Category: commercial real estate news san francisco (75)

Source: CoStar
By: Jesse Gundersheim

While some investors are exploring secondary and even tertiary markets throughout the country in search for higher yields, coastal gateway cities continue to take home the lion’s share of capital investment.

As typical, New York outpaces all other U.S. markets by far. Next up is Boston, then Los Angeles, Washington D.C. and Seattle. And while San Francisco and San Jose in California rank sixth and seventh, respectively, and the state’s East Bay rounds out the nation’s top 15, if all the Bay Area markets were combined they would outpace all but New York.

It’s further evidence of enduring demand generated by buyers attracted to the Bay Area’s expanding tech industry, along with several owner-user acquisitions, which has maintained downward pressure on capitalization rates, or the expected rate of return on investment, at premium asset pricing.

Combined, the three major Bay Area markets have seen $12.5 billion of office assets sell over the past 12 months, behind only New York’s $19.6 billion.

Sales volume in San Francisco alone, at $5.2 billion year to date, has already eclipsed the previous two year’s annual totals.

Boston, Los Angeles and Washington, D.C., have each seen about $8 billion in office assets trade over the past year.

New Owner of high-profile Peninsula Tower aims to take biotech to new heights

Source: San Francisco Business Times
By: Ron Leuty
Date Posted: November 19, 2015

Emerging biotech companies are fighting a losing battle for space against deep-pocketed, aggressive tech companies. But Neil Fox expects to deliver a new life sciences option by this time next year.

Fox’s Phase 3 Properties Inc. closed Tuesday on its acquisition of the high-profile Centennial Towers project, nestled between San Bruno Mountain and Highway 101 in South San Francisco.

The developer plans to immediately convert part of the existing 12-story tower for biotech companies by the third quarter of 2016, then start construction of a 21-story, 400,000-square-foot biotech-centric structure to the immediate north that would come online in the second half of 2017.

centennial tower

The overall 800,000-square-foot development’s sale price wasn’t disclosed.

In a tight market for biotech labs/offices, Fox believes Phase 3’s focus on ready-to-occupy highrise space will be a winner. The vacancy rate for new biotech space in South San Francisco is in the low single digits, not counting a half-million square feet of sublease space held by Amgen Inc. (NASDAQ: AMGN).

If nothing else, Phase 3’s timing is impeccable: Space in the two-building, 253,000-square-foot first phase of HCP Inc.’s (NYSE: HCP) The Cove at Oyster Point already is booked for its third-quarter 2016 opening.

By the time, Phase 3’s 150,000-square-foot south tower upgrades for biotech will be ready, Fox said, and construction will be under way on the north tower.

Two other South San Francisco biotech projects entitled for roughly 3 million square feet — BioMed Realty Trust’s (NYSE: BMR) Gateway of Pacific and Shorenstein/SKS Properties’ bayside project — haven’t yet broken ground.

Centennial Towers developer Jack Myers earlier this year considered building the planned north tower as condominiums. But Fox, whose San Diego company focuses exclusively on life sciences, said the future is in biotech.

“Our research says there’s a need across the board. That’s why QB3’s incubators (in San Francisco and Berkeley) are so full,” Fox said. “There’s no real second-generation space on the market right now.”

Indeed, a number of young and emerging life sciences companies — as well as larger, growing companies — are in a critical search for space.

Buoyed by a renewed interest by venture capital firms in early-stage drugs, those companies are bringing on more staff to push experimental treatments into studies in humans, but they often lose the space race to larger, established tech or drug-development companies that can lease floors at a time.

“We need the space last month, not a year from now,” said Ken Horne, CEO of Symic Biomedical Inc., a 17-person, two-year-old company with one potential treatment in an early-stage clinical treatment and another set to start in the first half of next year. “A year is hard for a high-growth, high-momentum startup.”

Symic is housed in the University of California-related [email protected] life sciences incubator in San Francisco’s Dogpatch neighborhood.

But Fox’s excitement about Centennial Towers isn’t based on timing alone: The development will offer biotech companies a high-rise option they don’t otherwise have in the Bay Area, he said, as well as space that needs a minimum of work for a quick move-in.

