The cost of doing business and heightened competition in top markets such as the Bay Area, Silicon Valley and the Los Angeles metro is increasingly untenable, and companies are setting their sights on inland markets.
By Lisa Brown | July 20, 2020 at 04:00 AM
WALNUT CREEK, CA—Before the global pandemic that roiled the economy and commercial real estate industry, commercial real estate brokers were noting a growing trend of companies moving out of dense West Coast markets. Faced with rising prices, and lack of office and industrial space, along with the rising cost of housing and business taxes, many small- and middle-market enterprises were under pressure.
The cost of doing business and heightened competition in top markets such as the Bay Area, Silicon Valley and the Los Angeles metro was untenable, and companies began to set their sights on inland markets. The COVID pandemic is projected to accelerate this trend, according to Edward Del Beccaro, executive vice president with TRI Commercial/CORFAC International.
In California’s major markets pre-March 2020, vacancies were decreasing in every sector except retail, which had exhibited an overall demand dip regardless of location. At the same time, the affordability and availability of housing in California were making it difficult for working- and middle-class people to find homes. In 2019, Census data showed that more people had moved out of California than had moved in for the seventh year in a row and a University of California Berkeley poll found 71% of people cited high cost of housing as the top reason for wanting to leave the state.
Mid-sized and small businesses such as billing companies, insurance firms, enterprise service companies, and smaller manufacturing and logistics firms couldn’t compete with larger employers for space or talent. Those firms needed to relocate where workforces could find lower cost of living and better quality of life.
“Particularly in the Bay Area, our firm has seen companies reach their limits,” Del Beccaro tells GlobeSt.com. “Because the Bay Area is constrained due to water, companies have spread out as far as Sacramento 60 miles northeast, creating super-commutes for their employees with travel times exceeding 1.5 hours one way. Business owners are looking beyond the Bay Area where both they and their employees can find better value and have more balanced home life. The COVID crisis also has companies looking at remote working and even leasing satellite locations in the outer suburbs away from downtowns.”
In the Western US, smaller companies have increasingly moved into inland states including those in the near west such as Utah, Nevada, Colorado and Arizona. Chief Executive reported that from to 2015, more than 1,800 companies left California.
One beneficiary of the Cal exit is Nevada, where the favorable business climate and growth of companies following a new Google data center in Henderson is causing a new housing boom. MDL Group/CORFAC International, a brokerage based in Las Vegas, recently found flex industrial space for a solar panel company moving from Fontana, CA.
“We expect this trend to continue with similar type energy-related companies because the overall cost of living and cost of doing business within the Southern California market is excessive,” said Hayim Mizrachi, president and principal of MDL Group. “Plus, Nevada has an excellent new home market and construction market, which will drive demand for alternative energy sources. Our climate is ideal for solar use and related businesses.”
While the full impact of the COVID-19 pandemic is yet to be known, one possible trend brokers are watching is that more businesses will look to spread beyond dense urban centers and coastal cities, which have been harder hit by the virus. Similarly, as remote work becomes more accepted, resulting in changing needs for space and staffing, companies may no longer need to be in expensive coastal cities. The California exodus may accelerate as middle-market firms choose to relocate operations to cities that are friendlier for business and more livable for employees, Del Beccaro says.
Read original article on GlobeST.com here.
By GEORGE AVALOS | gavalos@bayareanewsgroup.com | Bay Area News Group
PUBLISHED: April 1, 2020 at 7:35 a.m. | UPDATED: April 2, 2020 at 2:19 p.m.
DUBLIN — Amazon has bought a big Dublin office building where it could employ as many as 1,000 or more people, paying nearly $50 million in a deal that marks a dramatic new East Bay expansion for the tech titan.
Amazon.com Services purchased the Dublin office building, which is located at 5160 Hacienda Drive, paying $49.5 million in cash for the property, according to Alameda County property records reviewed by this news organization.
The office building, which totals 202,000 square feet, was bought on March 17, the county public files show.
“We are constantly exploring new locations and weighing a variety of factors when deciding where to develop sites to best serve customers,” said Brittany Parmley, an Amazon spokesperson. She added, “We don’t provide information on our future roadmap.”
Amazon’s purchase of the office building at the corner of Hacienda Drive and Gleason Drive marks a departure from the tech titan’s property activity in the East Bay.
In November, the e-commerce and video streaming behemoth leased a huge industrial building in Livermore at 400 Longfellow Court that totals 612,000 square feet.
“Amazon Logistics will open a new California Delivery Station, located in Livermore,” Amazon said in November in an email sent to this news organization. “The new station will power Amazon’s last-mile delivery capabilities to speed up deliveries for customers in the Bay Area.”
