Category: commercial real estate san francisco (65)

Calco Commercial real estate has facilitated a 7-year lease at 1950-2170 Cesar Chavez between the Landlord and the new Tenant, McMillan Electric. The leased property is a total of 40,500+/- square feet which includes dock load, office area & private fenced parking. The premises is part of the Gibraltar Business Center located on Cesar Chavez in between Highway 101 and I-280.

For more information on our other listings, or current San Francisco commercial real estate conditions, call 415.970.0000.

1950 Cesar Chavez

1950-2090 Aerial-Outline

12,500+/- square feet of superb and centrally located distribution space will be available for lease December 1, 2014 at 2170 Cesar Chavez. The space includes 4 docks, 1 drive-in loading door, a small office area and large exterior loading and parking. The lease rate is $1.25 PSF, IG. 2170 Cesar Chavez is located off the Bayshore Corridor and within close proximity to Highway 101 and I-280.

For more information on this property, our other commercial real estate listings, or the San Francisco marketplace, call 415.970.0000.

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The San Francisco Industrial market ended the third quarter 2014 with a vacancy rate of 4.5%. The vacancy rate was up over the previous quarter, with net absorption totaling negative (82,427) square feet in the third quarter. Vacant sublease space decreased in the quarter, ending the quarter at 305,115 square feet. Rental rates ended the third quarter at $15.29, an increase over the previous quarter. There were no properties under construction at the end of the quarter.

Net absorption for the overall San Francisco Industrial market was negative (82,427) square feet in the third quarter
2014. That compares to positive 957,648 square feet in the second quarter 2014, positive 88,854 square feet in the first quarter 2014, and positive 493,540 square feet in the fourth quarter 2013.

Tenants moving out of large blocks of space in 2014 include: FedEx moving out of (60,100) square feet at 200
Littlefield Ave, Vitasoy moving out of (52,500) square feet at
584 Eccles Ave, and KaloBios Pharmaceuticals moving out of
(49,351) square feet at 260 E Grand Ave.

Tenants moving into large blocks of space in 2014 include: Formations Brands moving into 120,000 square feet at 530
Forbes Blvd, LeeMah Properties, Inc. moving into 87,000 square feet at 155 S Hill Dr, and Stitch Fix moving into 80,000 square feet at 245 S Spruce Ave.

The Flex building market recorded net absorption of posi- tive 36,585 square feet in the third quarter 2014, compared to positive 299,408 square feet in the second quarter 2014, negative (50,744) in the first quarter 2014, and positive 73,956 in the fourth quarter 2013.
The Warehouse building market recorded net absorption of negative (119,012) square feet in the third quarter 2014 com- pared to positive 658,240 square feet in the second quarter 2014, positive 139,598 in the first quarter 2014, and positive 419,584 in the fourth quarter 2013.

The Industrial vacancy rate in the San Francisco market arean increased to 4.5% at the end of the third quarter 2014. The vacancy rate was 4.4% at the end of the second quarter 2014, 6.0% at the end of the first quarter 2014, and 6.1% at the end of the fourth quarter 2013.

Flex projects reported a vacancy rate of 5.9% at the end of the third quarter 2014, 6.1% at the end of the second quarter
2014, 9.3% at the end of the first quarter 2014, and 9.1% at the end of the fourth quarter 2013.

Warehouse projects reported a vacancy rate of 4.0% at the end of the third quarter 2014, 3.9% at the end of second quarter 2014, 4.8% at the end of the first quarter 2014, and 5.1% at the end of the fourth quarter 2013.

Rental Rates
The average quoted asking rental rate for available Industrial space was $15.29 per square foot per year at the end of the third quarter 2014 in the San Francisco market area. This represented a 2.1% increase in quoted rental rates from the end of the second quarter 2014, when rents were reported at $14.97 per square foot.