The Cove from HCP and the Gateway of Pacific project from BioMed, which is being acquired by Blackstone Group, have played up their tech-like campuses and amenities such as a bocce ball court and walking trails. But Fox said Phase 3’s differentiator with Centennial Towers is the high rise option that rarely is offered biotech companies outside of high-cost, high-density markets such as New York and Boston.

Working with San Diego’s McFarlane Architects, Phase 3 has floor plans that Fox said work for 95 percent of biotech companies. The space is a mix of 60 percent office and 40 percent general biology and chemistry labs — all with natural light.

Skidmore, Owings & Merrill LLP, the architect for Centennial Towers’ unique glass-facade south structure, also is designing the north tower.

“There’s no buried space in our buildings,” Fox said. “The quality of the project, the detail that went into it (by Myers), was something that was very attractive to us.”

Link to article: Peninsula Biotech

The San Francisco Business times is reporting that Dropbox is slated to release 200,000 square feet of its current 500,000 square feet of office located at 185 Berry Street in China Basin (Dropbox looks to Shed China Basin HQ Space) at $75 a square foot. However, the article suggests that the shedding of space by Dropbox may be more about not wanting to “stay around one location” rather than a sign of a market slowdown.

As other large tech establishments and unicorns (Salesforce, Rocketfuel, Twitter, Lyft, etc.) have either put space up for sublease or plan to shift operations to other locations, market analysts are keeping watch, and some venture capitalists are growing worried (Winder is Coming). But as the Business Times’ article also points out, the availability of sublease space helps other companies who are going the ability to break into the market, or allow “…the likes of Apple to dive into San Francisco in a spaced leased by CNET” In a related article on SF Curbed (Dropbox Sheds), Mary Jo Bowling reports that “real estate pros are still reporting a healthy demand for SF commercial space, albeit with some caution.”

185 berry
(185 Berry Street)

San Francisco’s Vacancy Increases to 3.6%
Net Absorption Negative (517,362) SF in the Quarter

Source: CoStar

The San Francisco Industrial market ended the third quar- ter 2015 with a vacancy rate of 3.6%. The vacancy rate was up over the previous quarter, with net absorption totaling negative (517,362) square feet in the third quarter. Vacant sublease space decreased in the quarter, ending the quarter at 337,738 square feet. Rental rates ended the third quarter at $17.82, an increase over the previous quarter. There was 293,100 square feet still under construction at the end of the quarter.

ABSORPTION

Net absorption for the overall San Francisco Industrial market was negative (517,362) square feet in the third quar- ter 2015. That compares to positive 89,907 square feet in the second quarter 2015, positive 111,275 square feet in the first quarter 2015, and positive 255,214 square feet in the fourth quarter 2014.

Tenants moving out of large blocks of space in 2015 include: Nippon Express U.S.A. moving out of (188,000) square feet at 250 Utah Ave, Tyco Electronics moving out of (184,462) square feet at 300 Constitution Dr, and Hajoca Corporation moving out of (40,000) square feet at 1111 Connecticut St.

Tenants moving into large blocks of space in 2015 include: Green Leaf moving into 105,600 square feet at 455 Valley Dr, Invitae Corporation moving into 103,213 square feet at 1400 16th St, and Flying Food Group moving into 69,500 square feet at 240 Littlefield Ave.

The Flex building market recorded net absorption of posi- tive 26,642 square feet in the third quarter 2015, compared to positive 203,145 square feet in the second quarter 2015, positive 104,924 in the first quarter 2015, and positive 114,780 in the fourth quarter 2014.

The Warehouse building market recorded net absorption of negative (544,004) square feet in the third quarter 2015 compared to negative (113,238) square feet in the second quarter 2015, positive 6,351 in the first quarter 2015, and posi- tive 140,434 in the fourth quarter 2014.

VACANCY

The Industrial vacancy rate in the San Francisco market area increased to 3.6% at the end of the third quarter 2015. The vacancy rate was 3.2% at the end of the second quarter 2015, and remained at 3.7% at the end of the first quarter 2015 compared to the previous quarter.

Flex projects reported a vacancy rate of 3.9% at the end of the third quarter 2015, 4.0% at the end of the second quarter 2015, 5.0% at the end of the first quarter 2015, and 5.4% at the end of the fourth quarter 2014.

