3 Reasons Why East Bay Is Hot
It's S.F. that garners all the attention in NorCal real estate, but it's the East Bay's time to shine. Here's what you need to know.
1. Financing Is Getting Easier
Latham Square, a 15-story, 118k SF office building in Oakland just scored $17.2M in bridge financing. Owners Contrarian Capital Management and Ridge Capital Investors plan to reinvent the 70% leased property at 1611 Telegraph, and will kick off the 12-month reno next week. CBRE's Brad Zampa, Michael Walker and Megan Woodring arranged the financing with capital provided by a national private debt fund. Brad (snapped skiing with the fam in Squaw) says Oakland has become an attractive investment market for institutional capital looking for core-plus and value-add returns at a substantially lower cost basis than S.F. CBRE is also handling leasing during and after the repositioning.
2. High Tenant Demand
Healthcare, FIRE and software/cloud information tenants account for 60% of active office requirements, according to new JLL research on North 680 Corridor submarkets. (We'll have the scoop this week on a well-known tech tenant poised to sign in Lake Merritt.) As demand is expected to rise through 2015, the vacancy rate will keep falling, JLL says. Downtown Walnut Creek experienced a sharp dip in vacancy between 2011 and 2012 with the redevelopment of Broadway Plaza Mall underway (pictured).
3. Multifamily Sales, Developments
A 42-unit prime mixed-use clump in the Piedmont Avenue retail district of Oakland was just marketed for the first time in 50 years and traded in a trustee sale. Located on Piedmont Avenue and Howe Street (pictured), the 36 multifamily units and six commercial units sold for $7.6M, or $181k per unit. (CAP rates ranged from 2.67% to 3.17%.) A 10-minute drive south, we hear the high-rise residential building at 1331 Harrison is gearing up to start.