Median Home Values in San Francisco Hit $1M Mark in April as Single-Family Housing Heats Up

By Alex Girda, Associate Editor

There is good news for the area’s housing market, as a recent report from the San Francisco Association of REALTORS indicates that prices have escalated and are now reaching new heights. The SFAR has revealed that according to sales data from April, San Francisco’s median home prices have now surpassed the $1 million mark—a staggering increase from 2012 and a return to pre-downturn levels.

The San Francisco Association of Realtors has announced that, when compared to the same timeframe in 2012, April 2013 has seen home prices rise by 31.6 percent. The supply of available single-family homes was down by 40 percent compared to last year. There is currently 1.1 months’ supply of homes for San Francisco, with normal values being somewhere around the five or seven-month mark.

A home only stayed on the market for an average of 28 days last month—a massive 43.5 percent less than the 49 days homes had to stay on the market before trading in April 2012. Condo unit prices also went up in April, as they reached their highest point of the last two years. The average price paid for a condominium in San Francisco in April reached $850,000.

According to SFAR President Christine Dwiggins, the high sales prices were due to “shrinking inventory combined with low interest rates and motivated buyers.” She also stressed the importance of potential buyers working with a qualified professional “more than ever if they hope to reach their dream of home ownership in the Bay Area.”

Image courtesy of user SanjibLemar via Wikimedia Commons

Joint Venture Holds Feng Shui Groundbreaking Ceremony for Sunset District Development

By Alex Girda, Associate Editor

A new residential community is set to debut later this year in San Francisco after a joint venture recently held a groundbreaking for a new development in the Lake Merced area. The joint venture, consisting of Maracor Development and Comstock Homes, is building a suburban-style residential project known as Summit 800 in a submarket that has not seen new housing for quite some time. The development will cater to homebuyers interested in new projects in the San Francisco Bay Area.

Located in the city’s Sunset District, Summit 800 is unique due to its suburban sensibilities, and should it prove a success upon opening in the fourth quarter of this year, this type of endeavor could be replicated in other areas of the country that are in need of new housing stock.

The 182 homes will be built on a site owned by equity partner Real Capital Solutions. The 7.7-acre lot was acquired by the company earlier this year. According to the San Francisco Business Times, U.S. Bank is providing financing for the project, while marketing duties will be handled by Polaris Pacific.

The groundbreaking ceremony was held in the presence of feng shui consultant Deborah Gee, who conducted a traditional feng shui blessing of the site. The ceremony is set to bring success to both the community and its residents. The ancient Chinese tradition of feng shui deals with restoring energy and encouraging positivity, prosperity and synergy.

The team of developers was obviously set to hammer home the idea of positive energy for the project, as special attention was also given to trees at the site. Set to be removed during the construction process, the trees were also blessed in the traditional feng shui manner in order to ensure that the area’s energy will not be disrupted. The ceremony strengthens the sense of care that the developers are displaying in relation to their newest and most intriguing venture.

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CIM Group Acquires Creative Office Building in Strong SoMa Submarket

By Alex Girda, Associate Editor

CIM Group, a company dealing with real estate and infrastructure investment, has recently announced the expansion of its commercial portfolio following the acquisition of a creative office building in San Francisco. The entity has moved on the market for a low-vacancy property located in one of the city’s hottest submarkets—the SoMa District. CIM acquired the 330 Townsend property for an undisclosed sum, as it increases the number of assets it owns in the blossoming district.

330 Townsend is a creative office property with an occupancy rate of 98 percent, in keeping with the area’s high average rates. The building is also located in close proximity to the CalTrain San Francisco Station, as well as the currently under-construction Central Corridor transit line.

Besides having zoning in place for additional development, in conformity with the West SoMa Community Plan, the newly acquired property is also within the city’s Central Corridor planning district, an area which is currently seeking new development guidelines. This could mean that current land uses and building heights may be adjusted in the near future, as well as an overall plan to turn the area into a more pedestrian-friendly one.