3RDqtrGRAPH

Warehouse projects reported a vacancy rate of 3.5% at the end of the third quarter 2015, 3.0% at the end of second quarter 2015, 3.3% at the end of the first quarter 2015, and 3.1% at the end of the fourth quarter 2014.

SUBLEASE VACANCY

The amount of vacant sublease space in the San Francisco market decreased to 337,738 square feet by the end of the third quarter 2015, from 339,249 square feet at the end of the second quarter 2015. There was 333,754 square feet vacant at the end of the first quarter 2015 and 285,144 square feet at the end of the fourth quarter 2014.

San Francisco’s Flex projects reported vacant sublease space of 159,239 square feet at the end of third quarter 2015, down from the 164,850 square feet reported at the end of the second quarter 2015. There were 186,108 square feet of sub- lease space vacant at the end of the first quarter 2015, and208,699 square feet at the end of the fourth quarter 2014.

Warehouse projects reported increased vacant sublease space from the second quarter 2015 to the third quarter 2015. Sublease vacancy went from 174,399 square feet to 178,499 square feet during that time. There was 147,646 square feet at the end of the first quarter 2015, and 76,445 square feet at the end of the fourth quarter 2014.

RENTAL RATES
The average quoted asking rental rate for available Industrial space was $17.82 per square foot per year at the end of the third quarter 2015 in the San Francisco market area. This represented a 1.7% increase in quoted rental rates from the end of the second quarter 2015, when rents were reported at $17.52 per square foot.

The average quoted rate within the Flex sector was $28.42 per square foot at the end of the third quarter 2015, while Warehouse rates stood at $13.76. At the end of the sec- ond quarter 2015, Flex rates were $28.53 per square foot, and Warehouse rates were $13.03.

DELIVERIES AND CONSTRUCTION

During the third quarter 2015, no new space was completed in the San Francisco market area. This compares to 0 buildings completed in the second quarter 2015, three buildings totaling 118,080 square feet completed in the first quarter 2015, and nothing completed in the fourth quarter 2014.

There were 293,100 square feet of Industrial space under construction at the end of the third quarter 2015.

Some of the notable 2015 deliveries include: 901 Rankin St, an 82,480-square-foot facility that delivered in first quarter 2015 and is now 100% occupied, and 1 Kelly Ct, a 25,600- square-foot building that delivered in first quarter 2015 and is now 100% occupied.

The largest projects underway at the end of third quarter 2015 were The Cove – Building 3, a 153,047-square-foot building with 0% of its space pre-leased, and The Cove – Building 4, a 140,053-square-foot facility that is 0% pre-leased.

INVENTORY

Total Industrial inventory in the San Francisco market area amounted to 94,065,666 square feet in 4,812 buildings as of the end of the third quarter 2015. The Flex sector consisted of 23,919,746 square feet in 791 projects. The Warehouse sector consisted of 70,145,920 square feet in 4,021 buildings. Within the Industrial market there were 520 owner-occupied buildings accounting for 12,959,398 square feet of Industrial space.

SALES ACTIVITY

Tallying industrial building sales of 15,000 square feet or larger, San Francisco industrial sales figures fell during the sec- ond quarter 2015 in terms of dollar volume compared to the first quarter of 2015.

In the second quarter, 11 industrial transactions closed with a total volume of $88,245,000. The 11 buildings totaled 423,420 square feet and the average price per square foot equated to $208.41 per square foot. That compares to 17 transactions totaling $180,790,000 in the first quarter. The total square footage was 870,221 for an average price per square foot of $207.75.

Total year-to-date industrial building sales activity in 2015 is down compared to the previous year. In the first six months of 2015, the market saw 28 industrial sales transac- tions with a total volume of $269,035,000. The price per square foot has averaged $207.97 this year. In the first six months of 2014, the market posted 30 transactions with a total volume of $275,279,100. The price per square foot averaged $211.04.

Cap rates have been lower in 2015, averaging 4.34%, compared to the first six months of last year when they aver- aged 6.58%.

Full Report: 3rdQTR_Industrial

Vacancy Rate Dips for Top Quality Space as Office Absorption Remains Well Ahead of New Construction

Source: CoStar
By: Randyl Drummer
Dated Posted: October 21, 2015

The U.S. office market logged 29 million square feet of net absorption in the third quarter, the second-highest quarterly total since 2006, with demand for office space from expanding companies roughly doubling the amount of new office supply added by developers.

