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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

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

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

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

How are Tech IPOs affecting Bay Area Housing?

How upcoming tech IPOs could affect the Bay Area housing market.

Last week, San Francisco-based ride-hailing startup Lyft finally filed to go public – the first of what is expected to be a number of area startups (such as Uber, Slack and Pinterest) that could be making the leap from the private market this year. To understand what this means for those living and working in the Bay Area, I talked to a couple of people in the real estate industry to get their thoughts. The short answer: The IPOs will almost certainly impact inventory and pricing.

Read more on NAI Northern California’s Newsletter

Tina Qi joins NAI Northern California as Investment Advisor in San Francisco

Expert in residential real estate joins the team in San Francisco

NAI Northern California is pleased to announce that Tina Qi has joined as Investment Advisor in San Francisco to focus on residential real estate. Tina brings over nine years of experience, working side by side with developers in getting their residential projects ready for sale. Tina handles everything from DRE Public Reports to working with attorneys and the city government in drafting legal documents necessary for CC&R and Bylaws, and ultimately selling the finished products. In the past few years, she has been increasing her business in land acquisitions and commercial transactions.

 

Is Bay Area housing still a sizzling hot housing market?

Even cool, Bay Area housing market is still hot.

The San Jose housing market has cooled more than any other in the country — and it’s still the hottest in the nation, according to a recent Zillow survey. The bidding wars and quick cash sales have abated, and home sellers are cutting prices more often and waiting longer to close deals than a year ago. But middle-income families still struggle to afford the median-priced home of $1.2 million in the San Jose metro area. A typical family needs to put about $600,000 down to fit that mortgage comfortably in their budget.

Read more on NAI Northern California’s Newsletter

 

 

How are there over 100,000 vacant homes in the San Francisco metro area?

An estimated 100,025 homes are sitting empty in the San Francisco metro area.

Compared to other cities, San Francisco metro area’s vacancy rate is actually low at 5.6 percent. Of the 1.784 million households counted in the census region, roughly 1.684 million are occupied. LendingTree concludes a region like San Francisco – which includes Oakland, Hayward and surrounding areas is what’s considered a sellers’ market, meaning people selling their homes will easily find buyers, while future homeowners will struggle to buy. Anyone who has tried to buy a home in the city in the last decade knows this to be true.

Read more on SF Gate

Jonathan Kelly joins NAI Northern California as Senior Investment Advisor in San Francisco

Specialist in residential real estate and technology industries joins the team in San Francisco

NAI Northern California is pleased to announce that Jonathan Kelly has joined as Senior Investment Advisor in San Francisco to focus on multifamily investment properties. Jonathan uses his entrepreneurial mindset to develop creative products and solutions for his clients, and spends his free time analyzing market conditions and evaluating potential properties.

 

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.