News From: TRI Commercial/CORFAC International
Media Contact: Gary Marsh (415) 453-7045 or gary@marshmarketing.com
TRI Commercial/CORFAC International Completes a Trifecta of Deals Associated with a SOMA Commercial Property
San Francisco, California (October 12, 2015) –TRI Commercial/CORFAC International President Tom Martindale, SIOR, announced today that Senior Advisor Jason James has completed a trifecta of transactions that were all associated with a single property in the SOMA (South of Market) area of San Francisco.
James marketed and subsequently sold a two-story, 34,400-square-foot, PDR zoned industrial building with 42 below-grade parking spaces located at 2650 18th Street in the Mission District of the city. He represented the seller in the $14.25 million deal – 2650 18th Street LLC, which was occupied by Weston Wear.
The buyer of the building was Chai LP, a multi-generational family-owned real estate investor based in San Francisco.
While the building was in escrow, James also leased the entire building to Zesty, a catering company that delivers, sets up and serves restaurant-made meals to businesses throughout San Francisco. The company was founded in 2013 and is backed by numerous Silicon Valley investors and venture funds. James said that Zesty plans to take occupancy soon. KQED, Heath Ceramics and HTC (designer of Droid phones) are located across the street from the future Zesty headquarters.
James concurrently represented Weston Wear in its relocation to 389 Oyster Point where it now occupies approximately 12,000 square feet.
James said that 2650 18th Street was offered for sale unpriced and that, over the course of the listing, there were many offers for the property from a variety of investors, as well as potential owner/occupiers.
“Given how hot the San Francisco market is and the highly desirable location of this property, I was not surprised by the level of activity the offering generated. It really could have gone in the other direction of being purchased by a developer with an eye toward adding additional floors to the site, but we found a local investor who wanted it as-is and a tenant that was willing to renovate the building on their dime.” James said.
“The active sale environment and the demand for such limited blocks of space is very indicative of what is going on with the market, there’s more demand than available space.” he added.
About TRI Commercial/CORFAC International
Founded in 1977, TRI Commercial/CORFAC International is a leading Northern California commercial real estate brokerage and property management firm specializing in San Francisco, East Bay and the Sacramento Metro property markets. The company has expertise in tenant and landlord representation services and helps clients buy and sell commercial and investment-grade property. The company serves office, retail, and land, multifamily and industrial property sectors, with offices in San Francisco, Oakland, Walnut Creek, Sacramento, Roseville and Rocklin. For more information, visit www.tricommercial.com or call 415.268.2200.
About CORFAC International
CORFAC International is comprised of privately held entrepreneurial firms with expertise in office, industrial and retail, tenant and landlord representation, investment sales, multifamily, self-storage, acquisitions and dispositions, property management and corporate services. Chicago, IL-based CORFAC has 48 offices in the U.S., 7 in Canada and 25 offices internationally. Founded in 1989, CORFAC firms completed (in 2014) more than 10,000 lease and sales transactions totaling 400 million square feet of space valued in excess of $7.4 billion. For more information on the CORFAC network, call the Chicago headquarters at 224.257.4400 or visit www.corfac.com
By: Natalie Dolce
SAN FRANCISCO—Asian investor profile has really been focused on New York and San Francisco. Now they may be willing to look more closely at alternate markets such as Chicago, Houston, Seattle, Denver and Boston or strong suburban markets. That is according to Anton Qiu, a principal and executive managing director of TRI Commercial/CORFAC International based in San Francisco, who spoke in depth with GlobeSt.com on the subject in this two-part Q&A series.
GlobeSt.com: Can you give us a sense of the scale of Chinese investment in US commercial property in recent years?
Anton Qiu: From January 2005 to March 2014, Chinese investors made direct acquisitions of $8.5 billion in U.S. commercial real estate. Of this amount, an enormous $5.8 billion was in the 15-month period from January 2013 to March 2014, according to Deloitte 2014 China Investment Report.
GlobeSt.com: Drilling down locally, what are some of the San Francisco investments made by Chinese buyers?
Qiu: *Vanke’s joint venture with Tishman Speyer (70/30) in SoMa to develop the 655-unit highrise luxury condo project Lumina at an estimated cost of $620 million.
*Beijing-based Zarison Group joint ventured with East Bay-based Signature Properties to create Brooklyn Basin in Oakland, which when complete calls for 3,100 homes, plus new commercial and retail development on the waterfront. The project is expected to take more than 10 years to build out and cost in excess $1.5 billion.
*China’s Gemdale Group is the financial backer for Lincoln Property’s ground-up development of the last remaining North Financial District Class A office building at 350 Bush Street.