The 68 million square feet of net office absorption in the first three quarters of 2015 compares with an average of just 30 million square feet during the same periods in 2005 through 2007, considered to be the height of the last office boom. Meanwhile, the national office vacancy rate continued its slow and steady decline, dipping to 11% for the third quarter of 2015, down another 20 basis points from midyear and a 60 basis point decline from third-quarter 2014.

shutterstock_270941090_for web

A large majority of U.S. office submarkets, 65%, saw declining office vacancy in the third quarter, while 52% of U.S. submarkets now have lower office vacancy than during the 2006-07 peak, with most metros posting solid rent growth.

Those were among the key findings in CoStar’s State of the U.S. Office Market Third Quarter 2015 Review and Forecast presentation this week, which aslo noted one major difference from previous office market cycles: the average vacancy rate for high-quality 4- and 5-Star office space built since 2008 has remained flat, even though the 42 million square feet of new supply delivered in the first three quarters is nearly 40% above the same period in 2005-2007, said Walter Page, CoStar Group, Inc. director of U.S. research, office.

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“We’re at a rare point. Vacancy in new space has flat-lined since about 2013. What’s interesting about that is the supply pipeline has not caused the rate to spike up nationally, unlike other market cycles,” said Page, who was joined by Aaron Jodka, senior manager, market analytics and Managing Director Hans Nordby for the the office market analysis.

“Office tenants clearly want this new space and are willing to pay for it because obviously, they’re leasing it up,” Page added.

Jodka added that demand for 4-and 5-Star space grew at 2.5% between third-quarter 2014 and the most recent three-month period, compared with 1.4% in the overall office market and nearly three times the demand growth rate achieved for 1-, 2- and 3-Star properties.

Nordby noted that despite a rise in rental rates, total occupancy costs as a percentage of company profits remain at an all-time low as companies continue to put more workers into fewer square feet, which is allowing firms to continue leasing high-quality space.

Among individual markets, Dallas stood out by posting the strongest year-over-year net absorption, while Houston — plagued by space-givebacks among energy focused companies — saw the weakest demand among large U.S. metros. Perhaps due to a more diversified business base, Dallas-Fort Worth and Denver are thriving despite their exposure to the economic repercussions from the falling price of oil.

Nordby pointed out that Dallas and Atlanta are classic big-tenant markets that do well late in the economic cycle, with corporate relocations of companies that require large blocks of space driving their markets.

Link to article: US Office Demand

Robust CRE Space Absorption Bolstered Recent Price Gains

Source: CoStar
By: Mark Heschmeyer
Date Posted: October 14, 2015

While construction has been rising in many markets, aggregate demand across the major property types continues to outstrip supply, resulting in lower vacancy rates and rent growth. This, in turn, continues to drive strong investor interest in commercial real estate, according to the latest CoStar Commercial Repeat Sale Indices (CCRSI).

Pages from ccrsi-october2015

In August 2015, the two broadest measures of aggregate pricing for commercial properties within the CCRSI-the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index-increased by 1.3% and 1%, respectively, and 12.6% and 11.4%, respectively, in the 12 months ended August 2015.

Click here for the full CCRSI October release and supporting materials: Commercial Repeat Sale Indices

Recent stronger growth in the General Commercial segment, which is influenced by smaller, lower-value properties, confirms a broad-based pricing recovery. Within the equal-weighted U.S. Composite Index, the General Commercial segment posted a monthly increase of 1% in August 2015 and 11.9% for the 12 months ended August 2015, propelling the index to within 7% of its pre-recession high.

Robust CRE Space Absorption Bodes Well for Continued Favorable Property Sales Conditions

For the four quarters ended as of the third quarter of 2015, net absorption across the three major property types-office, retail, and industrial-totaled 611.4 million square feet. That is 20% more than in the four quarters ended as of the third quarter of 2014. It is also the second-highest annualized absorption total on record since 2008.

The office and industrial sectors turned in particularly strong performances during this 12-month period, averaging net absorption of 0.3% and 0.4% of inventory, respectively. The the retail sector averaged a more modest 0.2% in the trailing four quarters ended as of the third quarter of 2015.