The average quoted rate within the Flex sector was $24.66 per square foot at the end of the third quarter 2014, while Warehouse rates stood at $11.64. At the end of the sec- ond quarter 2014, Flex rates were $23.85 per square foot, and Warehouse rates were $11.26.

Total Industrial inventory in the San Francisco market area amounted to 95,118,337 square feet in 4,848 buildings as of the end of the third quarter 2014. The Flex sector consisted of 23,921,073 square feet in 790 projects. The Warehouse sector consisted of 71,197,264 square feet in 4,058 buildings. Within the Industrial market there were 511 owner-occupied buildings accounting for 12,334,611 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 second quarter 2014 in terms of dollar volume compared to the first quarter of 2014.

In the second quarter, 20 industrial transactions closed with a total volume of $109,016,000. The 20 buildings totaled 558,793 square feet and the average price per square foot equated to $195.09 per square foot. That compares to seven transactions totaling $153,598,100 in the first quarter. The total square footage was 667,191 for an average price per square foot of $230.22.

Total year-to-date industrial building sales activity in 2014 is up compared to the previous year. In the first six months of 2014, the market saw 27 industrial sales transactions with a total volume of $262,614,100. The price per square foot has averaged $214.21 this year. In the first six months of 2013, the market posted 14 transactions with a total volume of $86,969,600. The price per square foot averaged $168.65.

Cap rates have been higher in 2014, averaging 6.70%, compared to the first six months of last year when they averaged 6.04%. One of the largest transactions that occurred within the last four quarters in the San Francisco market is the sale of 268-298 Alabama St in San Francisco. Totaling 34,545 square feet, the two industrial buildings sold for $20,000,000, or $578.95 per square foot. The property sold on 5/22/2014 and will be occupied by the buyer, Dandelion Chocolate.

Calco Commercial represented the Owner in the sale of 238 Capp Street in the Mission District this week. 238 Capp is a 7,874+/-square foot two-story building with ground floor warehouse and second floor offices. The warehouse area is clearspan with 15′ ceilings and one (1) drive-in door. The second story offices include hardwood floors & high ceilings.

If you have questions about our other available commercial listings, or Bay Area real estate market conditions, call our office at 415.970.0000.

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Source: CoStar News
By Randyl Drummer
October 8, 2014

U.S. office construction has reached its highest level since 2008 as developers break ground on new projects in a growing number of markets where job growth, rising rents and falling vacancies are finally justifying new development.

An analysis of CoStar Analytics data shows about 86 million square feet of higher-end office properties larger than 50,000 square feet under construction, a 25.7% increase compared to 2013’s 68.5 million square feet and the highest total since the end of 2008, when 105.7 million square feet of new office space was under construction.

This total amount under consturction for the year is likely to rise even higher as CoStar researchers discover more new projects breaking ground before the end of 2014.

CoStar expects 44.5 million square feet of office project deliveries by the end of 2014 — a 22% increase over 2013. New office construction starts, meanwhile, stood at 42.6 million square feet as of Sept. 30, already exceeding last year’s total, ensuring a steady supply of new product through early 2017.

“Developers are hustling now to get new product to the market, given the stronger absorption trends, particularly for newer, high-quality space,” explained Cassidy Turley Chief Economist Kevin Thorpe. “But it will take a couple of years for all of this new development to materialize, meaning demand will continue to outstrip supply, which will keep upward pressure on rents.”

Editor’s note: For a comprehensive look at the U.S. office market, register for the CoStar State of the Office Market Third-Quarter 2014 Review & Forecast on Oct. 21. CoStar subscribers may log on and click the Knowledge Center tab.

John Sikaitis, managing director of U.S. office market research for JLL, believes that managing the development pipeline will become the biggest challenge for the office market, especially in hot construction markets like Texas and the San Francisco Bay Area.

He points out that office development has shifted from being largely focused on build-to-suits to now primarily multi-tenant construction, which has lower 50% to 60% pre-leasing rates, versus a 100% pre-leasing rate on build-to-suit developments. While that signifies improving sentiment in both the office sector and the overall economy, it also foreshadows the oversupply issues from past cycles.

