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Remember years ago when homeowners were selling high priced homes in the San Francisco Bay Area and moving in droves to the Sacramento region? Well, get ready for the next way!
A recent Bloomberg article suggests that San Francisco is currently the hottest office market in the country, as indicated by the pending sale of a 10-story office building for $800 per square foot in SOMA (South of Market Area), a submarket where rents are up 22% over the past year. This would be the City’s highest selling price for an office building since the commercial real estate market peaked in 2007.
Follow my logic here… Bay Area jobs are coming back in a big way, led by robust increases in the technology industry. Most of these young workers, in their 20’s and 30’s, are seeking multifamily rental housing. As a result, rental demand for apartments in cities like San Francisco and San Jose is going through the roof with 2012 forecasted vacancy rates of +/- 3%. Not surprisingly, Marcus & Millichap reports that San Jose and San Francisco have taken the # 1 and # 2 spots in the National Apartments Index, behind # 3 New York.
What follows next? Well, multifamily property values are on the rise in the Bay Area with compressing investor yields (cap rates), suggesting investors will soon be looking to nearby markets for better investment returns. Given the Sacramento area was hit so hard with housing foreclosures, many people have been forced to rent apartments, which is driving region-wide multifamily vacancies below 5% in 2012.
The number of new multifamily listings for apartments in the greater Sacramento is most certainly on the rise. Here on the ground, it feels like we may have it bottom late last year in terms of apartments sale price per unit. Demand should increase from here, along with upward pressure on both rents and sale prices.
To give you an idea… an 11 unit REO apartment complex sold in South Sacramento on 6/30/11 for $34,000 per unit to a value add investor at 9.9% cap rate. The property was 91% vacant at the time and in terrible physical condition. Over the next six months, the investor rehabbed units, replaced patio decks, painted the entire property, and leased up the 10 vacant units at market rents.
After a turnaround period of only six months, this property is now back on the market with an asking price of $67,000 per unit (8.1% cap rate). Notice this cap rate is even stronger than a recent sale just two blocks away, which closed on 11/1/11, where East West Commercial Real Estate brokered the sale of a stabilized 14-unit apartment property to a foreign investor at 8.5% cap rate ($62,500 per unit). See video.
All signs are positive that Sacramento has entered a period of slow steady growth with support from nearby Bay Area influences. Now is a great time to consider investing in multifamily housing and apartments for sale while prices are still attractive.
For more information, contact Brian Jacks (916) 837-3456, Vice President and Northern California Regional Director for East West Commercial. Brian specializes in investment sales for multifamily housing and apartments throughout the greater Sacramento area. He is also proud to announce the addition of several new commercial real estate agents in the Bay Area, serving commercial and multifamily investors, landlords and tenants in the cities of San Francisco, Walnut Creek and San Jose.
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Email – Brian.Jacks@EastWestCommercial.com
East West Commercial – Professional commercial real estate expertise with offices in Sacramento, San Francisco, San Jose, Walnut Creek, Los Angeles, San Diego, Orange County, Riverside, and San Bernardino — commercial real estate, investment property, apartments for sale, office for sale, industrial for sale, retail shopping center for sale, 1031 exchange, commercial real estate REO’s, nationwide commercial BOV’s, nationwide commercial broker price opinion BPO’s, lender services, nationwide commercial BPO’s, asset management.
Visit our websites at:
http://www.EastWestCommercial.com
Sacramento, CA – As one of the hardest hit regions in the country, due the housing meltdown, Sacramento area apartment owners have been welcoming displaced homeowners in droves. Apartment communities have long been the safest commercial real estate investment class, since people always need a place to live no matter how bad the economy…. but consider this next fact for even more emphasis. As of 3Q11, Sacramento metro vacancies were reported at 12.4% (retail), 12.9% (industrial), and 19.8% (office). On the other hand, Sacramento metro apartments were reported at only 5.4% vacancy during the same period… after falling from 7.1% a year prior (3Q10). Plus, due to the compressing vacancy rates, apartment owners have been able to increase rents an average of 2.2% over the past year. With all this positive news, which asset class would you prefer to own right now?
Article contributed by Brian Jacks http://www.linkedin.com/
Data Source: Marcus & Millichap 3Q11 market update http://www.marcusmillichap.com/
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Asset Management / REO Brokerage Services
For more than two decades we have provided extraordinary service to assist our clients in disposing of and purchasing real estate assets in the California marketplace. East West Commercial Real Estate specializes in assisting lenders sell their special assets / ORE across multiple asset classes: apartments, retail, office and industrial.
East West Commercial Real Estate is pleased to announce that Ryan Misaresh, LEED AP represented LD Entertainment in the lease of Class A office at Mani Brothers’ 9000 Sunset building in West Hollywood. LD leased 6,878 square feet, in a four year deal, which represents nearly a full floor of the building. After undergoing a recent full remodel, 9000 Sunset is positioned as one of the premier entertainment office buildings in the “Entertainment Capital of the World.” Possessing a strong understanding of LD Entertainment’s needs and dynamic business model was essential in finding the proper fit for this rapidly growing production and distribution company, whose recent releases include the blockbuster action film “The Grey” with Liam Neeson, as well as “Biutiful,” “I Love You Philip Morris,” and “The Collector.”
