61% of New Office Deliveries Are Pre-Leased - And What's Left Won't Be An Option For Most Commercial Tenants

CBRE is reporting that a great majority of the new commercial deliveries are pre-leased which means what's left will need to be leased as occupancy dates approach.

Large tenants are typically the ones who have committed to these blocks of space and typically are full floor occupiers.

What this means is that most commercial leasing tenants aren't going to be able to lease these spaces because 1. they may not be able to lease a full floor or more 2. new construction lease rates aren't cheap and 3. not everyone wants to be in a downtown or similar location.

Just because you see cranes and buildings being built doesn't mean there's new inventory that will be an option for small and medium-sized companies.

For the report, please click here.

Chinese Outbound CRE Investment Way Up

BusinessWire has a report here of the spike in Chinese outbound commercial real estate investment.

Much of this is inbound to the United States.  The smaller investors who may not be included in these statistics will continue to acquire U.S. properties, boosting the pool of buyers.

The price per square foot in accordance to BART stations - please see this graphic

Thanks to the people who did the research to determine the cost per square foot for real estate proximate to BART stations.

Enjoy!

City coffers should be flush with revenues from property taxes

San Francisco just broke a record and you can thank all the residential and commercial property owners who have recently bought and sold which triggered a new tax basis.

See here: http://www.bizjournals.com/sanfrancisco/morning_call/2016/07/sf-property-assessment-taxes.html?ana=e_sfbt_rdup&s=newsletter&ed=2016-07-19&u=vg6D5JmGWYz237t8pJQfyu9S9ik&t=1468941996&j=74977152

Warning to commercial tenants: If The ADA Education and Reform Act of 2015 does not pass, "drive-by" lawsuits will only continue

One of my commercial clients, an insurance agent, informed me of a string of "drive-by" lawsuits his parent company had been dealing with nationally.

This bill will help avoid costly litigation and allow commercial tenants to make repairs (or seek repairs by their landlords) without money going to unscrupulous attorneys.

See here:http://www.narfocus.com/billdatabase/clientfiles/172/2/2696.pdf?om_rid=AAQwPS&om_mid=_BXhTApB9PiYlhL&om_ntype=BTNCommrcial

48 Property Global Portfolio Sale By Swedish Pension Fund - Is This A Sign?

It is begin reported here that a Swedish Pension Fund is selling their global portfolio of commercial properties which includes several assets in the Bay Area.

There are several reasons why people sell - they've reached their investment goals, the market is hot, or there are signs that we have hit the peak (or near it).

When something of this magnitude occurs, it leads many to believe that we're close to the top of the market as it wouldn't be prudent to sell early and leave a whole ton of money on the table.

SF Business Times: "Venture capital deal-making signals the party's over"

So I just read that the party is over.  Venture-backed firms are experiencing down rounds, layoffs, acquisitions, and more.  Well, don't tell that to all the venture-backed tech firms that I am currently working with who seem to be doing just fine and in need of space.

The article states that "Rory O'Driscoll, a partner at Scale Venture Partners in Foster City, likened the mood in the Bay Area's startup community to the moment the Titanic hit an iceberg.

"No one wanted to jump into lifeboats right away," O'Driscoll told the Wall Street Journal."

That sounds pretty foreboding!  Personally, I too have experienced the collapse on a small scale where two of my venture-backed firms who signed leases last year have already shut down locally or are about to do so.  There are grumblings that others may not be adding headcount as previously forecasted.  But the comparison to a sinking Titanic isn't a reality in my current circle, yet.

I suspect the slow down will continue but there are too many cutting edge companies being created each and every day that are going to succeed tremendously and reshape entire industries such as Airbnb, Square, and Uber.  As long as their growth and path to profitability are realistic, we should see a healthy commercial real estate market.

Now is the time for tenants to contact me to extend their leases or find new office space as securitizing a deal as things worsen will only get more costly.  Sure, there is the argument that rates may go down but unless there is a flood of office space in the 2-10,000 square foot range, pricing may not drop dramatically in the coming quarters.

Please ping me with questions about an early renewal, early relocation, or to discuss subleasing surplus space.