555 Sutter Street, SF Changes Hands for $7.5M

Address: 555 Sutter Street, San Francisco, CA

Seller:   Brothers International Holding Corp.

Buyer:   Rich State – Arkansas Inc.

RBA SF: 20,765 SF building

Lot size:  0.14 AC (6,081 SF)

Selling price: $7,350,000 ($353.96/SF )

Type:   Office – Mixed Use

 

This building was approximately 50% occupied, with some storefront retail on the ground floor.  The Union Square submarket has been hot recently with a solid mix of residential, hotel, and office occupancy rates all remaining strong.

Essex Property Trust Purchases Downtown San Mateo Land for Development

Essex Property Trust (NYSE:ESS) purchased 1.2 acres of land on 5th Street in downtown San Mateo from the Sand Hill Property Co. in a step to develop the property.  The space is currently a parking lot situated between Central Park Plaza and the Central Park tennis courts and baseball stadium.  Essex plans on building a 117-unit mixed use building which promises to be the largest development in downtown in quite a while.  According to several sources, residents and business owners have voiced concerns especially considering the already-tight parking situation in downtown.  This article was posted back in January of this year detailing the development and the concerns:  “San Mateo Mulls Biggest Downtown Development Since 2003″.

Apparently Essex felt confident enough in their ability to overcome these concerns, since they purchased the land for $10,800,000 or approximately $206/per sq foot on the dirt.  San Mateo has certainly upgraded their image in the past decade with the introduction of “Theatre Way” in the heart of downtown and now the halfway-completed Bay Meadows project just south on the Caltrain track.

 

Kidder Mathews Q2 2014 Peninsula Industrial Report

Things continue to look good from a landlord/seller perspective as inventory reaches new lows and demand continues to drive prices and lease rates upwards.  SBA and conventional interest rates are certainly helping on the buy side of things.  Here’s an excerpt from the report:

The San Francisco Peninsula saw 606,574 square feet of positive net absorption this quarter, and 1,159,864 square feet of positive gross absorption. The industrial market continues to stay productive with deals of all sizes completed throughout the San Francisco Peninsula in the second quarter of 2014. San Mateo County experienced minimal occupancy losses as well, which is not due to a lack of demand on the Peninsula, but rather a shortage of quality available space.

Read entire KM report here:  industrial-market-research-peninsula-2014-2q

 

 

Kidder Mathews Q2 2014 San Francisco Office Report

San Francisco remains the hottest city in the nation for commercial real estate. The 714,000 s.f. Salesforce lease at 415 Mission Street (formerly known as Transbay Tower and renamed Salesforce Tower) signed during the second quarter is the largest office lease in San Francisco history. Massive pre-leasing deals such as this, along with continuing investment and redevelopment activity, show that both tenants and institutional investors still see value and potential upside in San Francisco despite the huge market gains of the past few years. It is clearly their belief that the market fundamentals are strong enough to support current rents and sales prices into the future.

Read entire report here:  office-market-research-san-francisco-2014-2q

KM Helps Ink Retail Ground Lease in San Jose

Comparable details:

Address:  2284 Monterey Road, San Jose, CA

Landlord:  RI San Jose, LLC

Tenant:  Taco Bell

SF Leased:  29,798

Pricing:  $3.59 /psf NNN

Type:  Retail – Ground Lease

Term:  180 Months

Tide of E-Commerce Lifts All Industrial

By Paul Bubny

E-commerce is already dominating the conversation when it comes to industrial real estate development. However, a white paper from Prologis makes it clear that we ain’t seen nothin’ yet.

“Forecasters, such as Goldman Sachs, anticipate that online sales will continue to rise at double-digit rates for the foreseeable future,” according to the Prologis report, titled “Inside the Global Supply Chain: E-commerce and a New Demand for Logistics Real Estate.” McKinsey andForrester Research, among others, have estimated that the online share of the retail sector “will rise to the mid-teens during the coming decade, up from less than 10% today,” the report states. “We see several themes emerging that will shape e-commerce and logistics real estate for the foreseeable future.”

One of these themes is organization. “As aggregate e-commerce demand comprises the constituent e-commerce companies, considering decision-making of individual customers provides a roadmap for the future,” according to the Prologis report. “High industry growth suggests to us that distributors will increasingly favor facilities proximate to their end customers.”

We’re also likely to see a wave of industry growth and cannibalization. “High top-line industry growth is a positive, but we also observe that e-commerce customers use the space differently and more intensively; they need more space as traditional retail activities are consolidated into logistics facilities,” the report states. To cite one metric, the report notes that while a brick-and-mortar retailer with $1 billion in annual sales would require about 300,000 to 350,000 square feet of logistics space, the online merchant with similar sales volume needs upwards of one million square feet.

There’s also the specter of obsolescence. “In our view, most e-commerce customers adapt to traditional logistics facilities, rather than require extensive specialized configurations and improvements,” according to Prologis. “On the margin, we see a greater emphasis on high-quality space, including superior infill locations, higher ceiling heights and lower coverage ratios (in Europe and the US)—collectively, themes we also see among our non-e-commerce customers.”

Already, says CBRE Group, demand from both traditional and online retailers is putting a strain on the supply of available class A logistics product. Developers have been aggressive in lining up build-to-suit deals and breaking ground on approximately 45.7 million square feet of speculative development. However, given the 30 million square feet of active e-commerce requirements, and with demand likely to remain strong over the next few years, CBRE doesn’t see supply catching up with demand anytime soon.

Read entire GlobeSt article here.

Google Leases 240,000+ SF in San Francisco

Internet Technology Company Inks Deal at Spear Street Tower

San Jose Warehouse trades for $75/psf

Address: 210 Phelan Ave, , CA

Seller:   Griffoul Living Trust

Buyer:   R&C Brown Associates

RBA SF: 42,000 SF building

Lot size: 1.44 AC (62,726 SF)

Selling price: $3,150,000 ($75.00/SF )

Type:   Industrial-Warehouse

 

Kidder Mathews represented the Seller in this transaction.

Maryland based ASB Capital Adds 989 Market Street to Portfolio

Address: 989 Market St, San Francisco, CA

Seller:   Harbert Management Corp

Buyer:   ASB Real Estate Investments (ASB Capital Management)

RBA SF: 111,497 SF building

Lot size: 0.38 AC (16,552 SF)

Selling price: $61,250,000 ($549.34/SF )

Type:   Class A Office

989 Market Street is located near the intersection of Market Street and 6th Street in San Francisco’s Mid-Market corridor. Completed in 1908, this historic, six-story office building underwent renovations from 2011 to2013 and is 94 percent occupied. Current tenants include two industry-leading technology companies, Zendesk and Zoosk, and the ground floor retail space is occupied by national retailer Blick Art Supplies.

Kidder Mathews Assists Group in San Jose Warehouse Deal

Comparable details:

Address:  2086 Zanker Road, San Jose, CA

Landlord:  Prologis

Tenant:  Business Resource Group Inc.

SF Leased:  42,805

Pricing:  Call for pricing

Type:  Industrial – Warehouse

Term:  54 Months

 

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