This top rate space with sweeping 270 degree views of the Los Angeles basin was a match made in heaven between LD’s rise to prominence which now warrants a top rate office environment, and a landlord in a position to provide it, with minimal TI’s, in the heart of the creative capitol of the world.
Built in 1963 and featuring 144,802 square feet, 9000 Sunset is owned and managed by Mani Brothers and was represented by Greg Camacho of Camacho Commercial.
Ryan Misaresh is a Los Angeles commercial real estate broker specializing in lease and investment transactions for retail, shopping centers, multi-family and mixed use properties. Mr. Misaresh is part of the firm East West Commercial Real Estate, a commercial real estate services company with offices throughout California including, Los Angeles, San Francisco, San Diego, San Jose, Orange County, San Jose, Sacramento, Oakland, and Walnut Creek. East West Commercial Real Estate provides brokerage and asset management services for retail, shopping centers, office, industrial, apartments, medical office, self storage, senior housing, and hospitality. For more information, contact Ryan Misaresh at 213-309-3279 or Ryan.Misaresh@EastWestCommercial.com or http://www.eastwestcommercial.com/
Commercial BPO Time Management Process
www.REIClub.com – What Is Commercial Real Estate Investing? Here’s A Quick Video On The Many Types of Investments And Their Benefits. Hi, this isFrank Chen with REIClub.com, the only site you need as a real estate investor. Today I’ve got quick video on the many types of commercial real estate and some quick benefits to each. TYPES OF COMMERCIAL REAL ESTATE – Multi-Family Apartment Buildings – Self Storage – Mobile Home Parks – Retail Space – Office Buildings – Industrial, Manufacturing and Warehouses – Land Development – Hotels and Resorts – Health Care Facilities DIFFERENCES BETWEEN COMMERCIAL AND RESIDENTIAL – VALUATION – Residential: Purchase – land value and property value, Rent – FMR – determined by area – Commercial: Purchase – determined by income potential, Rents are determined by $/sq.ft, demand vs. supply – FINANCING – Residential: Smaller deposit, 100% loan to purchase, lower rates, but not as easy to get seller financing – Commercial: 30% deposit, higher rates, but better chance of leveraging – seller financing or using OPM. – RENTAL COMMITMENT – Residential: 1 year with option to renew, tenant quality fluctuates, vacancies hurt – Commercial: 3-20 Years, annual rent increase, better tenants, more flexibility with vacancy – MANAGEMENT – Residential: Most of the time YOU are the manager, time consuming, not budgeted for management – Commercial: Property management expenses built right into the valuation of property, professional companies to manage the building …
Bank Owned / REO Commercial Real Estate Land, Orange County, CA
This Bank Owned / REO 5,040 square foot available parcel is rectangular shape. Various commercial real estate uses — retail , shopping center, office uses. The land benefits from approximately 42′ of frontage along West 1st Street, and approximately 118 feet on North C Street. First Street is a major commercial thoroughfare in Tustin which is close to the 55 Freeway and Interstate 5.
The land is flat and is ready for development.
155 West 1st Street Tustin, CA 92780
Northeast Corner of West First Street and North C Street
In the hub of business activity for the City of Tustin
Close proximity to Freeways 5, 55, 22, 57
Within 10 minutes to County of Orange offices and the Anaheim / Irvine Business and Industrial districts
REO Bank Owned Commercial Real Estate in San Bernardino County for Sale
This bank owned commercial property consists of a single story building within the city of Ontario. This 8,552 square foot commercial real estate property is priced to sell. Uses include: childcare facility, school, day care, church, special use. The subject was built in 1965 and was used as a daycare facility. The improvements are wood frame construction, with painted stucco exterior, and a built up composition roof. The HVAC equipment is located on the roof of the improvements.
540 W. Maple St. Ontario, CA 91762
The subject property is approximately 0.9 miles north of Hwy. 60 and 3 miles south of Interstate 10.
Closest cross streets: S. San Antonio Ave. and W. Francis St.
Located in a residential community across the street from an elementary school
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www.reit.com Commercial real estate trends and issues that were prevalent in 2011 will continue into 2012, according to Steve Hentschel, managing director and head of Real Estate Banking, Gleacher & Co. In a video interview with REIT.com at REITWorld 2011 NAREIT’s Annual Convention For All Things REIT in Dallas at the Hilton Anatole hotel in November, Hentschel discussed sector fundamentals and recovery. He said that topics including global economic uncertainty, sovereign debt issues, nervous investors and market volatility, will continue into the New Year. When it comes to REITs specifically, Hentschel said one of the trends from 2011 that will carry over into 2012 is the trend of REITs owning core real estate. “People are looking for safety and want to own the highest quality assets,” he said. “There will be a continued emphasis on major market 24/7 cities that have global appeal.” In terms of trends that will be different, Hentschel pointed to leverage. He said that currently there’s too much of a penalty for REITs with high leverage. “The pendulum has swung a little too far in the other direction, so I think that gap will close,” Hentschel said. He added that there’s going to be more of a focus on debt maturities schedules and less focus on the absolute level of leverage. “Another thing that’s developing is that we are watching more private capitol become frustrated with the low cap rates in high quality assets. The spread has just tightened too much,” Hentschel said …