In contrast to the company’s other efforts, Amazon has now bought an East Bay building, rather than leasing space.
In Sunnyvale, using a series of leasing agreements, Amazon occupies more than 1 million square feet of offices where the company has enough space for 5,000 workers.
In the East Bay, Amazon could potentially employ 1,000 or more at the Dublin office building it purchased.
“Silicon Valley is spreading from west to east,” said Edward Del Beccaro, an executive vice president with TRI Commercial/CORFAC International, a commercial real estate.
Read original article on East Bay Times here .
October 10, 2019 Dean Boerner, Bisnow San Francisco Reporter
When Pacific Gas & Electric Co. broadened its shut-off map to about 600,000 customers Wednesday night, the utility company also added to the number of owners and property managers forced to enact emergency measures.
It’s a potential, but untenable, new normal for Northern California.
“There has to be a better way,” said Ed Del Beccaro, executive vice president of TRI Commercial, a prominent Northern California brokerage and property management firm. “We can’t be doing this four or five times a year. This can’t become the new norm.”
PG&E did not reply to a request for comment about how often it expects to enact rolling blackouts.
In San Diego County for much of the decade, Public Safety Power Shutoffs by San Diego Gas & Electric Co. have been a norm of sorts. The utility company has executed 13 such power shut-offs since the first instance in 2013, SDG&E told Bisnow.
SDG&E’s PSPS have affected largely the more rural, less densely populated East County, San Diego area, the Southern California Rental Housing Association said Wednesday. PG&E’s power shut-offs to over 30 counties in Northern California have impacted considerably more multifamily and office buildings.
Thrust into new territory starting Wednesday morning with the North Bay Area and counties inland falling into outage zones, Bay Area office and residential property managers have had to do some thinking on the fly while utilizing long-existing protocol.
“You can’t be in a building without power,” Transwestern Northern California Vice President of Asset Services Blake Peterson said.
For the many older office buildings throughout the Bay Area, that means working remotely, or not at all, and hiring personnel for emergency 24/7 services.
“The whole building card access system goes down, and a lot of times that system is not on emergency power, but runs independently,” Peterson said. “Engineers are on-site, security is on-site checking IDs, letting people in, often just to get medicine or cellphones.”
Both Peterson and Institute of Real Estate Management San Francisco President Vanessa Honey say constant fire watch is a necessity. Honey says security will be compromised to an extent, even with more personnel brought to monitor darkened, unpowered multifamily buildings.
“We actually have to hire someone who is trained to use their eyes and their nose to monitor buildings and notify the fire department in the event of a fire,” Peterson said.
Many of Transwestern’s buildings, including its 1M SF footprint of life science ones in south San Francisco, have generators, but the company has faced several outages in unspecified properties in San Ramon and Walnut Creek. Peterson said Transwestern has taken precautionary measures for properties “on the cusp” of PG&E’s shut-off map, which is based largely on weather forecasts, and has been in flux.
“We have a four-story building in Oakland, and we decided to stop using the elevators,” she said. “The really critical piece is communicating with building occupants and owners.”
IREM has stepped up its customer service, according to Honey. Many of its employees have dedicated their time to that given limited productivity on other tasks due to shut-offs. Most of IREM’s leasing offices don’t have generators.
“IREM professionals are going the extra mile from the leasing perspective and being extra kind and understanding during these times,” Honey said. “We have more time because we have less to do with our computers down.”
Transportation has been a widespread concern among tenants and property managers this week, including only recently allayed concerns that the vital Caldecott Tunnel would close and problems with BART would arise.
“The Public Safety Power Shutoffs are not affecting BART train service in any way because of the enhanced power redundancies we have put in place across BART’s system,” a BART spokesman told Bisnow.
But many were kept from work nonetheless, say Honey and Del Beccaro. Word that the Caldecott Tunnel would remain open barely arrived before outages commenced.
“I bet there is going to be a run on generators,” Peterson said. “There is potential for landlords to recognize that lack of occupancy means lack of productivity and employers are going to want to be in buildings that can sustain through this type of thing. Our hands are completely tied by what PG&E chooses to do.”
“Is this the new normal? That’s the question everyone is asking.”
Read original BisNow article here.
On behalf of Compassion Planet, the staff and management of TRI Property Management would like to thank our vendors for their generous support!
With their help, we raised $7,825 this year – our largest donation since the program began in 2006 – including $3,100 in holiday gifts for children at Compassion Planet and a $4,725 monetary donation to help defray operating expenses throughout the year.
Compassion Planet has tirelessly worked toward the goal of empowering local aged-out foster youth and at-risk youth (ages 18-24). Since their inception, they have been aware of the tremendous risk and vulnerability of disconnected young adults. Their dream was to start a program that connected with this under-served population and TRI believes they have done that, which is why we have chosen to support them.
