A New City Place for Santa Clara

Image via Urbanland.uli.org

Image via Urbanland.uli.org


Santa Clara, California, rolled the dice in 2010 when it decided to build a $1.2 billion stadium for the San Francisco 49ers National Football League team, sparking outrage from local environmentalists and die-hard Niners fans unhappy about the team’s games leaving town. Unlike recent stadium projects in other cities, there was no far-ranging redevelopment plan included in the deal for the 49ers stadium, which is located about 40 miles (64 km) south of San Francisco. And there was no guarantee that building the stadium and moving the games to Santa Clara would spark any interest in the city-owned land around the stadium site, which the city had been trying to promote for years.

“The ‘for lease’ sign had been on the land so long the sign fell down,” says Santa Clara Mayor Jamie Matthews.

Now, a year after Levi’s Stadium opened, Related Companies is planning a $6.5 billion mixed-use development on 239 acres (97 ha) across from the stadium, which is now home to a golf course and a BMX dirt track. The project—which was called City Place but for now is simply known as Related Santa Clara—includes more than 9.2 million square feet (855,000 sq m) of retail, entertainment, office, and residential space, making it one of the largest redevelopment projects in the region and one of developer Related Companies’ largest projects in the United States.

Would Related be developing this project without the stadium? “Absolutely,” says Ken Himmel, president and chief executive officer of Related Urban. But there is no doubt the stadium influenced the company’s plans for Santa Clara. “The stadium created a dynamic,” he says. “What it said to the business world is, we’re open for business and encouraging growth.”

Related has ambitious plans for the project, which is under environmental review. Not only does the firm intend to create an entertainment and retail destination, but its plans also call for a new city center for Santa Clara—the type of urban mixed-use project rarely seen in the suburban communities of Silicon Valley.

“There is a huge missing piece” in the region, Himmel says. “We view ourselves as building a new downtown for Silicon Valley.”

Becoming Santa Clara

In terms of development, Santa Clara, which is home to chip giant Intel, has lagged behind many of its swanky Silicon Valley peers. Palo Alto, Mountain View, Cupertino, and the other South Bay communities thrived during the high-tech boom years, developing around exclusive enclaves for the waves of newly minted tech millionaires. Modern Santa Clara, population 120,000, grew more as a suburban community near San Jose, and is best known for its semiconductor companies and California’s Great America amusement park.

“Santa Clara is a bit of an anomaly,” says Leah Toeniskoetter, director of the San Jose office for the nonprofit SPUR, the San Francisco Planning and Urban Research Association. “Santa Clara never had a downtown.”

During the early planning process for the stadium, the real estate market was still in the post-2008 funk, making it difficult for Santa Clara to entice a developer. Most of the site is landfill, raising an array of environmental and engineering issues. A group led by former 49ers quarterback Joe Montana developed a plan for an entertainment and retail complex on nine acres (3.6 ha) next to the stadium that is now used as a parking lot, but the group dissolved and the site is now part of Related’s plan.

Related saw a chance to create a large-scale mixed-use project. It also concluded that the market had changed. Prices for commercial and residential space in the communities surrounding Santa Clara have soared in recent years and now rank among the highest in the country. “Lease rates are high enough to promote work at a higher level,” Himmel says.

Related also found an eager partner in the city. “The golf course is not only water intensive, it’s subsidized by the city,” Matthews says.

This article was taken from urbanland.uli.org Original link http://urbanland.uli.org/development-business/new-city-place-santa-clara/ 

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Six Trends in Commercial Real Estate to Watch for in 2015

Source Urbanland.uli.org

Source Urbanland.uli.org

While many variables will determine the course of  U.S. commercial real estate, here are six potential trends for 2015 based on the current outlook:

