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Market Pulse: North Bay, August 2019

Welcome to NAI Northern California’s “Market Pulse” feature. We checked the pulse of the North 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 August 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 holding flat, with 12-month net absorption down at 127,000 sq. ft. of office space. Approximately 17.2 million sq. ft. are under construction with an upward trend. The vacancy rate is at 7.4 percent and expected to drop.

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 231,000 sq. ft., and the space under construction is also rising, at 1.1 million square feet. The vacancy rate is at 3.4% and holding steady.

There are 65.6 million sq. ft. of retail space available and rising, with a 12-month net absorption rate at 113,000 sq. ft. (a decreasing trend). More is being built, though, with 72,000  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 52 units across the North Bay area and is dropping. Construction is on the upswing here, at 557 units, with a rising vacancy rate of 5.4%.

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, August 2019

Welcome to NAI Northern California’s “Market Pulse” feature. We checked the pulse of the South 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 August 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 2.7 million sq. ft. of office space. Approximately 6.2 million sq. ft. are under construction with an upward trend. The vacancy rate is at 8.3 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 844,000 sq. ft., and the space under construction is also rising, at 771,000 square feet. The vacancy rate is at 5.7% and trending downward.

There are 79.9 million sq. ft. of retail space available and dropping, with a 12-month net absorption rate of 78,000 sq. ft. (a decreasing trend). More is being built, though, with 1 million sq. ft. under construction. Vacancy rates continue to drop, at 3.3%.

The multifamily market is holding strong, up to 144,000 units available in the inventory. The 12-month net absorption rate is 2,500 units and rising. Construction is on the upswing here, at 1,000 units. The vacancy rate is at 4.3% and dropping.

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.

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.

Which Bay Area neighborhoods are at risk for a major earthquake?

Earthquake map reveals liquefaction risks in Bay Area neighborhoods.

No place in the Bay Area is safe when it comes to the inevitable, devastating earthquakes that loom on the horizon. But some neighborhoods are better situated than others.

Read more on NAI Northern California’s Newsletter

Stanford Shopping Center wants to tear down a Macy’s store to make room for luxury retailers

The Macy’s Men’s store at Stanford Shopping Center could soon be replaced by retail heavyweights.

Simon Malls, the mall’s operator, proposed tearing down and replacing the 94,337-square-foot building with a Restoration Hardware and a Bashford luxury retailer, the Palo Alto Daily Post reports.

The men’s department store would be then merged into the shopping center’s main Macy’s store, Simon Malls Spokeswoman Solana Tanabe told the post.

A three-story, 43,581-square-foot Restoration Hardware store would reportedly take over the direct location, with a one-story 28,000-square-foot The Wilkes Bashford shop built on the nearby parking lot between Sand Hill Road and Pistache Place. Simon Malls is also looking to construct two 3,506-square-foot buildings as part of the plans.

Simon Property Group bought the mall from Stanford University back in 2003 for $333 million, though it still leases the land from the university. The surrounding region —  which includes Palo Alto, Menlo Park, Woodside and Atherton — is prime for luxury stores, with Stanford’s median home value estimate is just of $3 million, according to Zillow.

Restoration Hardware reportedly will be designing its building to include a rooftop restaurant and garden, as well as second-floor terraces. Simon Malls also has an alcohol permit in the works.

 

Read more at San Francisco Business Times

 

Could anti-price gouging laws slow rising rents in California?

California lawmakers are exploring new ways to limit skyrocketing rents.

Crooning in the shower is not Chad Regeczi’s thing.

That’s why when he learned last year his monthly rent would go up $300 so the new owners of his La Mesa apartment in San Diego County could upgrade his bathroom with a sound system, he was bemused.

“300 bucks!” he said. “I mean an iPod costs less than that. Everybody has got a phone now. Who needs a Bluetooth speaker in a bathroom apartment? It’s just weird.”

Regeczi, a VA employee, said the 30 percent rent increase didn’t match the condition of his apartment. But he felt powerless to challenge his landlords on the hike.

“Who’s gonna tell them no?” he asked. “There are no rules to how much your rent can go up.”

That may change. Talk is underway about putting a law on the books that would bar California landlords from raising rent beyond a certain percentage.

Oakland Mayor Libby Schaaf said in November the rule would mimic limits on what businesses can charge during natural disasters.