“A lot of developers now are thinking about breaking ground on that next project, and we could be in that same exact situation 36 months from now that we were in during 2009 and 2010,” Sikaitis said. “We really need to pause and think about the momentum in the market, and if it’s sustainable with this new development.”

Case To Be Made for Market Equilibrium
For now, analysts say, the good news is that strong leasing activity is more than offsetting concerns about potential oversupply. Only 45% of space under construction remains available, with large blocks taken by tech, creative and energy companies such as, Comcast, ConocoPhillips, Google, State Farm and LinkedIn.

Walter Page, CoStar Portfolio Strategy director of research, office, said the U.S. is on pace for office tenants to take 77 million square feet of office space in 2014 — a 77% increase over 2013 — followed by another 90 million square feet in 2015 and 2016.

The vacancy rate will trend down to a projected low of about 11% in 2016 as shadow space evaporates and office job growth continues to rise. In the improving economy, even the rate of decline for average space per employee has slowed from 2% to 1%.

“We have significant less supply than demand, which will allow vacancy rates to continue to move down until 2017,” Page said.

“The office market recovery is at its best point of the past seven or eight years. We experienced more occupancy gains in the third quarter than so far in the recovery,” Sikaitis added.

Preliminary CoStar data shows that net new office supply of 23.5 million square feet nearly caught up with demand of 24.9 million square feet in the third quarter. But that’s not likely to last, with absorption expected to remain north of 30 million square feet per quarter through late 2016.

By that time rent growth is expected to slow, as many of the new office developments now under construction enter the market, such as Hines’ 48-story tower at 609 Main Street in Houston, Hanjin Group’s 73-story, 1.7 million-square-foot Wilshire Grand Tower in downtown Los Angeles, and towers in North Riverside Plaza and 444 W. Lake Street in Chicago.

Mid-size projects beginning in the current quarter and early 2015 will reach the market in late 2016 early 2017 at the same time.

“We’re going to see a pickup in construction, which will ultimately weigh on fundamentals,” said CoStar Portfolio Strategy real estate economist Sam Tenenbaum.

Tenenbaum recommends that investors start thinking about developing in secondary and tertiary markets such as Portland, Minneapolis, Denver and Nashville, where demand has been fairly strong, vacancies have tightened, and pricing has picked up substantially, especially for newer office buildings built since 2008.

Ultimately, however, the usual host of economic wildcards will determine how much office space gets built.

“Prevailing macroeconomic factors, lenders’ willingness to start projects on a speculative basis, rising construction costs and the rise and fall of interest rates will determine how much of the pipeline will begin construction sooner rather than later,” JLL’s Sikaitis said.


Source: The Registry Bay Area Real Estate
Author: Jon Peterson

On the heels of large development announcements and purchases in Redwood City, San Mateo now seems poised to capture the attention of the development world as it unveils a new large development in the middle of the hot Peninsula submarket.

Philadelphia-based EBL&S Development is planning the development of Station Park Green, a mixed-use apartment, office and retail development in San Mateo located at 1700 and 1790 South Delaware Street.

The large development showcases the opportunity this market has to offer as one of Bay Area’s best connected towns. “I would think that this project will have a total development cost somewhere in the range of $250 million to $300 million,” says Alan Talansky, a vice president of development for EBL&S. He works out of the company’s regional office located in San Mateo at 30 West Poplar Avenue.

The developer is now going through a design review stage but anticipates the project to kick off shortly. “We should be able to start the project sometime during the first quarter of next year,” said Talansky.

This project was first brought up for approval in 2011. It was then put on hold by the developer due to the financial circumstances brought on by the Great Recession. All the while, the developer anticipated a time when the market would recover and allow the development to commence.

EBL&S has been given the okay by the city to construct 599 apartmens, 10,000 to 15,000 square feet of commercial space, 25,000 to 30,000 square feet of retail and 2.3 acres of parks.

