Calco Commercial just leased 8,150+/- square feet of commercial warehouse space located at 969 Folsom Street in the SOMA.  The SOMA continues to be a hot bed of activity in the San Francisco commercial/industrial real estate marketplace. 

To view our other listings, click here: Calco Listings

Foodie frenzy helps push up San Francisco industrial values

Source:  J.K. Dineen, San Francisco Business Times: Foodie Frenzy

The gentrification of San Francisco’s few remaining industrial areas is creating a windfall for owners of industrial flex business parks.

Last week Zurich Alternative Asset Management announced it had spent $25 million, about $180 a square foot, for the Potrero Business Center, a three-building, 135,000-square-foot complex. The seller was Morrison Street Capital LLC.

The property is on Cesar Chavez Street between Interstate 280 and Highway 101, adjacent to Mission Bay and in close proximity to the 22nd Street Caltrain station. Situated on 4.57 acres, the property is 94 percent leased to a wide spectrum of tenants.

“San Francisco represents one of the highest barriers-to-entry markets in the country, with industrial and flex space being particularly scarce,” said Steven Golubchik of Holliday Fenoglio Fowler, L.P., who represented the seller with John Simerlein.

While San Francisco’s industrial base has been slowly eroding for decades, the strong uptick in local food industry — everything from producers of boutique goods like coffee and chocolates to corporate caterers — is creating a strong demand for industrial space.

“They live in San Francisco and they want to be able to say they are a San Francisco entity,” said Golubchik. “The challenge is you can’t find food grade space in the city. Every space is 100 percent leased. When you have food-grade space the sky is the limit on rents.”

Groups bidding on the Potrero Business Center ranged from core funds to REITs to groups of high net worth individuals. Tenants in the complex include Graybar, Cupertino Electric, and group that supplies baked goods to companies like Twitter.

In addition, a family investment group incorporated as Mama Hermana LLC bought 2200 Jerrold Ave. for $19 million, or $193 a square foot. There aren’t enough industrial properties for sale in San Francisco to have meaningful comps, but the price is high compared to industrial property in general in the Bay Area. For example, A.G. Ferrari paid $104 a square foot for an industrial building in Alameda in November.

“As tech and other higher and better use conversions within SoMa push out the service oriented businesses… the 2200 Jerrold Ave. complex has always been a natural relocation opportunity based on its high ceilings, large loading doors and private on-site parking,” said Scott Mason of Calco Commercial Inc., who brokered the transaction.

The 100 percent leased property is a 98,000-square-foot, 25-unit industrial complex, which Mason says is rare in a marketplace dominated primarily by 5,000 to 10,000 square foot individually owned buildings.

Lease & Sublease Activity

The 4th quarter of the San Francisco industrial marketplace was punctuated by a decrease in vacancy from 6.6% (end of 3rd quarter) to 5.9% with net absorption equal to positive 602,366 square feet.  As to be expected with the further decrease of available product, fourth quarter rents increased from 3rd quarter rates of $13.76 ($1.15 psf.) to $14.40 ($1.20 psf.). 

Similarly, both the flex sector and sublease markets saw a decrease of available space.  The flex sector reported 129,587 square feet at the end of the 4th quarter, down from 136,326 square feet at the end of the 3rd.   Flex rates increased slightly in the 4th quarter to $22.68 ($1.89 psf.) from $22.64 in Q3. 

New inventory remains sparse as there was no industrial space under construction at the end of Q4 2014. 

Sales Activity

The sales activity for the San Francisco industrial marketplace slowed at the end of the year with only four sales compared to 10 in the previous quarter.  Furthermore, year-to-date sales are also down compared to 2012.  The price per square foot for sales in San Francisco averaged $178.47 this year, which is up from $145.31 per square foot in 2012.   Cap rates have also been lower in 2013, averaging 5.78% compared to 6.78% in 2012.  

According to CoStar “one of the largest transactions that occurred within the last four quarters in the San Francisco market is the sale of 2200 Jerrold Avenue.  This 97,093 square foot flex building sold for $19,000,000, or $195.69 per square foot.”  The sale of Jerrold Avenue was brokered by Calco Commercial, Inc. and was not only one of the largest sales of 2013 in San Francisco, but in the top three sales in the Bay Area industrial marketplace including San Mateo County. 

Data source:  www.costar.com

If you have any questions on current market conditions, available commercial properties or have an asset you would like to lease or sell, call us at 415.970.0000.

Calco inked a deal at the Crocker Industrial Park in Brisbane on behalf of the Tenant, Best Beverage.  Best Beverage will be occupying 31,734+/- square feet of clear height warehouse space with 10,000+/- square feet of office.  The space includes 6 dock levelers and parking for 12 trucks. 

To view our current listings, click here:  Calco Listings

485 Valley 2

Calco Commercial brokered both sides of the sale transaction for the 98,000+/- square foot multi-unit industrial complex located at 2200 Jerrold Avenue in San Francisco.   This 25 unit complex consists of clearspan warehouses with drive-in roll-up doors, and private on-site parking.  

