Confused about San Francisco’s real estate market? You are not alone

San Francisco is a place that loves to call itself “unpredictable,” and yet every fall it’s the same thing: the fog blows off, summer arrives, a ton of listings flood the real estate market and people start asking if this is the year the housing bubble finally bursts.

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Article provided by The Registry

HAYWARD, Calif. — Dermody Properties, a national private equity real estate investment, development and management company focused exclusively on the logistics real estate sector, has acquired the former Berkeley Farms milk processing facility on 20.23 acres of land located at 25500 Clawiter Road in Hayward. Dermody Properties will demo the existing facility and redevelop the property, to become LogistiCenterSM at Highway 92. 

Located in the center of the San Francisco Bay Area, LogistiCenterSM at Highway 92 will consist of two Class-A logistics buildings totaling 382,290 square feet. Each building will be able to accommodate between one and three customers. Demolition work will begin in October 2020 with final delivery expected in the second quarter of 2022. 

Jason Ovadia of JLL represented Dermody Properties in the transaction. Listing brokers on the project will be Ovadia, Greg Matter and Mike Murray of JLL.

“The Hayward submarket has become one of the largest warehousing and distribution centers in the Bay Area and is the second-largest industrial market along the I-880 corridor,” said George Condon, West Region Partner at Dermody Properties. “The property offers immediate access to Highway 92, Interstate 880, the Peninsula and the Port of Oakland. Its central location allows companies to reach the largest number of customers in the shortest possible time.”

The existing facility was previously owned by the Dean Foods Estate. Once the redevelopment is complete, each of the two buildings at LogistiCenterSM at Highway 92 will offer a 36-foot clear height, seven-inch concrete slab, 130-foot truck court, and will be equipped with an ESFR fire protection system, making it ideal for e-commerce.

“New-construction, state-of-the-art distribution space is highly sought-after as infill development in the Bay Area,” said Shelagh Danna, Vice President at Dermody Properties. “Particularly as e-commerce continues to trend upwards, LogistiCenterSM at Highway 92 will help to meet the ongoing demand as it’s ideally positioned to serve the greater Bay Area.”

Article provided by The Registry

COVID-19 has thrust the CRE industry into another transformative era. Causing C-suites to reflect on how they’ve supported employee productivity in the past and employees to redefine what the workplace means to them, the pandemic has sparked a momentous shift in how people work and stay safe simultaneously. 

At the onset of the crisis, this meant a mass migration to remote work. But six months on, and as the fatigue of working from home full-time begins to set in, workplace leaders are laboring to implement return-to-work strategies that meet their employees’ new expectations for flexibility and safety.

To examine how office utilization has changed since the COVID-19 infiltrated news headlines, VergeSense analyzed data from 20M SQFT of office space — specifically focusing on how utilization rates for desks, private offices, conference rooms, and phone booths have shifted. 

Here’s what we found. 

Hot Desks Are Heating Up 

Although we found that overall office utilization has struggled to rebound, early signs are pointing to an increased usage of agile work settings — like hot desks — that offer companies the flexibility they need when headcount changes daily. The utilization of these types of workspaces is gradually increasing as more employees return to the office. Other workspaces, however, remain stagnant with minimal utilization. 

The utilization of private offices, for example, dropped from 28% in February to just over 1.4% in July. And conference rooms, which were poorly utilized even before the pandemic, experienced yet another stark decrease in utilization from 12% in February to 0.6% in the summer months. Meanwhile, phone booth utilization, which peaked at 25% in February, fell to 1.5% in July. 

What these data tell us is consistent with what we’ve been hearing from our customers. That is that as companies recover from COVID-19, they’re shifting to more flexible seating plans that make office re-entry easier and safer, and also optimize the value of CRE in the new normal that follows.

From a safety standpoint, shifting to flexible seating in the near-term means workplace leaders can realize efficiency while catering to non-essential employees evolving needs as they choose to return to the workplace. This is because it’s a more on-demand approach where employees can book workspace only when needed. Desk reservation systems enable easy reserving a desk online in advance and occupancy sensors make real-time availability visible. This also enables companies to optimize cleaning and sanitization once employees are finished using a space.