The CCRSI’s U.S. composite pair volume of $79.5 billion year-to-date through August 2015 was a 32% increase compared with the same period in 2014. This suggests that 2015 could be another record year for commercial real estate acquisitions.

Both the high and low end of the market are attracting increased capital flows, with volume up by nearly 32% in both the Investment-Grade and General Commercial segments.

Link to Article: CRE Property Price Growth Heats Up

Calco Commercial represented the Buyer in the recent purchase of 111 S. Maple Avenue in South San Francisco. 111 South Maple Avenue consists of 27,360+/- square feet of commercial warehouse construction situated on a larger 1.25 acre lot. The warehouse boasts high ceilings, heavy power and close proximity to Highway 101, I-280, I-380 and SFO.

111_S_Maple

Calco Commercial has completed nearly 60 lease and sale transactions over the last year, representing approximately 450,000 square feet of commercial product. Calco continues to lead the San Francisco brokerage industrial marketplace. The Bay Area commercial properties continue to demand premium rental and sale rates as inventory and vacancies shrink.

Calco Commercial is a full service outfit that can help you make the most of your real estate properties and investments. If you would like to discuss your real estate options, or would simply like more information related to current market conditions, please call our office at 415.970.0000.

Boston Properties pitches 1.1 million-square-foot office addition to S.F. skyline
Source: San Francisco Business Times
By: Cory Weinberg
Dated Posted: September 29, 2015

Real estate giant Boston Properties, already building the tallest tower in San Francisco, has just proposed another huge addition to the skyline in South of Market.

The real estate investment trust filed preliminary plans for a 1.1-million-square-foot office complex that will sprawl on a full block across Fourth and Harrison Streets (across from Whole Foods). It will include a 240-foot-tall, carved-up tower that will likely become a future technology hub.

SF_Skyline_Web

“In a similar way we think about Salesforce Tower as a vertical campus, we think of this as an urban campus that will be attractive to large tech tenants,” said Michael Tymoff, senior project manager at Boston Properties. “We want the project to reflect the Centraol SoMa neighborhood, and have it not be a downtown office building or suburban office park from an architectural perspective.”

I reported in February that Boston Properties (NYSE: BXP) finalized a purchase option for the 102,000-square-foot lot that now houses a parking garage and a rundown auto repair shop. Boston is one of several big-time developers that have swarmed the Central SoMa area getting rezoned for more height and office use. The rezoning plan should get Board of Supervisors approved next year.

The plan’s preparation has triggered proposals from several major developers, like Kilroy Realty’s Flower Mart office complex, Tishman Speyer’s proposal of condominium towers that would raze the Creamery cafe, and Alexandria Real Estate Equities’ transformation of the decades-old S.F. Tennis Club into an office-fitness mixed-use project.

Boston Properties’ plan is not only one of the largest, but one of the most visually striking – love it, or hate it. A 65-foot podium building with a 90,000-square-foot floor plate will span the entire site. A 130-foot-tall midrise will stack on top on the eastern edge and a 240-foot tower on the western end.

“There aren’t many other buildings in the city that come close to 90,000-square-foot floor plate from a contiguous standpoint. It’ll stand out from the crowd,” Tymoff said.

Architect HOK (Hellmuth, Obata + Kassabaum) looked to “accentuate the ‘elegant and sculpted’ impression of the tower portion both as viewed from the neighborhood and distance along the skyline” with “sculpted buildings,” according to the plans.

“The various carvings into the tower result in a mass that resembles several individual buildings, rather than a single monolithic tower,” according to the plans.

In all, the project would include 907,300 square feet of office space, 9,900 square feet of retail and 53,6000 square feet of “flexible” space that will likely be zoned to open up more space for manufacturers or artists. It will also include about 15,600 square feet of public open space.

Of course, this project will likely shift at least slightly as the Central SoMa plan gets firmed up. The heights mostly conform with what the 2013 draft plan set as guidelines.

The Central SoMa rezoning would funnel an additional $600 million to $800 million into the city’s coffers from developers. The plan could also mandate that developers boost the amount of affordable housing and art and manufacturing space they build. The goal? Harness lucrative office development for more public good. (The trick, of course, is making sure that development is still financially viable even when San Francisco hits an inevitable economic skid.)