CIM Group also owns 260 Townsend and 211 Main Street, both of which are also located in the SoMa District. The two properties are Class A office buildings that currently boast 100 percent occupancy.

San Francisco’s office vacancy rates dropped in the fourth quarter of 2012, according to commercial real estate data provider Marcus & Millichap Real Estate Investment Services. The city’s office sector has outperformed the national rates over the past four years, and as the overall market seems to bounce back, San Francisco is expected to continue its positive evolution as well.

Chart courtesy of Marcus & Millichap Real Estate Investment Services at marcusmillichap.com

New Wood Partners Transit-Oriented Community Breaks Ground in San Mateo

By Alex Girda, Associate Editor

The Bay Area is set to see even more apartments hit the market in the near future as developer Wood Partners recently broke ground on a new community in San Mateo. The company is reportedly investing a total of $43.7 million in its new apartment project, one that will be focused on improving the current transit-oriented residential stock for the area between San Jose and San Francisco.

With the number of jobs in the tech sector being in constant growth, demand for housing in the San Francisco Bay Area is also rising, and Wood Partners is looking to seize the opportunity.   

Set to take shape on a 2.4-acre site at 2090 S. Delaware St., the 111-unit apartment community has begun construction with a spring 2014 deadline in sight. The complex will be located in the immediate proximity of the Caltrain Rail Line, thus providing potential renters with easy access to large job centers to the north and south. Post-completion, the project will generate five management jobs and approximately $395,000 in annual tax revenue.

The project will consist of two three-story residential buildings and will offer residents an amenity package that will include a fitness center with yoga, common lounge and club room, as well as expansive amenity decks. Units will feature floorplans of one-, two- and three-bedrooms and will have an average size of 970 square feet. In-unit features include hardwood floors, stainless steel appliances and solid surface countertops.

Located in San Mateo, the community will be in the vicinity of major companies that employ large numbers of people in the area such as Oracle, Visa, Sony, Franklin Templeton Investments, Salesforce and Gilead Sciences. Shopping spots in the area are easily accessible in downtown San Mateo and the Hillsdale Shopping Center.

Image courtesy of Google Maps

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115 Sansome Street Building Acquired by Harvest Properties, Set for Conversion to Creative Space

By Alex Girda, Associate Editor

115 Sansome Street, a prominent corner office building located in the city’s budding North Financial District, was recently acquired by a commercial real estate company. The new owner is Emeryville-based Harvest Properties, a firm specializing in investment and development. The trade was arranged by Tony Crossley and Tim Maas from Colliers International, the brokerage in charge of the listing. The value of the transaction was not disclosed by the buyer, who will also be taking over as property manager for 115 Sansome.

Designed at the end of the 19^th century and completed in 1912, the century-old structure still bears many of its original architectural features, including copper trimmed operable windows. Its ornate jewel box lobby, high ceilings, vintage design elements and generous frontage on Sansome Street, Bush Street and Treasury Place complete the 15-story office building’s unique charm. The building offers a total of 128,838 square feet of office space, as well as one penthouse unit.

Harvest Properties will now carry out extensive renovations that will strip the building of its existing, more traditional tenant improvements. The company will then work with architecture firm Hooks ASD and contractor RN Field to highlight the building’s strong suites through new creative office space. The new owner is betting that such a property in a location like San Francisco’s North Financial District would be a welcome alternative to Class A office space or commodity space.

Harvest Properties’ founder and Managing Partner John Winther also mentioned that “the building’s 9,000-square-foot floor plates subdivide well for small- to mid-sized tenants—perhaps appealing to the start-up, high-tech or younger companies interested in an open workspace environment with a retro feel and a great address.”

With its activity now spanning more than a decade, Harvest Properties deals with acquiring, developing, managing and financing commercial property, primarily through joint-venture investments in northern California, making its acquisition of 115 Sansome Street and its future plans for the property a perfect fit for the company’s business model.

