Posts

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.

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.

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

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

 

What are San Francisco’s plans for Mid-Market?

 Mid-Market’s vacancies, stalled developments trigger plants to activate dormant sites.

Stalled developments have meant boarded-up walls, vandalism and empty storefronts have become all too common along the upper stretch of Market Street. The city is hoping a new type of temporary permit will spark change.

Read more on NAI Northern California’s newsletter

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.

 

How would San Francisco’s proposed fees on empty storefronts affect retail and mixed-use properties?

This week the San Francisco Board of Supervisors will vote on whether to require owners of vacant storefronts unoccupied for more than 30 days to register their properties and pay an annual fee. This is one of the proposals they are considering to get a better idea of and start to remedy the glut of unused storefront space around the city.

Read more on Curbed San Francisco

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

 

Lucca Ravioli building asks $1.45M

Famed Valencia Street cornerstone for sale in triple-building package.

The building that for nearly a century housed Lucca Ravioli Company on Valencia Street is, as anticipated, up for sale. It’s part of a three-building package along with the two related buildings, all stuffed with a price tag of more than $8.28 million.

According to to the official history of Lucca Ravioli, the Italian goods store opened its 1100 Valencia Street locale in 1925 (18 years younger than the circa-1907 building it occupies), a family owned-institution that has endured through booms, busts, world wars, depressions, and the ever-changing character of the Mission District.

But as Eater SF reported in January, the neighborhood received shocking news that Lucca Ravioli will sell its last batch of tagliarini on April 20.

According to the San Francisco Chronicle, no one will take over the family business once 50-year proprietor Michael Feno retires. The sale of the off-the-market building will certainly finance quite a retirement in today’s market.

1100-1118 Valencia St. is presented for sale by Jordan Geller and J.B. Williams of NAI Northern California. Click here for more details on this listing.

 

Read more at Curbed SF