Congrats, SF!

San Francisco Named Top City in 2013 Real Estate Forecast

Elizabeth Razzi | Urban Land | October 17, 2012 | link

  • San Francisco displaces Washington, D.C., as top-ranked city.
  • Apartment sector remains investors’ favored property type.
  • Secondary markets to gain favor as investors search for yield beyond high-priced core markets.
  • Office sector has started to come back; retail “not as bad as feared;” hotels are “surprisingly good.”
  • U.S. is still seen as a safe harbor for global investment.

RazziET2013_351“This is our recovery,” Jonathan D. Miller, principal author of the report, said when the Emerging Trends in Real Estate forecast was presented at ULI’s Fall Meeting in Denver. “It’s a recovery, but anchored in considerable uncertainty,” Miller said. He cited Europe’s economic troubles, a slowdown in China, and the “fiscal cliff” looming in the United States. But the forecast says modest gains in leasing, rents, and pricing will extend across U.S. markets from coast-to-coast and improve prospects for all property sectors.

According to survey participants, despite a slower-than-normal real estate recovery track, U.S. property sectors and markets will register noticeably better prospects as compared with last year. Recent job creation should be enough to increase absorption and push down vacancy rates in the office, industrial, and retail sectors, helped by the limited new supply in commercial markets. Robust demand for apartments should hold up, survey respondents indicate, even as new construction ramps up – and even the housing sector makes progress in most regions. Additionally, improving fundamentals should help with rents and net operating incomes, building confidence about sustained growth and strengthening recent appreciation.

Apartments have gotten “rather pricey,” Miller noted, but he said there doesn’t appear to be overbuilding in top, 24-hour international gateways. If there is overbuilding, it’s likely to be in secondary and tertiary markets where there are not not high barriers to entry. “It will not be in top, site-constrained markets,” Miller said.

“With the outlook for commercial real estate continuing to improve in 2013, investors are expected to allocate substantial sums of capital to the real estate asset class, according to our survey respondents” said Mitch Roschelle, partner, U.S. real estate advisory practice leader, PwC. “As yield on bonds and other financial instruments tighten in a still volatile market, commercial real estate’s income producing and total return attributes offer investors potentially attractive risk-adjusted returns.”

Stephen Blank, ULI’s senior resident fellow for real estate finance, noted that investors must keep in mind recent progress made in the industry as they prepare for a slow but steady recovery. “What these findings suggest is that, in general, the industry is moving forward bit by bit. Nothing indicates a quick turnaround for commercial real estate, but it is improving. Those who are patient and willing to rethink their expectations and adapt to market realities are the most likely to come out ahead next year.”

Capital Chases Yields

Despite macro-economic concerns, the 2013 Emerging Trends forecasts that investors will return to greater risk-taking in their portfolios in an attempt to gain more yield. Even as riskier secondary markets show up on investors’ radars, many believe the move cannot be made without concentration on leasing to high-quality tenants within growth industries that are sustainable. However, as property prices meet or exceed pre-recession levels in the cities of San Francisco, New York City, Boston, Washington, D.C., Los Angeles, and Chicago, the focus of property investors has shifted more to the lessee’s value, various market demographics, a city’s economic production, diversification, job growth, and where people want to live.

According to the report, investment capital’s interest in commercial real estate is expected to increase as other asset classes continue to offer minimal returns or too much volatility. In fact, Emerging Trends found that only six of the 51 markets covered exhibited a decline in investment prospects.

Transaction volume is expected to tick up with more action in 2013, according to Emerging Trends. Pricing is predicted to strengthen, but increases will be muted until credit markets return to more normal states. Commercial mortgage–backed securities (CMBS) may return to the financing spotlight once transaction activity increases. Interviewees expect that CMBS issuance can return to a $75 billion to $90 billion level over the next several years.

Respondents to Emerging Trends cite a number of best investor bets for 2013, which include:

  • Concentrate acquisitions on budding infill locations: Top urban markets outperform the average, bolstered by move-back-in trends and gen-Y appeal. Top core districts in these cities have become too pricey, so look in districts where “hip” residential neighborhoods meet commercial areas.
  • Construct new-wave office and build to core in primary coastal markets: Major tenants willingly pay high rents in return for more efficient design layouts and lower operating costs in LEED-rated, green projects.
  • Develop select industrial facilities in major hub distribution centers near ports, rail corridors and international airports: In these markets, the industrial sector is driven by tremendous demand by large-scale users looking for specialized space and build-to-suit activity.
  • Use caution investing in secondary and tertiary cities: Focus on income-generating properties and partner with local operators who understand tenant trends and can leverage their relationships. Markets grounded in energy and high-tech industries show the most near-term promise, while places anchored by major education and medical institutions should perform better over time.
  • Begin to back off apartment development in low-barrier-to-entry markets: These places tend to overbuild quickly, softening rent growth potentially and occupancy levels probably by 2014 or 2015.
  • Consider single-family housing funds: Housing markets finally get off bottom and major private capital investors make a move into the sector. Concentrate investments with local players who know their markets and can manage day-to-day property and leasing issues.
  • Repurpose the oversupply of obsolescent properties: Whether abandoned malls, vacant strip centers, past-their-prime office parks, or low-ceilinged warehouses, an overabundance of properties requires a rethink, a teardown, and, in many cases, a new use.

Investors Follow Job-Producing Markets and Echo Boomers

During recessionary times, some investors have sought more economically diverse markets to weather job losses and declines. However, now, in a time of slight economic uptick, Emerging Trends results indicate that investor sentiment is focused on job-producing industries and those markets that contain them, regardless of how diverse the businesses are that are producing those jobs. Read more…

Cash is king…

Regular folks transform into cash buyers to compete in hot housing market

“Cash is king” is an all-too-true cliche in today’s Bay Area real estate market, where all-cash offers can beat out those with mortgages, even when the financed offers are higher. That’s motivating some folks — even fairly regular  people who don’t have Silicon Valley mega-bucks — to go the extra mile to be able to make cash offers.

Whether it’s borrowing from relatives, taking out a home equity loan, tapping retirement funds, or a combination, having that cash in hand can vault a buyer to the front of the line. For a detailed look at how some ordinary people took extraordinary steps to become cash buyers, click here.

“It’s an oft-told tale right now,” said Stuart Maus, an agent with Red Oak Realty in the East Bay. “The market is super-competitive. A cash buyer can afford to lay up a little bit, knowing that the terms of all cash and the ability to have a short close may counter a slightly higher offer with a longer escrow period. A buyer with all cash can sharpen their pencil and come in more aggressively with price.”

Consider 3361 Victor in Oakland’s Redwood Heights neighborhood (pictured above). The modernist home closed in late April for $820,000, 19 percent over asking.

“The winning buyer paid all cash with no loan or appraisal contingencies and a three-day inspection period,” said Aman Daro of Red Oak Realty (Red Oak’s Deidre Joyner was the listing agent). “There were three offers. The highest offer had inspection, appraisal and loan contingencies, so the listing agent got the lower, all-cash offer to up their price and the sellers accepted it.” Read more…

Worst off still doing better than most in our area…

Bay Area real estate market is hot even in hardest-hit areas

Pete Carey | San Jose Mercury | June 23, 2013 | link

With Bay Area home prices at levels not seen in nearly five years, the communities hit hardest by the housing crash are starting to boom again.

From Oakley and Antioch to East Oakland, East Palo Alto and East San Jose, all-cash offers and free rent for a month for sellers are sweetening bids as a swarm of move-in buyers and investors compete for a relatively small number of homes for sale. Read more…

Shakespeare comes to town!

Entertainment: Livermore Shakespeare Festival kicks off June 21 with ‘The Liar’ and ‘The Taming of the Shrew’

Pat Craig| Bay Area News Group | June 6, 2013 | link

Livermore Shakespeare Festival begins its summer season June 21 with productions of “The Liar” by David Ives, and Shakespeare’s “The Taming of the Shrew,” set in immediate postwar Livermore.

“The Liar,” a wild 17th century farce by Pierre Corneille, and adapted by Ives just a few years ago, retains its rhyming verse but changes and sharpens the comic sensibilities for a modern ear.

Kate, the wildly recalcitrant love interest, will be right at home when “Shrew” opens at Concannon Vineyard, because that’s where the young woman and daughter of the owner has been working through the war years.

The piece has a Rosie the Riveter vibe to it, right down to the role of Kate, who has spent the war years working on her father’s vineyard.

And, although pleased the war is over and the soldiers are returning home, Kate is not the least bit happy that she’ll have to give up her job and turn in over to a man. That pretty much underlines what “Shrew” is all about — a wild comedy about the battle of the sexes that director Gary Armagnac decided would work beautifully set in post-World War II America.

“One of the first things that hit me on rereading the play was that all the men and women want to get married,” Armagnac says. “It reminded me of when the men came home from World War II.”