*China’s Genzon Group (known as Kylli in the U.S.) bought the majority stake in 225 Bush Street, a 583,000-square-foot office building (the former Standard Oil Co. headquarters) which was valued at $350 million.
GlobeSt.com: What about smaller deals?
Qiu: Yes. Those are just the big deals. There have been many smaller property sales to Chinese buyers, many of whom are just high-net worth individuals buying local investment properties. For example, two years ago I was involved with a $12-million sale of a class B office building in San Jose. I represented a Chinese group out of Los Angeles in the acquisition.
GlobeSt.com: With China’s economy slowing, do you think the people managing its property investments here in the States will alter strategies?
Qiu: First and as most people know, there is a global search for yield with too much capital chasing too few investments of all asset classes. In the recent past Chinese investors have been willing to take on more risk; now they may be a little more cautious and instead of pure-yield plays, they may be looking for longer-term investments such as the Brooklyn Basin project in Oakland mentioned earlier. Additionally, the Asian investor profile has really been focused on New York and San Francisco. Now they may be willing to look more closely at alternate markets such as Chicago, Houston, Seattle, Denver and Boston or strong suburban markets.
GlobeSt.com: What’s behind all this Asian investment after all?
Qiu: The current market slow-down in US property markets may not be temporary; a real estate correction could occur given that capital markets have already begun a correction. Plus, the current market of super-high rents are not sustainable. However, I don’t see Chinese investments in US slowing down as there are waves upon waves of wealthy high net-worth individuals coming here and often for numerous reasons in addition to asset allocation and diversification previously mentioned, such as family needs—children’s education, immigration and quality of life. There are plenty of stories in recent years of Asians buying homes in and near Atherton to get their kids into local schools and have them ready for Stanford.
In addition, many wealthy Chinese are concerned about economic stability and uncertain how their own economy will continue to evolve from purely state-sponsored to some hybrid of capitalism with state controls or strong influence. The US is a safe haven for investment.
For Part 1 click here!
By: Natalie Dolce
SAN FRANCISCO—GlobeSt.com catches up with Anton Qiu, a principal and executive managing director of TRI Commercial/CORFAC International based in San Francisco, to assess the meaning behind China’s recent stock market slide and its potential impact on US commercial property investment.
GlobeSt.com: For starters, give us a perspective on Chinese investment in the US.
Anton Qiu: In the first half of 2015, Chinese firms spent $6.4 billion on 88 Foreign Direct Investment transactions in the United States—the highest first half-year figure ever recorded and about 50% of the money was put into real estate. (Source Rhodium Group China Report)
The biggest deal was Anbang’s $1.95 billion investment in New York’s Waldorf Astoria hotel.
GlobeSt.com: A little more than a month ago China’s stock market took a big hit—what happened?
Qiu: China stocks crashed and all Asian markets suffered major losses on “Black Monday” August 24. China’s benchmark Shanghai Composite index declined 8.5% in a day—its biggest selloff since 2007—wiping out all gains made this year. Many companies, including some state-owned firms, fell by the maximum 10%. The index lost about 38% of its value since its June 2015 peak.
It also sparked market turmoil worldwide. Europe is the world’s second largest economy and biggest trading partner with China; its stock markets declined 5% on the news, while Wall Street was crushed at the opening bell the following morning. Commodity prices fell into territories not seen since 1999. Oil fell to $39 a barrel—its low point since crude began its slide a year ago.
GlobeSt.com: You are originally from Shanghai and you do a lot of investment business with Chinese investors. After “Black Monday,” was there an immediate impact on some of your deals?
Qiu: Before I address commercial property sales, one anecdotal observation I will make is that San Francisco housing prices appear to be stabilizing—we’re seeing fewer bidding wars and sales actually closer to asking prices. Up in Napa, some of sellers of the high-end wine properties are beginning to discount prices. Bear in mind that about 15% of high-end residential sales in recent years have been to Chinese buyers—usually all cash. To me, this indicates that we may have reached a peak. My own deals weren’t impacted though Black Monday did generate a few phone calls and emails from concerned investors.
Regarding China’s stock market jitters and its impact on US commercial real estate—if anything, my personal view is that property investment will accelerate in the coming months and years because the wealthy upper-middle class and the ultra-high net worth families are now thinking about asset allocation, diversification and wealth/capital preservation more than ever before. This China stock market crash is a wake-up call that one can’t put all their eggs in one basket when it comes to managing and preserving wealth.
GlobeSt.com: Are there any indications that Asian property investors in the Bay Area are beginning to pull back a bit?