Calco Commercial, Inc. is a solution based San Francisco and Peninsula area commercial real estate brokerage firm.   Specializing in the sales and leasing of industrial, office and flex use properties, Calco Commercial offers definitive results with personalized service.  Steeped in knowledge about the Bay Area marketplace, Calco brings our clients over two decades of real estate experience coupled with unmatched customer service and prevailing technology.  Utilizing these resources, Calco provides the tools to help our clients make the right decisions in the ever-changing real estate marketplace.

To view our current listings, click here: Calco Listings

Have any questions about the San Francisco commercial/industrial real estate market place?  Give us a call at 415.970.0000.  2200 Jerrold 2

Marking our 55th deal in 2013, Calco Commercial Real Estate has leased 19,230+/- square feet located at 301 Toland Street in San Francisco.  This space consists of high-cube warehouse area with two (2) drive-in loading doors, one (1) dock and abundant street parking.

To view Calco’s current listings, click here: Calco Listings

San Francisco Commercial Real Estate

The recently renovated 1370 Harrison Street building can now be divided into two (2) separate units (4,700+/- SF on ground floor & 3,700+/- sf. on the second floor).  This central SOMA location is suitable for office/warehouse combo, showroom, gallery or other creative uses.  $32.00 psf. annual for the entire building or $34.00 psf. annual if divided.

Click here for the full brochure: 1370 Harrison

To view our other listings, click here: SoMa Flex SpaceCalco Listings

The 2200 Jerrold Avenue complex in San Francisco has one unit now available for lease with the following property features:

  • Concrete, tilt-up construction
  • Clearspan, 22′ ceiling height, sprinklered & drive-in loading door
  • Private & secure on-site parking
  • $1.10 psf. NNN

Click here to view the full brochure: 2200 Jerrold

To view Calco Commercial’s other available real estate listings, click here:  San Francisco Commercial Real EstateCalco Listings

 

Last week, Calco Commercial completed a sales transaction for the 243-253 Utah Avenue industrial complex located in South San Francisco.  The complex consists of 31,877+/- square feet of commercial construction situated on a larger 54,450+/- square foot lot and includes two (2) loading docks and four (4) drive-in loading doors. 

To view our available listings click here: Calco Commercial Real Estate Listings

If you have any market questions or need advice in the leasing or sale of your building, call 415.970.0000.   243-253 Utah

Reporter- San Francisco Business Times

If you are a downtown San Francisco office tenant waiting for cheap sublease to grab, you are going to have to wait a bit longer.

The amount of sublease space on the market— a metric that brokers use as a barometer of impending market weakness — is at its lowest point since 2000, according to research by CBRE.

Currently San Francisco has 1.1 million square feet of sublease space available. That is 60 percent decline from the 2.7 million square feet of unwanted space on the block after the collapse of the financial markets in 2009. And it’s 80 percent down from the 5.3 million square feet of dark and unwanted space left behind in the detritus of the dot-com train wreck in 2002.

Not surprisingly, rents for sublease space have shot up as the crunch has come. Rents for subleases have more than doubled from a low of just above $20 a square foot in 2010 to about $42 a square foot today.

And as the cost of construction rises, tenants will be even quicker to grab any decent built-out sublease space that hits the market, even if it’s short term, according to Colin Yasukochi, research director for CBRE.

Recent sublease deals include SunRun’s deal at 595 Market St., which was a sublease from Visa. Salesforce is expected to put unwanted space on the sublease market over the next few years as it consolidates at 50 Fremont, 350 Mission, and Rincon Center. Salesforce will be looking for subtenants for space at 123 Mission St., 1 California St., and 1 Market Plaza.

In a recent report the tenant rep shop Studley pointed out that tech companies are taking more space than they need, while efficiencies and the trendy collaborative workplace design is allowing the rest of the market to shrink square footage. Tech tenants are “making pre-emptive strikes and warehousing block of space in anticipation of future growth.” In contrast, legal, financial and other traditional space users are “taking a more analytic and cautious approach, having largely too much space already.”

Eventually, as anyone who has observed the boom-and-bust cycles of San Francisco’s past can understand, the market will crash and sublease space will become abundant. Although in this sizzling market it may take another few years. That is not going to be much solace if you are looking for a new office in 2014.

“It is critical that tenants of all sectors and sizes understand the pace of the market and rationally assess alternatives in both the short- and long-term,” said Steve Barker, Studley EVP and branch manager of the firm’s San Francisco office. “For example, large tenants with leases expiring between 2015 and 2017 have the time to assess whether or not the market’s growth will continue unabated. One potential opportunity for these users is the next wave of top-tier product which is set to deliver during the same timeframe. The first tenants to make sizeable commitments in the new projects will likely capture the greatest space efficiencies and generous concessions.”

Source: Business Journal