The project’s initial plans don’t go far enough in ensuring the neighborhood’s affordability, said SoMa activist John Elberling, who has been working with developers and the Planning Department to try to shape a “community plan.”

“We’ve proposed carving out an affordable housing site, about 15,000-square-feet, on (the site’s) east end. That’s not included,” he said. Elberling added that the building’s entire ground floor should be for affordable manufacturing or arts space, not just 50,000 square feet.

Another twist? The project may sit in a long line of development trying to nab the city’s finite office allocation, which is running out due to the 1986 office cap known as Proposition M. The mayor’s office has pitched some potential solutions to the pipeline clog, but hasn’t followed through on policy changes.

“We’re watching it close,” Tymoff said.

Link to article: Addition to SF Skyline

Source: San Francisco Business Times
By: Cory Weinberg
Date Posted: September 28, 2015

Surrounding the Anchor Steam Brewing Co. headquarters in Potrero Hill, the real-estate equivalent of a late-night bar brawl has been raging in the neighborhood.

Most major residential projects proposed for Potrero Hill are in the melee, but developer Related California is trying to rise above the fray a block from the brewery at 1601 Mariposa St. Related California sliced the number of rental units in its controversial Potrero Hill apartment proposal by 7 percent and boosted the percentage of affordable housing as it stares down a date with the Planning Commission next month.

The 1601 Mariposa proposal — two four-story buildings pitched three years ago to replace a warehouse and parking lots on the northern slope of Potrero Hill — shrunk its project from 320 units to 299 units after criticism from neighborhood groups that the apartment would crowd the neighboring Live Oaks private school.

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The developer also set aside 20 percent of the project for people making about half of the city’s median income instead of the initial required 14 percent. The project includes 28,000 square feet of public open space, and the developer has mulled another increase in the number of three-bedroom units to draw more families to the neighborhood. To help ease traffic, the project will swap out some retail space for workspace that will house small manufacturers.

“I’m sure you could find 10 people to disagree with me, but we’ve had a lot of big meetings lately, and I think people really like the plan in general – those who aren’t just opposed to any density at all,” said Bill Witte, Related California’s president and CEO. “The question is – which isn’t unusual in San Francisco – which community benefits are you willing to agree to to make it more neighborhood friendly, more affordable?”

The project is slated to get a large project authorization from the Planning Commission on Oct. 22, which would mostly greenlight it for construction. (The threats of lawsuits could always slow things down, of course.)

It would be one of the largest built in the neighborhood in recent memory and is part of a string of dense development there, including the 395-unit 1200 17th St. and the 234-unit 1301 16th St.

The 1601 Mariposa project – designed by David Baker Architects – already mostly conformed with current zoning under 2009’s Eastern Neighborhoods Plan. A city environmental study found the project would have significant and unavoidable traffic impacts at just one of 13 intersections studied – Mariposa and Mississippi streets. Combined with other projects that are in the development queue, the intersection of 16th and Arkansas streets will also get squeezed. Muni congestion would be insignificant, the study found.

The problem is that Potrero Hill – along with neighboring Dogpatch– has seen a string of residential proposals that add badly needed housing to the city’s stock, but rankled neighbors who are starting to see heavy construction with little transit or park improvements to show for it. (The 1601 Mariposa development would pay about $4 million in fees for the city to acquire and upgrade city parks.)

A group opposed to 1601 Mariposa, called “Grow Potrero Responsibly,” has said that the project would further congest Muni, provide insufficient parking and would be too dense for the neighborhood. The site is also zoned “urban-mixed use,” a designation that allows for flexible use and has paved the way for housing to replace production, distribution and repair (PDR) businesses.

J.R. Eppler, who heads the Potrero Boosters neighborhood group, said he only had quibbles with the project and that much of the large differences had been resolved. The group will vote on endorsing the project Tuesday.

The census tracts surrounding the 1601 Mariposa project include median household incomes that are about double the city as a whole and that also have much higher home-ownership rates. The neighborhood is attractive to builders not only for its zoning but for its proximity to technology and biotech headquarters in South of Market and Mission Bay.