    • Increased allocations and capital flows. With most institutions—not to mention high-net-worth investors—still being underallocated to real estate, combined with the strong four- and five-year performance of both NCREIF and NAREIT, we can expect more investment capital coming into commercial real estate. The significant amount of capital would be vexing if not for the fact that real estate seems to offer some of the best risk/reward propositions around, particularly given the multiyear run-up in equity and bond values. Look for higher allocation targets, and more foreign and retail investor money to continue to push capital values up well beyond the 2007 peaks, which should be cause for concern.
      • Continued low supply. New supply is at a historic low (see figure above), in part because market rents generally have not justified new construction and because financing has remained constrained. This leaves enormous upside potential in the property sectors to push occupancies and rents.
      • Increased appetite for risk. It has only been in recent quarters that investors have been willing to accept some additional risk to achieve higher yields. That has brought new activity to a number of secondary markets, including Philadelphia, Denver, Austin, and Charlotte, where well-priced Class A properties have come into play. In addition, there has been some “trickle out” through the marketplace into still-riskier placements in the suburban office arena, and into some Class B and C properties, where some investors are making strategic value plays. Finding the best investments in unfamiliar markets can be difficult. Class A office properties in one market are not always comparable to Class A office properties in another. The same is true across the spectrum of property sectors across the range of markets—from secondary markets to tertiary markets—anywhere in the country.
      • Investors continue to follow the jobs and people. Markets such as San Francisco, Austin, Seattle, and others have demonstrated advantageous population and job growth dynamics. Many of the jobs that are created in those cities are tied to technology as well as to energy and banking. Employment growth in the San Francisco area, for instance, outpaced the nation’s last year, with job gains exceeding 4 percent, and San Francisco is among the top tier of cities where a solid mix of job-creating industries is concentrated. Other Pacific Coast cities, including Seattle and Portland, also exhibit high concentrations of job-creating industries, driven in large part by technology. Other metropolitan areas, including Washington, D.C., with its still-substantial government employment base and growing financial services and technology sectors, and Houston, with its enormous energy sector and export machine, promise to be near the top of any list for investment—and not just in the office sector.
      • Multifamily still popular. Multifamily transaction volume has reached pre-recession levels, outstripping office transactions for the first time in ten years, as real estate investment trusts (REITs) and pension funds have fed a fierce appetite for the multifamily sector. The pace is unlikely to slow anytime soon. Apartment demand has been—and is expected to be—robust, supercharged by the shock waves of the recession and by strong demographic trends that are only beginning to manifest. And, as values moved ever higher, cap rates fell back toward 6 percent, close to where they stood in 2005 and 2006. Most deals have been concentrated in larger urban markets, such as New York, Washington, Los Angeles, and Chicago, with considerable focus on the echo boomers, who are partial to the amenities of an urban lifestyle, and their parents, who are realigning their housing needs toward walkable surroundings and mass transit.
      • Ongoing retail bifurcation. A confluence of factors including, especially, the economic recession and the inexorable wave of e-commerce has redefined the retail market equation. The day of the suburban mall, anchored by a mid-market department store, has probably passed. There will be no return. And, although the industry’s evolution continues, we are already beginning to see a deeply bifurcated mix of high-end urban retail destinations at one end of the retail spectrum with discounters at the other, and a scattering of local grocery-anchored strips in between. It may not be a formulaic trend, after years of consumer caution and austerity, but an improved housing market should lead to an improved retail environment. With home prices recovering and financial markets making strong gains, household wealth has risen to more than 5.5 times disposable income, the 20-year average. In addition, the annual expansion in retail sales, 6 percent per annum, is an indication that retail activity is well on its way to achieving a rate consistent with job creation and income growth.
      • At the upper end, Class A urban space has garnered the strongest rent growth and the lowest vacancies, as income, employment, and tourist activity are generally concentrated in the city centers (New York’s Fifth Avenue and Park Avenue; Chicago’s Loop and Magnificent Mile; Los Angeles’s Rodeo Drive; San Francisco’s Union Square). High-end department stores continue to thrive, and urban vertical mall space still commands a premium. Regional malls—most of which were developed prior to the downturn—serve as destination shopping venues for the affluent suburban population, and most of those malls have been holding their own, with vacancies hovering within a few basis points of 6 percent. Anchor tenants do well.
      • Industrial continues its steady improvement. Industrial real estate is subject to the whims of the national and global economies, as imports and exports wax and wane with the crises of the day, week, or month. There have been indications that economic slowing overseas has undermined some growth at some of the major ports and larger airports. And, as retailers move to be closer to customers, some intermediate warehouse points have suffered modest retrenchment. That the Amazon distribution model has affected the warehouse market goes without saying. A number of older warehouse properties have been tagged as obsolete. But, even locally based brick-and-mortar retailers still need warehouse space in many of the same places they have always been—near population centers where stores are and where people shop. Demand for industrial space—particularly in gateway markets—has been growing. Economic recovery and an upward trajectory in consumer spending, on furniture and electronics especially, have led to the absorption in many major markets, and there has been considerable “trickle-down” into secondary markets, including the Inland Empire of southern California, Sacramento, and Charlotte.
      • Investors are increasingly confident about acquiring assets, bolstered by attractive financing and still-attractive assets in the marketplace. We should expect to see multifamily continue to lead the Palio for investment activity, particularly in urban and infill locations and especially in transit-oriented locations, followed (in order) by industrial properties, hotels, office, and retail. While development remains subdued, with the exception of the apartment sector and in specialized areas of the industrial and hotel sectors, rankings are similar.

