Price Momentum Continues to Build for Commercial Real Estate

Latest CoStar Commercial Repeat Sale Analysis Finds Property Pricing Benefitting from Broad Recovery in Market Fundamentals

Kidder Mathews Assists Exchange Buyer in Burlingame Land Purchase

Address: 40 Edwards Court, Burlingame, CA

Seller:   RILCO-Edwards, LLC

Buyer:   North First Street Properties Management LLC

RBA SF: 11,000 SF building

Lot size: 3.53 AC (153,766 SF)

Selling price: $6,800,000 ($44.22/SF on land)

Type:   Land Investment

The purchaser was in a 1031 exchange.  The property is leased to several parking clients.

San Jose Home Depot Trades for $15M

Address: 635 West Capitol Expressway, San Jose, CA

Seller:   HDSJ, LLC

Buyer:   1988 Fiore Living Trust

RBA SF: 122,265 total

Lot size: 11.43 AC (497,891 SF)

Selling price: $$15,575,000 ($127.38/SF)

Type:   NNN Investment – Retail

This investment had 22 offers submitted from a variety of 1031 exchange buyers.  This transaction represents a 3.77% cap rate. Inks Largest Office Lease Deal in San Francisco History

Global Cloud Computing Company Signs 714,000-SF Prelease at Former Transbay Tower; 1.4 Million-SF Trophy High-Rise To Deliver in 2017

Valley Mechanical Purchases San Jose Office Building

Address: 1180 Coleman Ave, San Jose, CA

Seller: Joan Raznatovich

Buyer: The Lighthouse Family Trust dba “Valley Mechanical”

RBA SF: 10,1620 total

Lot size: 0.47 AC (20,639 SF)

Selling price: $1,650,000 ($146.62/SF)

Type: Class C Office

Owner/User purchase.

Industrial Upswing Will be Sharp

By Natalie Dolce exclusively chatted with three executives at Voit Real Estate Services throughout the Orange County-based firm’s western region on a recurring description that has emerged across most markets… “Slow and steady.”

Are markets improving? “Slow and steady.”

Are values rising? “Slow and steady.”

While economic fundamentals continue to improve in this same manner, the experts we spoke with say there is one sector of the market that appears to be outpacing the rest—industrial.

“We’re past the low point in the industrial market, and we’re on our way up,” explains Kevin Higgins, anEVP in Voit’s Las Vegas office.  “The good news is, the upswing will be very sharp.”

Higgins notes that even in Las Vegas, where recovery was slower than many other areas of the country, the industrial market is now demonstrating its resilience.

“Values are rising, and with healthy demand from tenants in the market, industrial investors are now willing to pay more for properties in Las Vegas than they were over the past few years,” he said.

With this willingness comes an increase in activity, according to Higgins, who said that investors are moving quickly to take advantage of ongoing low interest rates and the relative affordability of product in this market.

“New investors and investment companies have been entering the market, many from the Southern California marketplace, which is a strong driver for Las Vegas,” he explains.

In addition, Higgins notes that many large companies have emerged as buyers in Las Vegas, including Blackstone, Prologis, Oaktree, and Hines, among others.

“Confidence is growing throughout the industrial sector, which will contribute to the increasing speed at which the market will improve,” Higgins says.


Growing confidence is also evident among industrial tenants in the San Diego market, according to Randy LaChance, a SVP in Voit’s San Diego office.

LaChance explains that growth in the housing industry, as well as in niche industries such as craft brewing, is boosting demand for industrial tenant expansion in San Diego.

“Tenants are aware that the San Diego industrial market is in the process of converting to a landlord’s market,” he explains. “For that reason, many tenants are seeking out longer-term leases and working to secure industrial space now.”

LaChance notes that, based on the high cost and low availability of land, new industrial construction will be extremely limited in San Diego.

Read entire GlobeSt article here.

Medivation Inks Downtown San Francisco Lease Deal

Comparable details:

Address:  525 Market Street, San Francisco, CA

Landlord:  Invesco Realty Advisors

Tenant:  Medivation

SF Leased:  28,730

Pricing:  $contact us

Type:  Class A Office

Term:  -

This biopharmaceutical company will lease the entire 33rd floor of this 1M+ sq ft LEED certified building.