And longer-term, many organizations are beginning to see the writing on the wall. Even pre-pandemic, for instance, workplace utilization hovered around 30%. Post-pandemic, with many employees likely only going to be office-based 2-3 days per week, we can expect utilization to drop even further. As a result, companies are looking at consolidating footprints and designing workspace to be less dedicated and more collaborative, and again, deploying technology that allows employees to book workspaces online and CRE leaders to optimize a truly on-demand workplace. 

Flexibility is the New Normal 

As companies reopen their offices, flexible seating discussions have been heating up and companies clearly see the economic benefit of more agile workplaces. 

After all, why should employers pay for dedicated desks for every single employee when employees are spending half the week working from home? The new normal is an office that is not just a warehouse of assigned desks, but a haven where employees choose to experience socialization and collaboration with their colleagues.  And our data hints at what many are calling the rebirth of the office where CRE leaders drop drab work designs for agile environments that optimize both the employee’s experience and the value of their portfolio.

The nature of the office continues to evolve!

Article provided by The Registry

Michaels, a chain retailer for art and hobby supplies, has inked a large lease in unincorporated Tracy. According to a source familiar with the market, Michaels signed a lease for 925,000 square feet at the North Tracy Commerce Center about a month ago. The property is owned by Newport Beach, Calif.-based Phelan Development and Cortese Real Property, LP.

Colliers International’s Stockton office represented the tenant in the deal, but declined to comment when contacted by this news organization.

In all, the North Tracy Commerce Center is a three-million square foot, multi-phased industrial park. Michaels has leased Phase I of the project, and leasing has begun for Phase II, comprised of two buildings each totaling 126,204 square feet. 

The center is located between the Bay Area and Central Valley, directly off of Interstate 205, with access to major freight movement centers along Interstate 5. There are upwards of 350,000 warehouse, manufacturing and labor employees within a 45-minute drive of the complex, and Tracy, which is the second-most populated city in the San Joaquin Valley, has a growing population of 90,000 and a median household income of $80,000 per year.

Other major occupiers located in Tracy include DHL, Crate & Barrel, Best Buy and Costco. An offering memorandum for Phase II states that the location of the North Tracy Commerce Center makes it easily accessible, but with less traffic and congestion associated with other nearby locations.

At the end of the second quarter, the industrial vacancy rate in the Tracy submarket was up about 40 basis points to 8.1 percent, according to a Colliers International report. Net absorption came to 342,223 square feet, with the year-to-date total coming to more than 1.1 million square feet. In the market there is about 29.6 million square feet of industrial space, of which about 2.4 million square feet was available at the end of the second quarter. While the San Joaquin County industrial market did experience some impacts due to COVID-19, Colliers maintains in its report that activity remained fairly strong, and there was only a brief pause in activity, a positive sign for the months to come.

Article provided by The Registry

Amazon is continuing its push east, this time taking a large chunk of space on the other side of the Altamont Pass. The e-commerce giant has recently solidified a lease for 850,000 square feet at Prologis’ International Park of Commerce, according to an industry source. The agreement adds to the one million square feet of space that Amazon already leases inside the business park, and further expands its presence in Tracy, which is becoming a major distribution hub.

Amazon has taken Building 14, which totals 851,200 square feet and sits at the heart of the campus. The building’s expected completion is 2021. Amazon’s first building in the park, known as Building 1, is 1,001,449 square feet. Other completed and leased buildings include Building 9, which totals 641,364 square feet and has been leased to Best Buy, Building, which is 664,333 square feet and l eased to Zinus, and Building 19, which totals 724,775 square feet and is leased to Home Depot.

As a whole, the Prologis International Park of Commerce (IPC) is an 1,800 acre, fully-entitled master-planned park. IPC is adjacent to the Bay Area and about 48 miles from the Port of Oakland, and within an hour’s drive of a consumer base of 7.2 million people, according to Prologis. 35 million people can be accessed by same day travel from the site, and 64 million can be accessed by next day travel.

“International Park of Commerce’s location is ideally situated to serve the coveted San Francisco Bay Area consumer base, while leveraging the benefits of the Central Valley’s large and diverse labor force,” states marketing documents released by Prologis.

The project includes 95 acres of parks, walking trails and open space and sustainable landscaping. The pre-approval of projects allows Prologis to develop rapidly. The firm also offers help with pre-construction and facility design management. The development is also outfitted with sewer and recycled water infrastructure, multiple data and communication service providers, including fiber optic connection, and other utilities. All buildings are built to LEED Standards.

