Wells Fargo (Access1) LSFO
January 6, 2015

S.F. Continues To Bleed Tenants

We got the scoop on two S.F. tenants who have jumped ship to Oakland.

CIM Group

Nanny agency Town & Country Resources is packing its bags from its pricey Sutter Street address to move into more than 2k SF at 1333 Broadway (above), while HMC Architects traded its Financial District ZIP code for a 3k SF space at 2100 Franklin (below). Both groups moved from S.F. to take advantage of more attractive rents coupled with access to BART, says Lee & Associates principal Ben Jones, who repped both tenants. 

While on the rise, Oakland rents are around a third the cost of those in the city. A year ago the story was the sea of nonprofits swimming across the Bay; now it seems tenants are craving Oakland for a variety of reasons.

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Bisnow (RawSpace-Crowd) REC
HKS Architects (50UN)
Five Star (NoWater) SFO
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Top stories on Bisnow.com

Mergers Hit Seven-Year Peak in 2014 DFW's Wealthiest Real Estate Moguls
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ResiModel CEO: Where Multifamily's At

We just caught up with ResiModel CEO Elliot Vermes before the holiday, here in town for a quick bite at the Palace Hotel (what do CEOs of year-old analytics companies eat? cheeseburgers). His NYC-based company is the only deal management, analytics and valuation platform specifically designed to speed up the underwriting process by 50% for multifamily transactions. So far, deal teams at brokerage titans like Colliers, Cushman & Wakefield, and CBRE have input more than 1,500 multifamily transactions into the platform. He used to be knee-deep in the biz himself, raising capital for large real estate funds at JP Morgan and driving acquisitions at Citigroup. 

 

That's when he spotted two big problems with deal transactions. Deals have many parties involved--sellers, brokers, lenders--sharing and exchanging info manually. Potential buyers get handed rent rolls and historical operating statements for properties via a PDF or Excel sheet from different systems. Half the time is wasted trying to get that data into a format you can consume, he says. Second problem: deal info sits in a network drive, with no way to capitalize on the info. He met with the head of multifamily at a major brokerage firm, and he was shocked to learn how hard it was just for him to get an analyst to pull data.

Because of the crash, we are much more a rental society than we were a decade ago. It's also harder to get mortgages. He thinks fundamentals have changed. More people are renting, and that increased demand is driving prices up. At the same time, the Fed is talking about no longer holding rates at 0; that will have a negative impact on prices, he says. That means we might be at a peak--not because of real estate fundamentals, but because of the capital markets. The nice thing about his platform is it can adapt to any market. If it's very active and people want to underwrite as many deals as possible, the platform opens up more time to do so. That means no longer missing out on diamonds in the rough because they didn't have the time to underwrite them. And if a market crashes, you need to do more with less. Having tools like his helps, he says.

 

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CREW SF (Bridge2) SFO
Bisnow (Niche-White)
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What Was On Wish's Wish List

Before 2014 wrapped up, Wish--a growing social shopping app--inked a big deal at One Sansome, and we've got some exclusive details from sources who worked on the 54k SF lease. The lease averaged in the low $80s over the phased-in term. CBRE reps the landlord and had a stellar 2014, filling up the building fast. What's unique is Wish agreed to work with landlord Barker Pacific on developing two spectacular 30-foot-tall window mezzanines that were in shell condition from the time the building was erected. This gave Wish some dramatic space on the top floors, and ownership got a return to help offset the cost of developing these mezzanines.

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Are you looking for space in Oakland? Tell us about your search: tierney.plumb@bisnow.com