2012 Global Market report - NAI Global

San Francisco, California
Ventura County, California
Contact
NAI Kilpatrick
+1 415 226 1510
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
4,388,477
4,600,912
2,368,649
$106,788
$77,395
San Francisco has side stepped the rest of California with a
strong foundation in the finance, international trade and
tourism sectors topped with a thriving high-tech industry.
Demand for residential and office space has pushed vacancy
rates down and rents up. Investors are taking advantage of
market-bottom pricing paired with high demand growth and
a fixed supply of land.
Increasing asking rates, downward pressure on vacancy and
positive shifts in employment continue to be the story
regarding the San Francisco office market. Vacancy rates
have continued to decrease from a market high of 14.2% in
Q3 2010 down to 12.1%. Submarkets south of the financial
district continue to grow with significant move-ins in 2011
by major tech companies including Google, Salesforce and
Zynga. Investor confidence and downward pressure on cap
rates continues to be the story of a number of office building
sales.
The San Francisco industrial supply continues to decrease
as buildings or land are converted to other uses, primarily
residential and flex office space. Fixed supply of land
continues to drive costs above manageable operating levels
for industrial use and companies continue to relocate to the
East Bay. Historical buildings south of the CBD continue to
be a hot-spot for both creative office space and housing,
driven by high-tech start-ups.
Multifamily residential activity has been strong. Rental rates
have been increasing dramatically and cap rates dropping
to historically low levels. Demand has been driven by
expanding educational facilities in the area, high-tech
companies hiring rapidly, and a lack of affordable forpurchase
housing opportunities.
A number of major projects are under way which will
significantly impact the urban landscape. The first, the
Transbay Transit Center is to be the “Grand Central Station
of the West” and include new residential, office and retail
space all in the core of San Francisco. SFPUC Headquarters
is currently under construction encompassing a total of
257,097 SF and is 100% pre-leased. Another significant
project underway is the addition of floors 9 to 12 at 188
Spear Street.
Contact
NAI Capital (Ventura County)
+1 805 278 1400
NAI Capital (Westlake Village)
+1 805 446 2400
NAI Capital (Simi Valley)
+1 805 522 7132
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
836,425
891,269
430,061
$98,688
$77,517
Ventura County is the smallest county in the Los Angeles
Basin as measured by population. Its largest industries are
trade, transportation and utilities, which underscores the
importance of the Port of Hueneme to the local economy.
The second largest industry is not an industry but rather the
government. More generally, Ventura County’s economy is
service orientated as 84% percent of all jobs in the county
are considered some type of service job.
Ventura County’s unemployment rate was 10.1% at the end
of September 2011. While high, this is lower than the 11.3%
peak of the previous recession. The reliance on government
sector jobs is not likely to bode well for Ventura County.
Budget problems at all levels of government suggest that
jobs in this sector will decrease in the coming months. If
not, furlough days and other cost cutting measures will
continue to negatively impact the wages of government
employees.
Economic conditions in the office market remain weak.
Vacancy rates are high. In fact, vacancy rates for Class B
space are 20%, while those for Class A space are not much
better. Excess supply and little demand have severely
curtailed new construction. We estimate that a paltry 5,800
SF of new office space came on-line in 2011. However, this
will change in the coming months when the 100,000 SF
offices at RiverPark come on-line.
Due to the Port of Hueneme, vacancy rates for industrial
space have fared better. The rates are high but not nearly
as high as those for office space. More importantly, we expect
this segment to improve along with world trade. Although
small compared to other ports in the region, the Port
of Hueneme handles significant amounts of fresh produce
and automobiles.
Ventura County’s retail market is expanding. The Collection
at RiverPark is a new 600,000 SF open air specialty center
that will open in 2012. Tenants will include Whole Foods
Market, a 16-screen Century Theatre and REI. Target has
already opened its 150,000 SF store at the site.
Total Population
Median Age
38
Total Population
Median Age
35
San Francisco At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$
$
$
$
$
$
21.99
26.00
10.20
31.97
21.00
10.20
$
$
$
$
$
$
59.87
59.87
50.00
79.23
86.01
98.26
$ 40.94
$ 38.26
$ 31.11
$ 50.29
$ 38.40
$ 31.75
61.00%
12.00%
14.30%
93.00%
14.00%
11.00%
Bulk Warehouse
Manufacturing
$
$
3.84
5.88
$
$
38.50
15.00
$
$
9.39
9.18
6.00%
5.00%
High Tech/R&D
retaIl
$ 7.80 $ 36.00 $ 20.80 15.00%
Downtown
$ 18.00 $ 120.00 $ 37.80 4.00%
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
15.28
25.00
N/A
$
$
66.00
42.00
N/A
$ 30.22
$ 32.21
N/A
6.00%
3.00%
N/A
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
$30,000,000.00
$ 1,124,069.00
$ 80,000,000.00
$ 24,377,593.00
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
$ 445,000.00
N/A
N/A
$ 3,559,322.00
N/A
N/A
Residential
$ 1,950,000.00 $ 36,305,547.00
Ventura County At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
$
$
$
$
N/A
N/A
N/A
N/A
22.20
11.94
3.60
3.60
3.60
N/A
7.80
10.20
N/A
$
$
$
$
$
$
$
N/A
N/A
N/A
N/A
35.40
41.47
15.00
21.00
21.00
N/A
42.00
54.00
N/A
$
$
$
$
$
$
$
$
$
N/A
N/A
N/A
23.17
26.05
22.70
6.80
6.82
6.76
N/A
21.92
21.81
12.55
N/A
N/A
N/A
73.60%
17.40%
20.00%
9.20%
8.20%
11.00%
N/A
9.10%
9.20%
2.80%
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
$
$
$
N/A
43,500.00
325,000.00
N/A
650,000.00
N/A
$
$
$
N/A
1,089,000.00
650,000.00
N/A
1,250,000.00
N/A
2012 Global Market Report n www.naiglobal.com 86