Image courtesy of user 115 Sansome Street via Facebook

Walnut Creek Apartment Portfolio Trades Hands for $64.3 Million

By Alex Girda, Associate Editor

A multifamily portfolio recently traded hands in the city of Walnut Creek after the completion of a deal made between seller JB Matheson and new owner Interstate Equities Corporation. Arranged by Marcus & Millichap’s multifamily brokerage division, Institutional Property Advisors, the deal includes three different apartment buildings located in Walnut Creek—the main business and entertainment hub of Contra Costa County. The fee that IEC paid for the residential portfolio stood at $64.3 million, according to a press statement issued by IPA.

The three apartment complexes were built between 1962 and 1964 and offer a combined total of 358 apartment units. The properties are Carmel House, located at 1756 Carmel Dr.; Cypress Creek, located at 1011 Ygnacio Valley Rd; and Creekside Glen, located at 125 Near Court.

The 283,075 square feet of residential space that Interstate Equities Corp. has acquired benefit from their location in one of the consistent submarkets of the San Francisco Bay Area. The average area of a unit stands at around 788 square feet, while apartments will feature one-, two- and three-bedroom floor plans.

According to IPA Executive Vice President of Investments Stanford Jones, “the investment appeal of these assets is driven by strong employment fundamentals both in Walnut Creek and the Interstate 580/680 corridors, resulting in a high-single-digits existing loss-to-leave.” The representative also pointed out that the portfolio’s overall net potential rent has seen an increase of 12.5 percent between August 2011 and July 2012, exceeding Walnut Creek’s median increase over the same time, which stands at 11.9 percent.  

While the per-unit fee paid for the three apartment complexes, which stands at $180,000 per unit, is far below San Francisco’s strengthening figures, it is actually a solid number when taking into consideration the fact that Walnut Creek is located in the Contra Costa County submarket.

Chart courtesy of Marcus & Millichap Real Estate Investment Services at marcusmillichap.com

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Pleasant Hill Retail Property Trades Hands in $100 Million Deal as Retail Rates Make a Comeback

By Alex Girda, Associate Editor

One of the largest retail properties in Pleasant Hill recently traded hands, with Loja Real Estate LLC announcing the sale of one its most important assets. The Downtown Pleasant Hill Shopping Center was acquired by UBS Global Asset Management for a fee of approximately $100 million. Handling the transaction on behalf of Loja Real Estate was a Colliers International team consisting of Kevin van Voorhis, James Kaye, Jay Gomez and Lindsey Lantis.

The Downtown Pleasant Hill retail center offers 345,687 square feet of commercial space in San Francisco’s Pleasant Hill community. The center is the area’s main commercial hub, featuring a 40-strong tenant roster that includes names such as Century Theaters, Lucky Supermarket, Bed Bath & Beyond, Michaels, Ross, Golfsmith, Paul Mitchell the School and Zachary’s Chicago Pizza.

Loja Group LLC, a real estate investment management entity controlling Loja Real Estate LLC, has praised the newly offloaded property in a press statement as being a “strong property.” Katherine Burr, CEO of Loja Group LLC, said that “this was the opportune time to sell and advance other important initiatives at Loja.”

The multi-tenant retail property’s sale illustrates the increase in median prices for retail properties in the San Francisco Bay Area. Data from Marcus & Millichap Real Estate Investment Services points out that over the past five years, average prices decreased considerably in terms of both single-tenant and multi-tenant retail properties, with 2012 being the first year of growth since 2006. Single-tenant properties now charge higher per square foot rates than multi-tenant properties, with considerable growth being clearly visible for the past year.

Chart courtesy of Marcus & Milllichap Real Estate Investment Services at marcusmillichap.com

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Over-Performing San Francisco Office Market Produces Yet Another Office Deal

By Alex Girda, Associate Editor

San Francisco’s improving office market has produced yet another deal after a joint venture created by Hines and Invesco Real Estate moved to acquire an iconic construction located in the city’s South Financial District. The two real estate companies have completed a deal making their joint venture the new owner of the Rialto Building. While official financial terms for the deal were not disclosed, market specialists place the transaction’s value at around $57 million. The entity selling the Rialto Building was Africa Israel USA, or AFI USA.

