January 8, 2015

Vacancy Down, Rates Up, Landlords Rejoice

S.F. rents are sky high, vacancy is rock bottom, and we've got some star-studded speakers set to tell us all about real estate's Cloud 9 at Bisnow's 4th annual S.F. State of the Market event on Tuesday, Jan. 20, at the San Francisco Marriott Marquis, starting at 8am. Get your tickets now!

Spencer Brown

Our keynote speaker needs no introduction (but we'll give him one anyway). It's LA-based Kilroy Realty CEO John Kilroy, who recently uprooted from Malibu to move to the city (S.F.'s sailing and creative talent were on his "pros" list; the cold fog was probably a "con"). John told us last fall that rental growth and occupancy were up in all markets the company plays in (Bay Area, Seattle, LA and SD). He definitely won't have a shortage of local projects to talk about, which include Salesforce's future home at 350 Mission and a bold pitch to plant offices atop the famous S.F. Flower Mart. He's got much more on his mind, including a $450M office project in Mission Bay teed up to start this year.

Eric Tao

Another top speaker: AGI Avant president Eric Tao, originally from the Big Island of Hawaii (here's Eric doing a statue selfie with King Kamehameha the First). Eric tells us he used to own and run the Hukilau Hawaiian Restaurant in S.F. Now he looks for projects near bars and restaurants; that's what urban dwellers want and it dictates rents they are willing to pay, he told us during Bisnow's residential event last summer. A new project on his company's books is a 13-story, 199-unit residential building at 1270 Mission.

AGI Capital

One of Eric's most unique development experiences was creating the "Blue Blob" at his 1880 Mission Vara project. He called the 300 SF spongy blob part sculpture, part adult play structure and part outdoor seating area. He thinks it may have been ahead of its time, however, as the subsequent owner removed it. AGI's theory as to why: It caused "sudden uncontrollable fits of laughter and spontaneous outbursts of creativity." Not deterred, Eric tells us he has something in the works for his next project in Dogpatch. Code name: Shipwreck. 

One moderator is Polaris Pacific principal Paul Zeger, who's been selling S.F. residences since the late '80s. He calls today's market the "Holy Trinity": economic growth, a place everyone wants to be, and increased demand from investors who don't care about returns as much--they just want to preserve their equity. Polaris Pacific is charged with selling the 656-unit LUMINA, and a newer assignment is the 260-unit Rockwell coming to Pine and Franklin--the largest condo project to break ground in PacHeights in a decade.

Another panelist is Lend Lease GM of California Bruce Berardi, whose construction firm is delivering and planning more than 1,500 units in the next 24 months (clients include Hines and Tishman Speyer). He expects residential and commercial growth to continue along the Van Ness corridor, the waterfront from China Basin to India Basin, Candlestick Point and the Central Subway Corridor. Due to the high level of construction and land price escalation over the past year, he says the balance between development cost and income may inhibit some construction starts.

The numbers reveal a stellar state of the market. Office asking rates grew by 14.2% to $63.24 last year, and investment sales volume totaled $5.9B, nearly triple that of 2013, according to fresh CBRE figures. Find out what 2015 holds at our 4th annual S.F. State of the Market event at the San Francisco Marriott Marquis, Jan. 20 starting at 8am. You'll hear from the all-stars above and other top execs from Hines, Emerald Fund, Webcor, Tishman Speyer, TMG Partners and VTS. Sign up today!

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Essel (KeepCalm) SFO
Bisnow (RawSpace-Crowd)
CohnReznick (Field) SFO
Bisnow (Niche-White)
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Juicy News From LUMINA

Tishman Speyer's SoMa condo project just landed a gourmet grocer and dining emporium called The Market on Main as an anchor retail tenant. The 9,500 SF space will feature high-quality prepared foods for takeout and organic groceries from local growers, shops and artisans. During the first two years of occupancy, the market will offer residents perks like daily coffee service, weekly wine and cheese welcome receptions, monthly farm-to-feast dinners and quarterly rooftop barbecues in LUMINA's amenity spaces. Don't feel like leaving the house? Order via the LUMINA mobile app to the concierge for pickup. We also got a sales update at the 656-unit condo complex: Since late September, the Main Street Plaza A building has sold out, with more than 100 residences in the 37-story Main Street Tower D sold. Sales start this Saturday in the Beale Street Plaza C building, with 74 residences up for grabs.

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Tell Us

Here's our PSA of the day: Don't forget the Golden Gate Bridge will be closed this weekend. tierney.plumb@bisnow.com