16
Evolving Trends in the East Bay Industrial Market “2016 Year In Review”
| Date post: | 12-Apr-2017 |
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Evolving Trends in the East Bay Industrial Market
“2016 Year In Review”
Steve Kapp, SIOR
Executive Managing Director
o Our team’s expertise in the East Bay industrial
market spans 3 decades.
o The team leased or sold over $95 Million Dollars
of real estate in 2016.
o Newmark Cornish & Carey recognized by the San
Francisco Business Times as the largest in the
Bay Area.
WELCOME
- 1 -
Curtis Stahle
Director
o Expected presentation time- 15 minutes.
o There is a chat box located in the bottom left
corner of the web conference interface.
o If at any time during the presentation you have a
question, please type your question into this chat
box and select either me or the group as a
recipient.
o Slides are numbered for reference.
Presentation Format
- 1 -
2016 – Industrial Highlights
o Asking Rates > $1.00/NNN/PSF/Mo for the first time ever.
o New Construction: booming in both core markets and
fringes.
o Hot areas: E-commerce, Advanced mfg., 3PLs.
o Industrial investment sale activity nearing all time highs.
o “Green” buildings - Oakland.
- 2 -
Rental Rate Trend – Warehouse Product for Lease
- 3-
$0.47
$0.59
$0.68
$-
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
2008 2009 2010 2011 2012 2013 2014 2015 2016
I-880 Corridor Warehouse Vacancy Rates and Rental Rates
Vacancy Asking Rate
Key Points
• 7 consecutive
years of
vacancy
decline
• On a % basis,
this rent has
grown fastest
• This product
type makes
up 45% of
total
44.68%
Rental Rate Trend – R&D for Lease
- 4 -
Key Points
• This product
type makes
up 17% of the
total inventory
• Highly
concentrated
in Fremont
$0.95
$1.15
$1.37
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
2008 2009 2010 2011 2012 2013 2014 2015 2016
I-880 Corridor R&D Vacancy Rates and Rental Rates
Vacancy Asking Rate
44.21%
Rental Rate Trend – Industrial for Lease
- 5 -
Key Points
• This category
of product is
most varied
• This product
makes up
38% of total
$0.59 $0.64
$0.77
$-
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
2008 2009 2010 2011 2012 2013 2014 2015 2016
I-880 Corridor Industrial Vacancy Rates and Rental Rates
Vacancy Asking Rate
30.51%
Historical Gross & Net Absorption – I-880 Corridor
- 6 -
-1000000
-500000
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
4500000
2008 2009 2010 2011 2012 2013 2014 2015 2016
Gross & Net Absorption
Gross Net Key Points
• Gross
absorption
has declined
for 2
consecutive
years.
• Low Net
Absorption
indicates
supply
constrained
market.
New Construction Timeline
- 7 -
Development Status
Planned Industrial Development
- 8 -
2017 and Beyond
Site Developer CityPotential
Development Size
Pacific Commons ARA/Connor Fremont 800,000 SF
Pacific Commons OMP Fremont 1,700,000 SF
Morton’s Salt TBD Newark 200,000 SF
Depot Everwest Hayward 50,000 SF
Point Eden IPT Hayward 150,000 SF
W. Winton TBD Hayward 400,000 SF
Eden Shores Steelwave Hayward 93,000 SF
Alvarado IPT San Leandro 154,000 SF
Kraft Trammell San Leandro 553,000 SF
Georgia OMP San Leandro 280,000 SF
Port of Oakland Prologis Oakland 680,000 SF
LDK PCCP Richmond 700,000 SF
TOTAL 5,760,000 SF
Building Sales
- 9 -
Key Points
• Average
investment
sale pricing
up 60% since
2014
• Why are
investment
sales
price/psf
higher than
user sales?
$82.00
$98.00 $103.42
$107.00
$135.00
$90.00
$100.00 $99.85
$159.00 $159.00
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
$110.00
$120.00
$130.00
$140.00
$150.00
$160.00
2012 2013 2014 2015 2016
User Sales vs Investment Sales / Price Per Sq Ft
Owner User Investment Sales
Market Drivers
- 10 -
o E-Commerce
o Tesla
o Advanced manufacturing
o Food
o Inventory erosion
Market Mover Transactions
- 11 -
Land Sale – Pacific Commons- Fremont, CA
Buyer – Overton Moore / Invesco
Seller – Integral Communities
Site Size – ±100 Acres
Land Price – $28.00/psf
Tesla Lease – Livermore, CA
Tenant – Tesla
Landlord – Trammell Crow / MEPT
Lease Size – 600,000 SF
Lease Rate – $.56 NNN
LBA Portfolio Sale
Seller – LBA
Buyer – Blackstone
Sale Price – $1.46 Billion
Comments – 51 properties- 13MM SF– multiple Bay Area
buildings
Strategies for 2017
- 12-
o Early renewals – advantageous to both parties.
o Capital upgrades – roofs, HVAC, lighting, internet,
security.
o Market Leasing Assumptions – More restrained.
QUESTIONS ?
THANKS
FOR ATTENDING
Evolving Trends in the East Bay Industrial Market
“2016 – Year in Review”
Steve Kapp, SIOR
Executive Managing Director
Curtis Stahle
Director