Kate’s vows of obedience to her husband, Petruchio, make a bit more sense in the postwar setting, but the show is much less a social document than a zany romantic comedy, mirroring the movies of the ’40s, along with focusing on the battles between Kate and Petruchio raging as all those around them are falling in love and getting married.

The play’s masks, which will be featured on the opening weekend, are considerably zanier than the Shakespeare piece, thanks, mainly to Ives, who was commissioned to write the adaptation to replace long speeches with silly fun and make the story, basically about the education of a romantic young man coming to the city, play well for a modern audience.

The Corneille device of including some quotations from Shakespeare has been retained, however, said Lisa Tromovich, founder and artistic director of Livermore Shakes.

“The Shakespeare speeches are usually paraphrased, but since this is for a Shakespeare Festival crowd, I put them in,” she said. “In fact, I think this is the reason ‘The Liar’ has been part of the season for many outdoor Shakespeare festivals.”

Tromovich has also moved the time period up to later in the 17th century to take advantage of the more interesting costumes from the Restoration period.

Beyond the comedy, the show uses the notion of masks to discuss the various ways people act in public and private, such as the masks they wear when they conduct business, to function in public or to get a date or maintain a relationship. The idea of masks is so prevalent; sometimes a person doesn’t know what he is like beneath all the masks. And Corneille concludes it is necessary to know this and function without masks when you’ve found the partner you want to spend your life with.

Both shows play in the Concannon Vineyard, 4590 Tesla Road, Livermore. The shows run about 21/2 hours, including intermission. Tickets cost $25 to $46 and can be reserved at 800-838-3006 or www.LivermoreShakes.org.

Preview and Family Night Performance of “The Liar” is on June 20, the opening night performance on June 21, with subsequent “Liar” shows June 22, 30 July 5, 6, 14 and 20. Preview of “The Taming of the Shrew” is on June 27, June 29, July 12, 13, 19 and 21, with a Family Night performance July 7.

Performances are 7:30 p.m. Thursdays and Fridays, 7 p.m. Saturdays and Sundays and 8 p.m. July 28.

FIREHOUSE FIRST FRIDAYS: The first Friday of the month mean special free events throughout the summer at Pleasanton’s Firehouse Theatre.

This Friday will include an improv show by Pleasanton’s teen group Creatures of Impulse. Also on the program is an installation on The Contemporary Landscape in the Harrington Gallery, a demonstration by landscape and still life painter Sally Haig

July 5, local singer-songwriter Ryan Cassata will perform. Also featured are watercolorist Marge Atkins who will show and share her methods, plus programs to be announced later, as will the entire August program, except for the Aug. 2 fiber and mixed media program by Denise Oyama Miller.

Child care and studio projects will be available for children at all the first Fridays.

Local charity never tasted so good…

Livermore Valley Wine auction raises $280,000

The Livermore Valley Wine Auction raised $280,000 for charity at its 19th annual event May 11, its organizers said Thursday.

Livermore Valley Winegrowers Foundation and the Wente Family Foundation for Arts Education are set to present checks June 6 to the beneficiaries, including ValleyCare Foundation, Open Heart Kitchen, Happy Talkers, Bankhead Theater and Livermore Valley Education Foundation.

Other major or “Master Sommelier” sponsors of the fund-raising event included FedEx, Diablo Magazine, Safeway Foundation and the Rose Hotel, said Peter Leary, president of the Livermore winegrowers group.

The wine auction, held at Wente Vineyards Estate Winery in Livermore, was attended by 300 guests who bid on more than 80 items.

Prepare for bigger bills, Livermore!

Livermore sanitation rates to go up starting in July

Jeremy Thomas | Contra Costa Times | June 7, 2013 | link

LIVERMORE — Most residents in Livermore will pay a little more for their trash pickup starting July 1.

Sanitation rates will go up by 0.8 percent for the next fiscal year, applying to smaller size 20-gallon and 32-gallon containers. For customers with 20-gallon bins, the change equates to an 85 cent increase in their total monthly bills to $17.61, which is still among the lowest rates in the East Bay, according to city Public Works Director Dan McIntyre. Bills for 32-gallon containers will go up 55 cents to $27.51 per month, about the median price for East Bay cities.

The fee change, part of an annual review process, will affect about 85 percent of residential customers, McIntyre said, and offsets revenue shortages and inflationary increases to service and employee costs for Livermore Sanitation, Inc. The city council is set to give final approval to the new rate schedule at its June 10 meeting.