Qiu: No, I see continued strong demand and acceleration of investors’ desire to invest in almost all asset classes and the demand is from both individuals, family offices, as well as large corporations, tech companies, funds and SOEs (State-Owned Enterprises).
For Part 2 click here!
On behalf of TRI Commercial we are pleased to welcome Lawrence Chan to the San Francisco Office.
Lawrence Chan
Lawrence has a B.S. in Biochemistry from the University of California, Davis and an MBA from the Kellogg School of Management, Northwestern University and has spent the last 25 years in the biotechnology industry in sales and marketing positions. He is a proud native of San Francisco and lives in the city with his wife, Michaela, two children, Mila (9) and Kian (6), and Jax, the family cat.
Specialization
Through acquiring and managing a large portfolio of properties, Lawrence grew a passion for and specializes in Multi-Family investments and has become extremely well-versed in the San Francisco’s rent control ordinance.
Lawrence Chan
Investment Advisor
Direct: 415.268.2272
Fax: 415.268.2299
Lawrence.Chan@tricommercial.com
BRE License #01892831
Our San Francisco team donated gifts to the SF Fire Department’s Toys for Tots charity drive this year in lieu of a live Christmas tree. Happy Holidays!!
by Bill Wilson, Senior Broker, TRI Commercial
“There must be more to life than having everything” – Maurice Sendak
Positive Absorption (net gain) this year for the San Francisco market is 2.2 million square feet versus 1.6 million square feet a year ago. That translates into the vacancy factor in the Central Business District going from 5.9% last quarter to 5.3% currently; which means landlords in Class A space can ask for rents nearly double the $35/square feet that was normal five years ago. Have you doubled your revenue?
Gone are the days when tenants could go South of Market to receive a discount of 30-40% compared to asking rates North of Market. All of the action is South of Market. The only new construction North of Market is happening at 350 Bush Street (in back of the Russ Building) where Lincoln Properties is constructing 435,000 sq.ft. to be delivered shortly after 2015. Roughly 5 million square feet is in the pipeline for construction South of Market but the space is already 40% leased!
Solutions to the problem of rising rates vary from reducing suite size and reflecting smaller staff needs to being able to shrink necessary space by 10-20%. Some tenants are downgrading to Class B and looking forward to being able to open the windows to let in natural air and saving $5-10/square feet. In San Francisco, areas with relatively inexpensive rents are the Van Ness Corridor, North Waterfront and Union Square submarkets. Then there’s the ultimate solution: To move out entirely, or in part, from San Francisco. Oakland is the recipient of several non-profit agencies due to this trend. In April, Gordon & Reis moved about one-quarter of their headquarters operation, consisting largely of support staff, to 1111 Broadway across the Bay. There are 460,000 commuters who spend valuable time on BART daily to get to S.F. from the East Bay.
By the time you get this letter, the Giants will hopefully be on their way to another Championship, the stock market will have scared everyone again with its volatility, Europe will be closer to a recession threat, Ebola will be a household name and San Francisco rents will still remain high. Take a minute to call and tell me your real estate situation. We can find a solution!
Visit Bill Wilson’s website – http://sfspaceadvocate.com/main/
Jean Ko, TRI Commercial/CORFAC International
POSTED ON NOVEMBER 11, 2014
San Francisco is a veritable boom town that has already surpassed the market roar of 1999. It can even conceivably be compared to 1849, when gold was discovered 100 miles east. In fact, this year is so utterly off the charts that most of us in the commercial real estate industry have never seen an upcycle like this in our entire careers.
Witness the fact that through the first three quarters of 2014, San Francisco’s gross office absorption reached 7.6 million square feet. Net absorption in this same period was 2.4 million square feet. This compares with 1999, the record year, when gross absorption was 7.4 million square feet – and that was for the entire year! It is quite possible we’ll hit 10 million square feet of gross absorption by the time 2014 closes out. Incidentally, net absorption for 1999 was “only” 526,000 square feet.
Not surprisingly, three out of the four biggest leases in the third quarter were completed by tech companies. The tech frenzy in San Francisco has been well documented. Most of the Silicon Valley companies want, or need, to have a presence in the city. The trend is employment-driven. Young techies don’t want to commute to the suburbs, and there are plenty of jobs.
San Francisco added 1.11 million new jobs between August 2007 and August 2014 – a 10.5 percent increase in the employmented base here, according to Chris Thornberg, founding principal of Beacon Economics. The city’s employment gains are greater than all other California cities. They also rank among the highest, if not the highest, in the U.S. during the recession’s recovery.