        Investors are moving into an array of asset choices in a widening number of markets as they seek ever more attractive yields. Interest rates do not appear ready to rise substantially in the near to medium term (especially in light of the Fed’s ongoing accommodative stance and massive deflationary factors gathering momentum), and cap rates—even in many secondary markets—will continue to compress, creating negative spreads in some larger gateway markets for the first time in many years—a worrisome sign. While new construction has begun to pick up in a few areas, new product does not appear likely to offset positive absorption trends. The outlook for 2015 is that commercial real estate fundamentals will continue to improve—but will its popularity, as evidenced by ever-increasing investment flows, create the conditions for another pricing bubble?

This article was written by Peter Burley and David Lynn, two of the contributors to ULI’s new book, The Investor’s Guide to Commercial Real Estate. Original post: http://urbanland.uli.org/economy-markets-trends/six-trends-commercial-real-estate-watch-2015/

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Brian Fielding Reviews Why Alliance for Justice is an Amazing Cause

Alliance for Justice is an Amazing Cause

Alliance for Justice is an Amazing Cause

Brian Fielding is one member of the real estate industry who cares. Whether it be taking time out of his busy schedule to help families from all over the place find their perfect home, or spotlighting different charities from around the globe who strive to help people, his whole platform in life is about making a difference.

Brian Fielding knows that Alliance for Justice is one organization that offers Americans the chance to help fight for a fair America. Located in the Washington, D.C. area but with offices around the country including the west coast and Texas as well, this group is dedication to the exploration of human and civil rights, as well as advocating these practices and educating the mass population in the country as well.  All Americans have the right to have their voices heard, seek justice through the court system as well make sure the government knows their feelings when making decisions that affect their lives.

This group counts their organization as a group that runs not for profit, something that is important in today’s world. Many charities out there operate as if they are giving the whole amount of donations to the people who need it most, but instead employ a lot of highly-paid staff members  that eat up a lot of the money each year that could be given where it would matter more. This is not the case for Alliance for Justice, since about 85% of the total expenses each year are directed toward different programs and services delivered, and 6.5% spent to try to raise more money.

Brian Fielding knows this charity hopes America continues to strive for progression towards the creation of an equal and just society, but Alliance For Justice needs our help. Donate today to help create a better future for America.

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Fielding Investments Discusses Three Different Types of Leases and How They Affect Investors

Property investment advisor Brian Fielding shares that there are three main types of leases that investors should be aware of.

Property investment advisor Brian Fielding shares that there are three main types of leases that investors should be aware of.

When investors start looking into purchasing and renting out commercial real estate to tenants, they need always to be aware that what they see on the Internet is not always the whole story. Brian Fielding of Fielding Investments shares that oftentimes, investors will find a lease that is classified as “NET,” yet it is not specified whether the lease is a “N” lease, an “NN” lease or a “NNN” lease. In order to assist investors in making informed decisions, Brian Fielding is releasing this guide.

  1. Triple-Net Lease “NNN”

The triple-net lease is the most preferred among investors, as it places all of the burden for any and all sorts of problems with the building itself onto the tenant, not the investor(s). These types of leases are in great demand by non-operating investors, as all responsibility for structural damage, taxes, insurance, utilities and more is assumed by the tenant. In addition, the terms of these leases are oftentimes 15 years or more and are generally reserved for larger regional and national tenants. These types of tenants have the experience and knowledge to handle any and all problems that could arise during their time of tenancy, however the investor should be aware that at the conclusion of the lease, the property will be returned in good condition with “normal wear and tear” excluded. This will usually mean that there may be little life remaining for critical portions of the building such as the roof and HVAC systems. The investor should assume that he will have to spend significant money to refurbish and ready the property for a subsequent tenant.

