additional leadership roles for both their San Francisco and Oakland offices. Community outreach and volunteering efforts have also been a key component of company life with volunteer days at Project Open Hand in Oakland and San Francisco.

 

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 350 offices worldwide and over 6,000 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 10 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.

Transit-oriented development on the rise

Cities across the Bay Area are opening up to transit-oriented development, building high-density housing with ground-floor retail near BART stations, including on BART-owned land. Despite neighbor complaints, cities are revising their zoning restrictions to allow bigger buildings near major transit hubs.

Most of the development is happening in the East Bay, with completed projects near at least eight stations and more under construction including a 402-unit apartment complex at MacArthur Station with 13,000 square feet of commercial space; 94 units at Fruitvale Station; 200 units at Pleasant Hill Station; 410,000 square feet of commercial space at West Dublin/Pleasanton Station; and 596 units at Walnut Creek Station. Planned projects in Millbrae, West Oakland, Lake Merritt, North Concord/Martinez, Balboa Park, and Fruitvale total over 2,300 units and over 2 million square feet of commercial space.

As zoning codes begin to relax near transit, future development opportunities could open up, strengthening the local markets for existing multifamily buildings as well as retail and office assets.

Source: SF Chronicle

How are developers preparing for sea level rise?

The Bay is expected to rise up to 10 feet in the next 80 years; how are local developers protecting their waterfront projects? According to the SF Business Times, “With the right planning, project designs and innovative construction, new developments can not only survive the effects of climate change, but in some cases, can help protect the region from flooding and erosion.”

Depending on what changes the world makes (or doesn’t make) to slow climate change, California estimates that waters will rise 1.1 to 2.7 feet by 2050 and between 2.4 and 10.2 feet by 2100. Most developers and project planners aim to be ready for 2 feet of sea-level rise by 2050 and 6 feet by 2100.

One solution is to truck in dirt to raise the level of the ground before building; Brooklyn Basin, a master-planned community on Oakland’s waterfront, elevated the land 3 feet with this method, and it is also being used on Treasure Island. The Treasure Island development is also using the strategy of siting buildings farther away from the shoreline to allow room for future retaining walls or levies. Terracing is also an option; India Basin and Pier 70 in San Francisco are building homes on sites that already sit well above the water, even if it means they’re a little farther from the waterfront. A more back-to-nature approach is restoring the Bay’s wetlands and marshes, which absorb water and slow flooding.

New developments have many strategies to survive sea level rise, but it remains to be seen how older buildings and infrastructure can be protected. There are currently 48,895 homes in the Bay Area worth a total of $31.8 billion that are at risk of flooding due to sea-level rise, on 48 to 166 square miles of threatened shoreline.

Source: SF Business Times

NAI Northern California volunteers with Project Open Hand in Oakland

On Thursday, July 25th, NAI Northern California volunteered with Project Open Hand in Oakland. Ten brokers, staff, and members of management from both the Oakland and San Francisco offices worked at the Grocery Center repackaging pinto beans, black beans, and quick oats from their original bags into individual servings for sick and vulnerable people in the Bay Area. Project Open Hand’s program coordinator, Sharon Schrager, described the nonprofit’s origin during the AIDS crisis and their mission of providing healthy, nutritious meals to people with critical illnesses.

After the introduction, they put on their hairnets, washed their hands, and put on gloves (“In that order!”) Then they set up their work space and poured 50 pounds of pinto beans into a tub while Sharon put on a playlist of 80’s pop music to set the vibe. Two people pulled the bags for the individual serving off of the rolls they came on; two applied labels to the bags; three people measured out eight ounces of each item; two sealed the bags; and one counted the completed bags and moved them into crates. Rinse and repeat until all the beans are gone, and then load in 50 pounds of black beans, then 50 pounds of quick oats, then clean up. “A lot of the time the team was so focused that they wouldn’t stop for pictures!” said Danyn Oakes, the digital marketing manager for NAI Northern California. Their hard work, teamwork, and efficiency resulted in finishing over half an hour earlier than planned; repackaging 150 pounds of food (300 servings) only took the team about an hour and a half.

Despite the frenzy of activity, they still had fun, humming along with the music and laughing when they bumped into each other. Market analyst Trey Sells said, “Volunteering at Project Open Hand was a reminder how teamwork is fun, motivating, efficient, and helpful. I am glad there are resources like Open Hand to support members of our community.” Sourcer Travis Chu agreed, and was ready to keep going if they’d had more work to do; he said, “My experience with Project Open Hand was great. Although the workload was too easy, I enjoyed working with the team, creating bonding moments, and making small impacts to the community.”

Operations Services Associate Anna Guzman, who coordinated the event for NAI Northern California, said, “It was lovely to hear how Project Open Hand started from just one person cooking for those around her who were suffering from the AIDS epidemic. It goes to show you that just one small gesture can expand into greatness for others.”

“I thought it was a great experience,” said Samantha Schoneweis, a market analyst in the San Francisco office. “I didn’t realize that they aren’t necessarily a food bank but are dedicated specifically to educating around nutrition and feeding those with disabilities and illnesses. It’s so great that they’ve continued to operate in the Bay Area for almost 40 years now.”

In a thank-you letter from Project Open Hand, their program coordinator wrote, “The amount of hard work, energy, and enthusiasm your group brought was unmatched, and we so appreciate your generous donation of your time and service.”

See all the photos from the event on NAI Northern California’s Facebook page.

ABOUT PROJECT OPEN HAND

Founded in 1985, Project Open Hand is a nonprofit organization that provides meals with love to critically ill neighbors and seniors. Their food is like medicine, helping clients recover from illness, get stronger, and lead healthier lives.

Every day, they prepare 2,500 nutritious meals and provide 200 bags of healthy groceries to help sustain their clients as they battle serious illnesses, isolation, or the health challenges of aging. They serve San Francisco and Oakland, engaging more than 125 volunteers daily to nourish their community.

Learn more or sign up to volunteer at OpenHand.org 

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.

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

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.