“When there’s a fire, you pass an anti-rent gouging ordinance,” Schaaf said. “The state has a fire. It’s called the housing crisis.”

Rents are surging in some California cities where there is no rent control by double, even triple digits, according to mayors and tenants rights advocates.

And more than half of the state’s renters pay more than a third of their income on housing, according to the California Budget & Policy Center. And a third of renters spend more than half of their paycheck on a place to live. The real estate firm Zillow reported last month that communities where people pay more than a third of their salary on rent, see a faster rise in homelessness.

 

Read more on East Bay Times

 

 

Neighbors rise against plan to replace Red Cottage Inn with bigger hotel

Owner wants to tear down small hotel for Hampton Inn with three times as many rooms in Menlo Park, but residents call it too massive.

The owner of a Menlo Park hotel who wants to replace it with three times as many guest rooms is facing fierce opposition from a neighborhood group that threatens to appeal the project if the city approves it.

Sagar Patel, who owns the 28-room Red Cottage Inn at 1704 El Camino Real near the Atherton border, said his proposal to raze the hotel and build a taller, 68-room Hampton Inn in its place checks off all the city’s approval boxes. He’s also made a number of concessions sought by nearby residents, such as better screening for privacy, after meeting with them over the past 16 months, he said.

“I was under impression that we meet (Downtown) Specific Plan requirements and that’s the holy grail,” Patel said. “Not only did we meet them, we exceeded them.”

Residents say they aren’t pleased because after Patel came forward with a proposal in the spring that would have placed all parking underground and set back the building 36 feet from their homes, he later scrapped it saying the concessions would be too costly and without warning, presented a different plan to the Planning Commission during an October study session.

In the latest proposal, parking would be at ground level and setbacks reduced to 10 feet.

“He decided he couldn’t afford underground parking and he changed everything,” said Deborah Melmon, a member of Park Forest Plus, the group opposing the new hotel.

Melmon said the current proposal places the edge of the three-story building 17 feet from her master bedroom window and living room on Buckthorn Way.

“He’s gone from a hotel that a lot of time and effort was spent on trying to compromise with the neighbors … and suddenly changed it up on us,” she said. “If the Planning Commission votes to approve the plan, we’ll appeal it; if it doesn’t, he will. Either way it’s going to end up at the (City) Council.”

Patel said he is tweaking the proposal to possibly put the parking back underground, though in a less expensive fashion, before going back for possible approval in February.

 

 

Read more on The Mercury News

 

 

Bay Area tops U.S. in new office space, but lags in housing starts

 The Bay Area is a hot place to build cubicles, conference rooms, and office suites. But don’t look for as many hammers pounding out new homes, condos, and apartments.

The region is expected to open 18.2 million square feet of office space in 2018 — tops in the nation and more than New York City and Dallas combined — while home, condo and apartment building has grown only modestly.

More work space, more jobs and more people chasing a limited supply of homes is expected to add more steam to the pressure cooker of the Bay Area housing market.

“It’s encouraging that so many respected employers are investing in Bay Area jobs and immigration growth” said Carl Guardino, CEO of the business-backed Silicon Valley Leadership Group. “But we all recognize that jobs need a place to go home and sleep at night.”

The region created six times as many jobs as housing units between 2010 and 2015, according to a study by the leadership group and the Silicon Valley Community Foundation. The increased housing pressure has forced lower-income workers out of the region at much faster rates than higher paid workers, even as jobs go unfilled.

The run up in commercial development is led by major office openings in the South Bay, according to a survey from real estate data company Yardi Matrix. The big projects in 2018 include the official, complete opening of the 2.9 million square foot Apple Park in Cupertino, Park Tower at Transbay and The Exchange on 16th in San Francisco totaling 1.5 million square feet, and Facebook’s MPK 21, a half-million-square-foot campus designed by Frank Gehry in Menlo Park.

Other major developments underway include the Voyager property developed by Nvidia in Santa Clara, Microsoft and Google projects in Mountain View, the Stoneridge Mall Road project in Pleasanton, and Moffett Towers in Sunnyvale, according to Yardi Matrix.

The real estate data firm estimates that commercial openings in Santa Clara County are up 6.5 percent over the same period last year. The San Francisco and Oakland metro has seen three times as much commercial space open up this year compared to last year.

 

 

Read more on The Mercury News