While few projects have been completed so far, the Potrero Hill/Showplace Square plan area includes 19 percent of the city’s total units approved for construction, according to the city’s Housing Inventory report.

Adding to the irritation, the Warriors arena proposal, Pier 70, and the Giants’ Mission Rock development are large projects that will sit nearby. (Those haven’t galvanized significant, organized opposition in Potrero Hill, however.)

The Planning Commission is due for a briefing on the Potrero Hill/Showplace Square plan area this Thursday. Meanwhile, developers fighting against a proposed moratorium on market-rate in the Mission District have feared a similarly drastic measure in Potrero Hill.

Eppler of the Potrero Boosters said neighbors aren’t mulling a moratorium but want the Planning Department to re-evaluate the Eastern Neighborhoods plan as it “reaches the end of the pipeline” of construction planned there.

“There needs to be the political will necessary to devote a significant amount of resources to Potrero Hill, Dogpatch, Mission Bay, South Beach and to connect dots of development to implement new systems that will allow them to operate together,” Eppler said.

link to article: Potrero Housing

Source: The Registry
By: Nancy Amdur
Originally Posted: September 14, 2015

As office and industrial space in many markets gets increasingly difficult to find, a real estate Web site is launching a new service this week that allows companies to find and swap space.

The service is geared toward markets with low vacancy, said Hans Hansson, president and founding partner of the site, TradeAddresses.com. Once the Bay Area site is under way, the service will debut in Seattle, New York and Austin. Those markets have a “lack of space, are technology-oriented, and we have boots on the ground there to support the business,” Hansson said.

The site allows companies to “trade their leases to accommodate their actual needs,” when it is difficult to find space on the open market, Hansson said.

Trades can include leaving some or all of a space’s furniture and equipment. There is no guarantee that the lease price will remain the same when swapping, though. “It’s not about trading rent, it’s about securing space,” he said.

TradeAddresses since 1999 has been generating commercial real estate transactions. The company added the swapping service in 2000, but after seven months and about 25 trades, the market crashed and the company ended the service, Hansson said. This is the first time industrial space is being included in the service.

Hansson, a real estate veteran who is president, principal and founding partner of San Francisco real estate company Starboard TCN Worldwide, reinvigorated TradeAddresses with partners Jim Osgood, owner of office space referral and information network OfficeFinder.com, and Carl Bosse, owner of The Associate Realty of the Americas, a national network of high-end residential and commercial agents.

Tech companies are likely candidates for using the service because they are “fluid,” Hansson said, but other types of companies also are potential users.

Bay Area office vacancy is at 9.1 percent and has declined for 21 consecutive quarters, according to a second quarter 2015 report by commercial real estate company DTZ. Space also is being taken quickly. As an example, since early last year, 4.6 million square feet in new development projects in Silicon Valley has been pre-leased, 99.5 percent by technology companies, according to a recent report analyzing the top 30 tech cities in North America by commercial real estate firm CBRE Group, Inc.

Hansson said the company added industrial properties to the service because much existing product is aging, little new industrial space is being built and some sites are being converted to mixed-use or residential developments. Industrial vacancy in the Bay Area was 3.4 percent for the second quarter this year, down from 4.6 percent during the same period in 2014, according to a DTZ report.

TradeAddresses also allows a company “to test the waters” before telling a landlord it wants to sublease, Hansson said. In some leases, a landlord could take back space intended to be sublet before a company finds new space, he said.

Site users can post and seek space for free. They initially do not give a name or address and just enter information about their space such as size, general location and length of the sublease. This is primarily done because most leases have provisions where the landlord, once notified of intent of a sublease, has the option to cancel the remainder of the lease. Both companies pay 4 percent of the remaining lease term to TradeAddresses if a trade is made.

TradeAddresses uses its own brokers—called trade facilitators—who use a proprietary database to access off-market space and work with the companies. Companies also can find space on TradeAdresses then turn the deal over to their own brokers, though TradeAddresses would still retain its fee if the trade is made using properties listed on the site.

Additionally, companies listing a property on TradeAddresses can still market their property in other ways.

Hansson said that in a traditional market, the service likely would not be necessary. “It handles inefficiency in the market today, because there is no space,” he said.

link to article: Dwindling Office & Industrial Vacancies