Located at 116 New Montgomery St., the Renaissance-style Rialto was initially developed in 1902. The Great Earthquake of 1906 called for an extensive interior rebuilding and renovation process to be undertaken by the Meyer & O’Brien Architects-designed structure. It offers tenants 135,486 square feet of office and retail space.

AFI USA had owned the Rialto since 2007, a time frame in which the company had restoration works focusing on the original design of the structure, with main points of interest being the lobby, the elevator’s ornate metal doors, the painted panel ceiling, marble floor and bronze staircase. The building had an occupancy rate of around 85 percent at the time the transaction was completed. The current tenant roster includes names such as Trulia, Nelson/Nygaard, Walgreens and Chipotle.

According to a press statement issued by Hines Senior Managing Director Cameron Falconer, now that the building is part of the company’s portfolio, “Hines and Invesco will continue to invest in the building to complete its transition to a ‘creative core’ asset that caters to San Francisco’s burgeoning technology and multimedia industry tenants.” AFI USA CEO, Tamir Kazaz, went on to say that the deal “proves that San Francisco is still unmatched as the nation’s top-performing office market.”

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Former Solyndra Factory Given New Life as Seagate Unveils R&D Facility Plan

By Alex Girda, Associate Editor

The former Solyndra solar factory in Fremont is seeing sunshine again as the abandoned facility is set to be re-adapted. The site, previously owned by the failed solar panel manufacturer, will be transformed by Seagate Technology into a new research and development complex to be used by the data storage giant.

As Seagate is looking to the future of disk drives with its successful solid state and hybrid data disks, the company wants to capitalize on its current success and come up with the next big thing in data storage systems.

The old Solyndra site will be given a complete makeover as it morphs into a $180 million state-of-the-art R&D facility. Located on Kato Road in Fremont, the 411,000-square foot complex was bought by Seagate earlier this year for a fee of $90 million, San Jose Mercury News writes. The rest of the $180 million budget will be directed towards acquiring and installing the equipment that will turn the former factory into a Seagate facility that would create up to around 600 jobs in the field.

According to Mercury News, Seagate shopped around the Bay Area and Silicon Valley looking at around 40 potential locations to house the new project.

Solyndra closed down in 2011, a move that resulted in more than 1,000 layoffs. Seagate’s takeover of the facility will be a move welcomed by the local community, one that most likely would have preferred to avoid having an eyesore in the form of the former solar-panel manufacturing plant.

Image courtesy of user DarkSilverR53 via Panoramio

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Essex Property Trust Picks up Fox Plaza Residential Component, Commits to Improvement of New Asset

By Alex Girda, Associate Editor

Essex Property Trust has moved into San Francisco’s multifamily market to acquire a large chunk of housing units—part of a mixed-use building located in the city’s highly publicized Mid-Market district. The fully integrated real estate investment trust has shelled out $135 million for the residential component of Fox Plaza—a 29-story high-rise building located at 1390 Market St.—from Archstone, who was initially looking for a sale price more in the $150 million range.

The 444 units that Essex has acquired, located on floors 14 through 29, offer great views of the city and feature high ceilings and large decks. Three quarters of the units are 450-square foot studio apartments, with the remaining apartments featuring one- and two-bedroom floorplans. Essex Property Trust is also getting a two-level underground parking facility that can accommodate as many as 405 vehicles.

The acquisition deal did not include the lower floors featuring commercial office space. However, an adjacent two-story, 37,800 square-foot commercial building was part of the agreement.

The REIT’s interest in this second building is clearly linked with the fact that there is permitting in place for a 250-unit, 11-story apartment development. While Essex maintains that it has no immediate intentions of activating the entitlement, the entity has confirmed that the possibility of developing the tower will be evaluated in the future.

The new owner is set to commit $27 million over the next couple of years for the renovation and improvement of Fox Plaza. The 1968-built structure will undergo extensive interior and exterior improvement work in order to raise its current profile in one of the main emerging submarkets in the San Francisco Bay Area.    

Photo courtesy of user J. Ash Bowie via Wikimedia Commons

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