If you are interested in learning more about Compassion Planet, please visit their website at https://www.compassionplanet.org/
It’s been an incredible year and we thank our vendors again for taking part. Through their extraordinary generosity we’ve donated more than $54,000 to local charities over the past 13 years! It’s a holiday tradition we look forward to sharing for years to come. The companies who participated in 2018 are listed below.
– John Gallagher, TRI Property Management
2018 Generous Donators:
20/20 Window Care, Inc.
ABC Pressure Washing
All American Sweeping Co. Inc.
C & C Interiorscapes
Champion Fire Protection
Don Heene Plumbing
Explorer Pest Management
H20 Proof Roofing Services
J & S Asphalt Old Village Landscaping Inc.
Law Offices of Joseph W. Carroll
SSRP, Inc. d/b/a Sure Shot
Tecta America Roofing
Trainor Fairbrook
Cassie Nagel
Andrew Murbach
Debbie Fender
John Gallagher
TRI Property Management
Year & Donations:
2006 – $2,000
2007 – $3,225
2008 – $2,800
2009 – $2,000
2010 – $3,800
2011 – $3,865
2012 – $4,025
2013 – $3,575
2014 – $3,450
2015 – $5,100
2016 – $5,825
2017 – $6,550
2018 – $7,825
TOTAL: $54,040
An annual operating budget for your income property is one of the many tools available for monitoring the income and expense of the asset, measuring its viability and success.
A “best practice” of property management companies is preparation and presentation of an operating budget for owner approval prior to the beginning of each calendar or fiscal year. A zero based budget, practical for reoccurring vended services, is most accurate. To begin the process, property managers request bids from several vendors for each clearly defined scope of services. This scope allows evaluation of bids/costs on an apples to apples comparison. Fluctuating costs such as utilities and non-reoccurring expenses such as plumbing or electrical repairs are based upon historical operations.
Income/Revenue may have several components; rent, expense recapture or CAM and perhaps tenant’s contribution toward marketing or tenant improvements. Owners differ in their desired reporting formats, many are satisfied with simply a Rent income line item, others (and TRI’s preference) is to report the Gross Potential Rent (actual rental income for the occupied space plus a market rate for the vacant space) followed by Vacancy and Free Rent then subtotaled as Total Collected Rent. This more descriptive approach to forecasting Income requires assumptions on roll-over of existing leases, new leasing activity, market lease rates and free rent terms. It also makes management and ownership aware of upside in improved occupancy and associated costs such as leasing commissions and tenant improvements.
Another component of Income is Expense Recapture under full service office leases and Common Area Maintenance or CAM’s under triple net retail and industrial gross leases. These are an estimate of the tenant’s proportionate share of operating expenses (defined by the lease) reimbursed to the landlord/owner. TRI has found many properties that we’ve taken over management leaving significant dollars on the table due to poor lease administration and collection of CAM’s.
Once Total Income and Total Operating Expenses are defined, the Net Operating Income (NOI) is the difference. Net Cash Flow may also be calculated by subtracting debt service from NOI. Further, capital improvements such as Tenant Improvements, major repairs, commissions, etc., can be forecasted and included in the annual budget.
This budget, once approved by the owner, is entered into the financial software and used as a comparison to actual monthly income and expenses for identification and explanation of significant variances.
Planning and measuring the success of your asset’s financial operations is one of the many services provided by TRI Property Management.
President, TRI Property Management
“Rocklin and Roseville have benefitted more than any other Sacramento submarket this year”, says Wirt
SACRAMENTO—TRI Commercial/CORFAC International president Tom Martindale, SIOR, recently revealed that John Gallagher, CCIM, CPM and managing director with the firm, led the TRI team that won the 531,273-square-foot commercial property management assignment in the Sacramento suburban community of Rancho Cordova that includes 10 separate properties under one ownership group.
The property owner is Karlin Cap Center LLC and the building addresses for the offices are: 11000, 11010, 11020, 11030, 11040, 11050, 11060, 11070, 11080, 11090 on White Rock Rd., Rancho Cordova, CA.
The buildings were constructed in 1984 and 1985 and the campuses are known as Cap Center II and III. Located in the Highway 50 Corridor of the state capital area, it is the largest submarket in the metro area and comprised of approximately 14 million square feet of office inventory. The submarket is predominantly occupied by large-space office users which include back office operations for several national and regional companies.
“We’re naturally proud to have won the management assignment in a competitive environment and look forward to supporting the occupants of the building as well as the owners to achieve maximum efficiency of building operations and on-going tenant satisfaction with the space they respectively occupy,” Gallagher says.