  1. Double-Net Lease “NN”

While still common amongst non-operating investors, property investment advisor Brian Fielding of Fielding Investments shares that the burden for many structural and site maintenance responsibilities will fall to the investor. He recommends that those investing in such properties hire professionals to help establish a budget for capital and repair matters. The projection of such costs is difficult to project and can range greatly depending upon location, number of tenants and a variety of other factors. Investors who own NN and N leased properties and do not live close to the property should seek the retention of someone diligent to oversee the property to protect against tenant abuse and to insure preventative maintenance is done for critical systems. In this type of lease, tenants are responsible for paying certain costs that are defined within the underlying lease. Mr. Fielding recommends that the investor should retain professionals to help budget for operational and capital expenses and have an accountant help prepare a budget for both the expected and “surprise” costs he is likely to encounter from year to year. This budgeting process may also allow the investor to accrue for such expenses in reporting to the IRS.

  1. Single-Net Lease “N”

While not entirely descriptive of the lease conditions, the term Net suggests that the tenant has limited responsibilities in the maintenance of the structure and various elements of the property. This type of agreement is often most successful with experienced property owners who have the talents and knowledge to address a variety of issues that befall any property. Many N lease owners are either able and willing to do their own repair work or have access to both handymen and specialists who can oversee the maintenance of critical systems [i.e. roofing, HVAC, masonry] professionally.

  1. Gross Leases

It is not uncommon to find governmental agencies and other large entities seeking Gross or Modified Gross lease commitments. Landlords are expected to have access to services such as janitorial needs and garbage collection and provide for those needs as part of their lease obligations. Mr. Fielding recommends that this sort of business should be reserved for the more experienced investors since there is a great deal of management and oversight required of the landlord. Further, tenants who seek gross leases are often more demanding in nature, and expect the landlord to be available immediately for even the most minor of maintenance issues. A casual investor who plans to travel or enjoy activities away from his home/office will likely not be fully comfortable with leases of this sort.

 For more information about any of these types of leases as well as for more information about commercial real estate investment, visit http://brianfielding.com.

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Brian Fielding Shares 5 Pieces of Advice for Those Wanting to Invest in Commercial Real Estate

Brian Fielding of Fielding Investments reveals some of the most important aspects and things to consider when investing in commercial real estate.

Brian Fielding of Fielding Investments reveals some of the most important aspects and things to consider when investing in commercial real estate.

Commercial real estate can bring in big returns, but it can also cause huge losses. The difference between the two is having the knowledge and the experience to make a good investment. While not everyone has 40 years of experience like Brian Fielding of Fielding Investments does, they can follow his advice with these five tips for commercial real estate success.

Don’t limit oneself to residential offerings.
There is a whole world of commercial real estate investment opportunities that are not simply homes or apartments. From office space to industrial hangars to mobile home parks and retail buildings and beyond, commercial real estate is a varied industry with so much to offer. If an investor does not have experience in these areas of the industry, it is prudent to partner up with someone or find a mentor who does.

Build relationships in the community.
Having good relationships and a foundation of well-placed connections are important assets in the commercial real estate world shares Brian Fielding of Fielding Investments. Having lots of contacts means having lots of potential partners who can complement an investor’s talents and possibly help finance their ventures.

Have a source to get questions answered.                                                                                                                                         When an individual is starting out in commercial real estate, they are likely to have many questions. Without the proper source of knowledge, they can make mistakes that would otherwise be easily avoided. The evaluation of properties, the types of calculations that need to be made and more are important parts of a successful commercial real estate venture that hinges upon having the correct information. Similarly, a prudent investor should have a good attorney and insurance broker and have access to individuals with expertise in the various elements of construction.

Having a partner is sometimes key.
Having a partner in the commercial real estate industry can oftentimes be a great advantage shares Brian Fielding of Fielding Investments. It is unlikely that one person will have all of the money and expertise necessary to evaluate and purchase certain assets. Investors should be prepared to share in both their success and exposure. Doing so might limit the return on one outstanding investment, but success usually breeds success and partners (as well as those that want to be) will take notice of the individual’s activities and be eager to join with them in future investments.

 Understand the math.
There are specific measures that quantify one’s return on an investment in commercial real estate. Not only will knowledge of formulae such as ROI, Cap Rate, and IRR help the investor to better understand the value of a prospective purchase, but these terms will be important to all commercial lenders. Spend the time to learn the terminology of the industry, as it will help establish credibility with sellers, brokers, lenders and other professionals who could be important factors in the success or failure of a venture.