It’s anticipated that the first part of the development will be with the housing. “I would think that the initial part of the development will be with around half of the apartment units constructed,” said Talansky.

The vast majority of the apartments will be market-rate units. In terms of the affordable development, the project is planning to have either 15 percent affordable units, or 10 percent will be considered as low-income units. Most of the apartment units are planned to be one-bedrooms. This kind of housing should attract either single and/or young professional working couples and empty-nesters. The project will have only five three-bedroom units, which is something that the city of San Mateo had requested.

EBL&S estimates that employees of nearby companies should be attracted to the apartment portion of the development. “I believe that the employees located in the nearly 300,000 square feet 400-450 Concar office project owned by Hines located across the street and other close by office buildings should be attracted to the housing that we will be providing,” said Talansky.

Station Park Green is a transit oriented development. There will be a Caltrain stop located in the development. This will allow apartment renters to commute either to the north or south. This project has been selected as one of the first LEED-ND projects to attain Gold status.

The retail planned for the development will feature a neighborhood retail theme. This will serve the existing customers already living in the area and the new renters of the apartment project. One amenity planned for the apartments is to have six car-sharing spaces for its renters to use.

EBL&S is unsure at this time what the ownership structure of the project will be in the future. There is a possibility that traditional construction financing could be used on the project. There also is a chance that some institutional partners might be brought into the project. This could be a REIT or a private equity real estate fund.

EBL&S owns two other properties in the San Francisco Bay Area, according to its Web site. This is the Sun Microsystems Building located at 2525 North First Street in San Jose and Kmart Plaza at 1700 South Delaware in San Mateo.

San Mateo Planning Massive $250MM to $300MM Mixed-Use Development

3130 20th Street is now available for lease. 3130 20th Street is centrally located in the Mission District just a few blocks from BART, countless shops and restaurants. The 13,850+/- square feet that is available can be divided into three spaces (9,000+/- main PDR space; 3,250+/- separate PDR space; and 1,600+/- SF of auxiliary warehouse). The spaces will be available on or about January 1, 2015 @ $2.25 psf./$27.00 annual.

For more information on this space, our other available listings or San Francisco real estate market conditions, call 415.970.0000.

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3130 20th Street Property Brochure

820 26th Street is now available for lease. This 6,300+/- SF warehouse/distribution space is totally clearspan with 20′ ceilings, sprinklers, heavy power and two (2) large drive-in doors. The property is situated only one block from the 3rd Street rail line and is located in the Dogpatch/Potrero Hill area. $8,700.00/month ($1.38 psf.)

If you have any questions about this property or the San Francisco commercial real estate market, please call 415.970.0000.

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Calco Commercial has leased 3175 17th Street in San Francisco. This 6,800+/- square foot ground floor “creative” space includes HVAC, heavy power & electrical distribution, exposed wood ceilings, and is in close proximity to public transportation and BART. Located in the Mission District, 3175 17th Street is located directly across from Mission Bowling and the ODC Theatre.

If you have any questions about our other available listings, the San Francisco commercial marketplace or market conditions, please call our office at 415.970.0000.

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Source: San Francisco Business Times

The current boom in the tech industry isn’t necessarily comparable to the 1990s dot-com bubble, although a downturn in high-tech would significantly hurt the Bay Area economy.
Those are some of the thoughts from John Williams, the Federal Reserve’s president in San Francisco, during a sit-down interview with the Contra Costa Times.
Williams said demand for products and services during the dot-com bubble came from companies that were a mirage. He noted the current tech boom isn’t necessarily as pervasive.

However, Williams said a burst tech bubble this time around would put a large dent in the economy, especially if the wealth of employees at companies such as Facebook and Google plummeted.
Williams said the Bay Area economy is improving dramatically with the exception of the housing industry in some outlying areas.
He noted San Francisco’s economy is “on fire,” thanks to in part to a strong real estate market.