Paper Company Wraps up an Industrial Purchase in Union City

Address:   2975 Volpey Way, Union City, CA

Seller:    Citrus Coast Distributors

Buyer:   P&R Paper Supply Company

RBA SF:  60,080 total

Lot size:  2.90 AC (126,324 SF)

Selling price:  $5,500,000 ($91.54/SF)

Type:  Industrial-Warehouse

The building features seven loading docks with four Kelley Load levelators, heavy power, clear heights of 24 feet, fire sprinklers and skylights.   This was an owner/user purchase.

Kidder Mathews Q4 2013 Industrial Report

We’ve finally compiled the most recent numbers to end the year.  Here’s an excerpt from the report:

The San Francisco Peninsula industrial market continues to tighten as deals of all sizes were completed throughout the
fourth quarter of 2013. Absorption remains positive this year, increasing with larger deals occurring when compared to the previous quarter’s smaller transactions. From the start of the year, total deal velocity increased each quarter, with the largest of deals transacted towards the end of the year.

Vacancy on the Peninsula continues to decrease as demand remains strong, ending the quarter with a 5.9% vacancy rate. The fourth quarter of 2013 marked the fifth consecutive quarter in which vacancy has declined, recording ±290,000 square feet of positive absorption. As a result, rental rates are increasing, averaging $0.86 per square foot, NNN.


2014 is The ‘Year of the Distribution Center’ in U.S.

By Francys Vallecillo

The U.S. industrial market has been recovering for four years and is poised for a spike in demand, development and delivery, according to Jones Lang LaSalle.

The market has witnessed 15 consecutive quarters of positive net absorption, with last year marking a five-year high with 168 million square feet of net absorption. JLL forecasts this figure could top 180 million square feet in 2014.

“2014 is starting off with high demand from e-commerce and other users who are in the market for large, sophisticated space, and lots of it,” Craig Meyer, president of Industrial Brokerage at JLL, said in the report. “Modern space with proximity to population centers and a robust logistics infrastructure will dominate the industrial real estate sector in 2014.”

The national vacancy rate is forecast to reach a cyclical low of 7.5 percent in 2014.

Here are the four trends driving the market momentum highlighted in JLL’s report:

1. Demand is spreading into secondary markets: Tenant requirements for large, modern warehouse space to accommodate evolved distribution strategies and material handling processes outweighs supply in prime distribution hubs such as Los Angeles, Chicago and New Jersey. As a result, development will spill into markets with land ready for new construction like Phoenix and Indianapolis. Demand is already red hot in traditional distribution corridors, especially the Inland Empire, Dallas and Philadelphia / Harrisburg.

2. Build-to-suits are the new spec: 
 In 2013 half of all U.S. construction began with pre-leases in place. Underwriting criteria for big box space made true speculative construction difficult and many developers sought pre-commitments prior to ground breaking. This means today’s build-to-suits are less about special purpose buildings, or design-build-projects, but are more about kicking off semi-spec buildings.

3. Focus on rail: With the cost of trucking on the rise, developers and investors are focusing on markets with solid intermodal infrastructure in place such as Dallas, Columbus and Memphis. For the seaport markets such as Oakland and Miami there is a push to enhance on- and near-dock rail capabilities; Miami’s new rail system, for example, will give the port access to 74 percent of the U.S. population.

4. Growth driven by ‘clicks’ surpassing ‘bricks’:  A staggering 40 percent of big-box industrial requirements are correlated to e-commerce; a sector growing globally by 20 percent each year. As retailers develop new real estate models to support their omni-channel logistics models, they are looking at six primary types of warehouse space, ranging from mega-distribution centers to smaller delivery centers in urban areas.  In 2014, we expect to see demand for urban logistics centers to support same-day package delivery.

Article can be seen at World Property Channel here.


Get every new post delivered to your Inbox.

Join 158 other followers