Amazon has quickly been expanding its reach across the Bay Area. In May, Amazon took all 707,000 square feet at the Bay Area Logistics Center in Richmond, and all of Black Creek Group’s Hayward Logistics Center, which totals 506,000 square feet. In the fall of last year, Amazon leased 600,000 square feet at the Longfellow Logistics Center in Livermore.

Submarkets like Tracy—where Amazon’s newest lease is located—continue to do well thanks to the expansion of major companies such as Amazon. In another recent lease, Michaels, a retailer and craft supply store, leased 925,000 square feet in unincorporated Tracy, at the North Tracy Commerce Center, owned by Phelan Development.

Both leasing and development in Tracy have remained fairly consistent over the past couple of quarters. While vacancy rose slightly to just over eight percent, according to a report released by Colliers International, net absorption came to 342,223 square feet. Development kept pace to match demand, in what Colliers has classified as a “tight” market: During the second quarter, Five Class A advanced and manufacturing/distribution buildings were developed by Panattoni, and ranged in size from about 51,000 square feet to about 149,000 square feet. An additional six buildings are under construction, which total three million square feet. Prologis’ IPC continues to have a large impact on the market and accounts for 1.8 million square feet of total development currently underway in Tracy.

Article provided by The Registry

SAN JOSE, Calif. (September 16, 2020) – Starting December 16, 2020, businesses, commercial property owners, and multifamily residences in San José can apply for significant rebates on eligible electric vehicle (EV) Level 2 and DC Fast charging equipment and installation costs. This opportunity is available through San José Clean Energy’s (SJCE) partnership with the California Energy Commission’s California Electric Vehicle Infrastructure Project (CALeVIP).

Today, CALeVIP launched a new website (calevip.org/incentive-project/peninsula-silicon-valley) to help prepare interested participants for the application process, which opens on December 16. The new website provides specifics on eligibility requirements and eligible equipment costs, summarizes the application process, and provides a list of frequently asked questions. Project funding is expected to be in high demand, so applicants are encouraged to prepare ahead of time and apply quickly.

This $14 million investment ($4 million from SJCE and $10 million from the California Energy Commission) will add approximately 100 new DC fast charging ports and 1,400 level 2 ports – doubling the current level of charging infrastructure in San José.

SJCE is committed to installing at least 25% of the charging stations in low-income and disadvantaged communities to improve access to this infrastructure and move the needle on EV adoption. CALeVIP’s program administrator, Center for Sustainable Energy (CSE), will also provide technical assistance to multifamily residences and properties located in low-income and disadvantaged communities.

“Improving access to EV infrastructure is imperative to bringing down San José’s greenhouse gas emissions – 60% of which comes from current transportation methods,” said Mayor Sam Liccardo. “We are committed to making cleaner air and a more livable planet for all San Joseans.”

CALeVIP works to address regional needs for EV charging infrastructure throughout California, while supporting the state’s goals to improve air quality, fight climate change, and reduce petroleum use. San José’s investment is part of a regional Peninsula-Silicon Valley Incentive Project that totals $55 million in incentive funding in Santa Clara and San Mateo Counties.

San José residents can take advantage of extra discounts on EVs now through October 31 through Drive Electric San José. Five local dealerships – Capitol Chevy, Capitol Hyundai, Capitol Kia, Premier Nissan of San José, and Stevens Creek Kia – are offering up to $3,000 in discounts on seven EV models. Customers can stack these discounts on top of state, federal, and local EV rebates for up to $13,000 in savings. 

Income-qualified households can receive additional grants, affordable loans, and extra support to purchase or lease an EV, including used EVs. Those interested can learn more through free one-on-one counseling and financing workshopsin partnership with Peninsula Family Service.

“We are thrilled to offer these incentives to our community,” said Lori Mitchell, director of the Community Energy Department, which operates SJCE. “Making EVs more affordable and expanding the city’s charging network will help San José shift to an electric transportation system, which will lead to cleaner air and healthier communities.”

Income inequality is a challenge in San José and Silicon Valley, and many of our communities are disproportionately burdened by environmental pollution. As San José does more to ensure that low-income residents and disadvantaged communities have greater access to the benefits of our tech-centered economy, SJCE will focus on providing programs that are designed to increase equity and access to the benefits of electrification and renewable energy.

About the City of San José