For more information about the commercial real estate industry, or for answers to some of the most common questions that people ask about commercial real estate, visit http://brianfielding.org.

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Brian Fielding Presents Tips for Maintaining Commercial Real Estate Properties

As commercial real estate owners look at the rest of the year, they want to make sure that it is one that is prosperous. One of the best ways to ensure that they are able to do this is by ensuring that the property they have so carefully chosen and invested in is well-managed.

Whether an owner is a tenant as well or if they own a property that is exclusively rented out to other parties, there are many steps that they must take in order to make sure that they are properly caring for both the property and the tenants. To help these investors, especially those who are facing their first year as commercial real estate owners, Brian Fielding offers some suggestions for how these owners can maintain their properties. 

  1. Update all leases: Brian Fielding shares that it is essential an owner have current lease agreements with all of his or her tenants. Extensions should likewise be kept current. Owner operators should also have a current lease agreement with themselves when they are one of their many tenants as this will help them stay consistent. Though their own rent goes back to themselves, they should still have their own guidelines and agreement as a tenant in the building in writing to help them with their operations.
  2. Take note of key dates: There are many deadlines and key dates that the owner of a piece of commercial real estate must keep track of. They must know when leases with their tenants come to an end, when payments are due, and other important information. When owners are not aware of these dates and when exactly they are coming up, they may neglect important deadlines. That is why Brian Fielding recommends that each investor takes careful track of these dates.
  3. Track utilities: Some states, such as California, are now requiring that large commercial properties report their energy usage to the state. When an owner of a piece of commercial real estate is not the tenant, and thus cannot track their usage through their utility bills, they must find other ways of keeping track of this usage. Mr. Fielding shares that it is important that owners and tenants stay in touch to make sure that this information is easily accessed when it is needed.

When investors take advantage of advice from Brian Fielding and Fielding Investments, they are sure to maintain their property correctly to make sure that they find success. For more information on the best practices of buying and managing a piece of commercial real estate, visit www.brianfielding.com/

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Brian Fielding of Fielding Investments Reveals Essential Information for Purchasing Commercial Real Estate

Brian Fielding shares some basic knowledge of the commercial real estate market.

Brian Fielding shares some basic knowledge of the commercial real estate market.

When an individual or company is thinking about investing, they need to consider the options before them. Many investors who would like to invest in the real estate market usually gravitate toward residential real estate. Residential real estate tends to be more familiar territory, and more sentimental, which draws in many interested investors. However, Brian Fielding of Fielding Investments shares that investing in commercial real estate also has its advantages, and right now, with the market prospects showing strong signs for the rest of the Year, it is an optimal time to consider the advantages of commercial real estate. However, before making a purchase, utilize this knowledge about the market and this compelling comparison of the residential and commercial real estate from expert Brian Fielding.

  1. Commercial real estate is generally more financeable: When investing, it is important to remember that a commercial real estate transaction is viewed very differently than a residential real estate one.  Commercial assets are not only financeable with traditional lenders; there are a wide variety of other sources such as insurance companies that are eager to hold a security interest in quality commercial and retail properties. Further, one can expect to be able to obtain greater leverage from those lenders if the tenant base is well credited. In fact, it is not unusual to find lenders who will consider non-recourse [no personal guarantee other than for traditional carve-outs] and financing of up to 70 -80% for assets that have strongly credited tenants with long term leases.
  2. Commercial real estate historically tends to be more profitable: In most cases, when an individual invests in residential real estate, they are renting to individuals who are likely not sufficiently financially strong enough to purchase their own home. Commercial real estate, however, has potential for a much broader range of tenants including many that are very creditworthy. A building with multiple retail, industrial, and office spaces allows for a greater diversity of tenant mix. The loss of a single tenant does not impact the investor as seriously since that loss will be only a fraction of the property’s total income.
  3. There are several factors that determine value: While the basic maxim of real estate, “location, location, location,” applies to both commercial and residential property, commercial assets are more easily valued and financed than the somewhat equivalent residential property. Most lenders are willing to establish value and finance accordingly based on recognized indices such as cap rate and internal rate of return when considering commercial assets.

With knowledge of how commercial real estate is different from residential real estate, and what factors need to be considered when investing, Brian Fielding and Fielding Investments know that investors can make informed decisions about how, when, and why they should invest. For more information on real estate investment visit http://fieldinginvestments.com/.  

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