In fact, Bruce Wirt, SIOR and SVP in TRI Commercial/CORFAC International’s Roseville office, exclusively tells GlobeSt.com that Rocklin and Roseville have benefitted more than any other Sacramento submarket this year.
“We’ve had quite a bit of positive absorption in Rocklin and Roseville the first half of this year for several reasons,” Wirt says. “With the recovering economy and rental rates finally increasing, we had some classic ‘flight-to-quality’ leasing activity. Plus, many of the decision makers live in these communities and they prefer shorter work commutes,” he says.
While the Rancho Cordova/Highway 50 market hasn’t been the busiest submarket in the Sacramento Metro market this year, the Rancho submarket does offer 25,000-to-50,000-square-foot floor plates to users at competitive prices, compared with the tonier neighborhoods in Roseville and Rocklin, says Gallagher.
A few of the bigger deals in Rocklin this year, according to Wirt, are: PG&E expanding into 38,000 square feet (consolidated from several locations); Liberty Mutual taking roughtly 50,000 square feet, relocating from the Point West submarket; and Rocklin Academy leasing about 40,000 square feet (a brand new charter school); they went into a building that had been vacant since 2007.
Some of the recent Roseville deals this year he mentioned include: Rabobank expanding into 83,000 square feet, from about 40,000 square feet; Solar City leasing 55,000 square feet; and SureWest in the process of selling its 200,000-square-foot campus to Bridgeway Church.
TRI Commercial/CORFAC International Property Management’s team recently announced that it had secured the winning bid to manage 531,273-square-feet of commercial property management in the Sacramento suburban community of Rancho Cordova. This assignment includes 10 separate properties under the ownership of Karlin Cap Center LLC and the building addresses for the offices are: 11000, 11010, 11020, 11030, 11040, 11050, 11060, 11070, 11080, 11090 on White Rock Rd., Rancho Cordova, CA.
One of Rancho Cordova’s largest office complexes is set to add several new leases in upcoming months. Capital Center II and III at 11000 to 11090 White Rock will be getting improved HVAC and safety systems, drought-resistant landscaping and even food trucks for existing tenants.
Reference Links
http://www.corfac.com/news-details.cfm?NewsID=1073
TRI Property Management Services, a subsidiary of TRI Commercial Real Estate, one of the area’s largest regional commercial real estate companies, was founded in 2000 and is incorporated and licensed in the State of California.
TRI presently manages 3.5 million square feet of commercial properties including: multi-family residential units, mobile home parks, office, retail, owners associations and industrial facilities in California. TRI maintains six office locations throughout Northern California consisting of property management offices in Rocklin and San Francisco and commercial brokerage offices in San Francisco, Oakland, Walnut Creek, Roseville Rocklin and Sacramento. TRI’s comprehensive, professional property management can make the difference between a marginal real estate investment and a successful one. Our “value added” capabilities extend beyond the traditional functions of property management, staffing, marketing, leasing, collections, maintenance and financial reporting to include: asset management, construction management, compliance administration and real estate advisory services.
Since our inception, TRI has continually focused on serving the property management needs of individual and institutional owners. Our proactive, hands-on approach to management ensures unsurpassed attention to property performance with a focus on revenue maximization and expense minimization. TRI’s management staff meet one-on-one with owners to establish ownership objectives, address critical issues and provide timely, cost effective measures to overcome any property concern.
TRI is committed to client service and is continually refining its technology to meet the changing needs of today’s real property owners. The utilization of industry leading computer software (Yardi Voyager) provides accurate and timely management reporting which is critical to proactive real estate management. TRI Property Management provides commercial tenants and multi-family residents a secure on-line website portal which allows them to view their accounts, make payments and initiate maintenance requests. Prospective residents can search for available apartments and apply on-line. The portal can be accessed at: portal.tricommercial.com.
TRI is a member of BOMA® (Building Owner’s and Manager’s Association) and ICSC® (International Council of Shopping Centers) and participates in educational forums and seminars to remain on the leading edge of our industry. TRI’s personnel roster contains seasoned real estate professionals including CPM® (Institute of Real Estate Management’s Certified Property Manager) Designee and Candidate Members, CCIM® (Commercial Investment Real Estate Institute’s Certified Commercial Investment Manager) Designee and Candidate Members and RPA® (Building Owner’s and Manager’s Association’s Real Property Administrator) Designee and Candidate Members. Choose experience and integrity. Choose TRI.
To contact us about Property Management please call John Gallagher in Sacramento at 916-960-5700 Karen Smith in San Francisco at 415-268-2270 or and review the experience and qualifications of our professional Property Managers. http://ow.ly/kAr52
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