Pleasanton Principals speak out…

Principals reflect on their time at Pleasanton schools | All three agree building relationships is paramount

Glenn Wohltmann | Pleasanton Weekly | June 7, 2013 | link

Pleasanton’s three departing veteran principals all have different backgrounds, but they share a common message: The key to their success is building relationships.

“The way we’re most successful with students is getting to know them and getting them to connect with us,” said John Whitney, who’s retiring after 14 years at Pleasanton Middle School. He was principal at Donlon Elementary before that, and served as dean at PMS before moving to Donlon.

One of the ways Whitney’s been known to reach out is through music, playing guitar with students and getting others to dance.

Both high school principals, Foothill’s John Dwyer, who’s headed to a high school in west San Jose, and Jim Hansen, who’s retiring, agreed that success is about more than just the students.

Dwyer is leaving after spending nine years at the school, where he started as a vice principal. He’s been principal for six years.

“Everything is built on relationships,” Dwyer said. “You need to build solid relationships with staff, parents, kids and the community.”

Hansen has been principal at Amador since 2010, and spent 11 years before that as principal at Harvest Park Middle School. Give him five minutes, and he loves to talk about accomplishments — not his own, but those of his students.

“It’s pretty exciting when, for example, our baseball team won Saturday,” he said. “They’re moving on to the next level of North Coast Section play. It’s kind of cool to see how excited the kids get and be able to be involved in that, to see the excitement of the kids that came in second in the nation in ‘We the People,’ just how hard they worked to get there.

“It’s just gratifying as a principal to see kids doing so well and thriving.”

Hansen also complimented the school’s drama and mock trial team.

“In this school, excellence in the classroom is the norm, but even beyond the classroom, just being able to watch kids excel. Not only do they excel in competitive environments, but they excel in community service,” he said.

Whitney said the best part of the job is being part of a team.

“Being part of a large team of dedicated, passionate people who want to make a difference in the lives of kids — that’s awesome,” he said.

Dwyer agreed.

“You get to work with wonderful kids, great teachers and faculty,” Dywer said.

He said the hardest part of being a principal is trying to achieve balance.

“Between the time you spend at school and the time you want to spend at school, because it’s a great place to be, but also looking at your own personal family life and trying to find that balance, it’s a time consuming job,” he said. “For your personal health and sanity, you’ve got to find that balance. We’re all challenged by that, trying to find balance in our lives.”

Both Whitney and Hansen touched on recent economic struggles as among the hardest parts of the job.

“Overall, the funding situation has been so unpredictable,” Whitney said. “We’re used to doing educational instruction at certain levels of staffing and financial support. With the budgeting challenges, we were bound and determined to continue that. We did everything we could to continue the highest levels of quality.”

For Hansen, less money meant having to say “no” more often.

“If there’s a request for funding a project or funding an event or something that’s near and dear to the staff or the students and the funds aren’t there to do that, that’s difficult,” he said.

They said working with problem students can be tough, too.

“Once in a while, you try everything you can for a specific student but there’s something in the way of getting them where they need to be,” Whitney said.

Hansen said his approach to discipline has always been less about punishment than it is about helping a student realize the consequences of her or his actions.

“Having that conversation with a student about what they did and what the consequences are — involving the family in that conversation, typically — I know that I’ve been successful if the child doesn’t do it again, if there’s a sense that he understands,” he said. “When a kid walks out of the office after you’ve had that conversation and after you’ve given him the consequence and he says, ‘Thank you,’ or she says, ‘Thank you’ — and they usually do — I think it’s been successful.

“There are times you have to be heavy handed with suspensions and expulsions but I really think kids come away from those experiences having learned a huge life lesson, so it’s really about the life lesson.”

All three offered simple advice for the next person to step into their job.

“Establish a real solid foundation of positive relationships with all staff — teaching staff, classified staff, kids, community. When it comes time to make changes, that becomes much more difficult, I think,” Dwyer said. “If you want to be successful with the changes you want to make or moving the school forward, you have to spend a lot of time building those relationships.”

Jason Krolikowski, an assistant principal from the San Ramon Valley Unified School District, was hired as Foothill High’s new principal.

Hansen’s successor at Amador Valley has yet to be selected.

His advice for the next principal is “learn the culture, get to know the staff and the students and the parents and understand what this community is about, what direction it’s already going.

“Obviously,” he said, “that person is going to want to add his own ideas in terms of that, but make sure he understands the direction the place is already going before implementing any changes.”

Whitney said he’s already confident the incoming principal at PMS, Aileen Parsons, will do a great job.

“She knows our school well,” he said. His single piece of advice: “You just have to enjoy the moment.”