This makes now an exciting time to be in San Francisco, but it comes with the risk that our local and regional economy is overly dependent on sustainable growth by technology companies.
For a little perspective, our CORFAC International colleagues from London recently paid TRI a visit. Farebrother/CORFAC International told us that while tech is also hot in the U.K.’s capital, it accounts for a reasonably healthy 15 percent to 20 percent of leasing activity in London. San Francisco’s leasing activity is 65 percent tech-driven or more.
When rents used to get out of hand during upcycles, companies would typically flee to Oakland and other points in the East Bay. Not tech companies in this cycle. We’ve created a new submarket to absorb some of the growth: Mid-Market, where Twitter is headquartered.
Composed of some 3.5 million square feet, no one would have located their businesses there five or six years ago. Nowadays, if space is tight in the historic tech center of SOMA (South of Market), tech companies will take space in traditional office properties in the Financial Center. They will simply make their interiors as creative as possible by gutting drop ceilings, increasing ceiling heights and exposing concrete and HVAC ducts.
By Jean Ko, Senior Vice President of TRI Commercial/CORFAC International in San Francisco. This article originally appeared in the November 2014 edition of Western Real Estate Business magazine.
– See more at: http://rebusinessonline.com/for-better-or-worse-tech-dominates-norcals-office-sector/#sthash.N0JyP5QG.dpuf
San Francisco, CA (September 26, 2014) –TRI Commercial/CORFAC International
President Tom Martindale, SIOR, announced today that C. Jean Ko, Senior Vice President and Office Leasing Group team leader, received a unique honor from the San Francisco-based education advocacy organization Room to Read. In recognition of Mr. Ko’s ongoing support, the organization dedicated a new library in Dhading, Nepal in his name. “We are very proud of Jean Ko’s ongoing efforts in support of Room To Read and congratulate him on this remarkable tribute. At TRI Commercial, we encourage agents to commit their time and financial support to the causes they are passionate about. Through these efforts, they truly embody our corporate social responsibility,” said Tom Martindale.
San Francisco-based Room to Read is a global not-for-profit organization actively empowering education through literacy and gender equality programs throughout the developing world. Over the past 10 years, more than 8.8 million children worldwide have benefited from Room to Read’s programs.
Written by Bill Wilson
How many times, through the years, have you heard that question?
On the business front, we are looking for clues for the timing of the next business downturn. In San Francisco, we have had four years of recovery and all signs are glowing. In the last year, the tech sector has soared 17% to 53,300 jobs. In the Central Business District of San Francisco, the direct vacancy is around 6.7%. City-wide, the direct rate is 7.2%. That’s quite a different picture than in early-2001 (at the peak of the dot.com bubble) when there were only 32,500 people in high tech. At that time, the vacancy in the CBD was only 2%. Throughout the roaring dot.com days, the tech crowd shunned Class A, preferring Class B warehouse space South of Market for the low rates. For the last four years, during the new recovery, there is still a preference for Class B side-core buildings with high ceilings known as “creative space”.
Those converted SOMA warehouses are now mostly full, forcing a lot of tech users to rethink the necessity for “creative space”. What sets Airbnb, Linkedin, Twitter or Salesforce apart from the rest of the “tech crowd”? Do they need side-core “creative space” to do their jobs. Of course not! Out of necessity for space, the tech star, Salesforce, reversed course and concentrated on Class A in the CBD. On top of their prior space, this year they leased all of 350 Mission Street (450,000 r.s.f.) and over one-half of the former TransBay Tower at 415 Mission Street (710,000 r.s.f.). The easy walk in the CBD to BART/Muni has attracted corporations with employees who have to commute from all surrounding communities, reflecting San Francisco’s housing crisis. This places a premium on space close to major transportation facilities.
Despite the nearly 7% direct vacancy in the CBD, large users are having trouble finding spaces exceeding 100,000 r.s.f. For many of my readers, that won’t be a problem. But the earlier restriction of Proposition M could constrict the availability of new construction, sending rents higher. Prop M restricts the amount of square footage in yearly allotments to 875,000 sq.ft. Despite 5.1 million sq.ft. in unused building allotments at the end of 2013, recent market activity has sapped that figure to zero. That restricts the movement of more large corporations moving to S.F. The rent pressure will fall on the small tenants, particularly those who use less than 10,000 r.s.f. According to CoStar, in the CBD there are 240 spaces below 5,000 r.s.f. and 132 spaces in the 5,000-10,000 r.s.f. range. (Note: These don’t include sublease space.) There are choices, but not a lot!
So it looks like there will be limited space in the next two years. Use it to share in the prosperity which is presently upon us!
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