Category: commercial real estate news san francisco (74)

The 19,228+/- square foot single-identity building located at 2121 Oakdale Avenue has been leased with Calco Commercial as the listing broker.  This property consists of ground floor warehouse space, second floor office, full ADA access and a private parking lot for 17 vehicles.  

To view our other listings, click here:  Calco Listings

If you have any questions about commercial real estate, listings or brokerage in and around San Francisco, give us a call at 415.970.0000. 

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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. 

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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.