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Evolving Trends in the East Bay Industrial Market “2016 Year In Review”
| Date post: | 12-Apr-2017 |
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Real Estate |
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Evolving Trends in the East Bay Industrial Market“2016 Year In Review”
Steve Kapp, SIORExecutive Managing Director [email protected]
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 StahleDirector
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 RatesVacancy 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 RatesVacancy 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 RatesVacancy 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 AbsorptionGross 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 BeyondSite Developer City Potential
Development SizePacific Commons ARA/Connor Fremont 800,000 SFPacific Commons OMP Fremont 1,700,000 SFMorton’s Salt TBD Newark 200,000 SFDepot Everwest Hayward 50,000 SFPoint Eden IPT Hayward 150,000 SFW. Winton TBD Hayward 400,000 SFEden Shores Steelwave Hayward 93,000 SFAlvarado IPT San Leandro 154,000 SFKraft Trammell San Leandro 553,000 SFGeorgia OMP San Leandro 280,000 SFPort of Oakland Prologis Oakland 680,000 SFLDK 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 FtOwner 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, CABuyer – Overton Moore / InvescoSeller – Integral CommunitiesSite Size – ±100 AcresLand Price – $28.00/psf
Tesla Lease – Livermore, CATenant – TeslaLandlord – Trammell Crow / MEPTLease Size – 600,000 SFLease Rate – $.56 NNN
LBA Portfolio SaleSeller – LBABuyer – BlackstoneSale Price – $1.46 BillionComments – 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 ?
THANKSFOR ATTENDING
Evolving Trends in the East Bay Industrial Market“2016 – Year in Review”
Steve Kapp, SIORExecutive Managing Director [email protected]
Curtis StahleDirector
