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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Brian Fielding Shares Best Cities for Office Space Investments in 2015

 

Brian Fielding Space Investments in 2015

 

There are many different types of commercial real estate properties that an investor may consider when they are looking to make a purchase that will offer them a profitable return. Brian Fielding of Fielding Investments knows that commercial real estate is always a good investment, but when an individual is starting in or trying to grow in the market, they should focus on one kind of property and learn through experience to be successful managing such a property before they begin to invest in other properties. One of the most desirable property types in commercial real estate is office property, and when an investor is looking for a space to purchase, they should consider the strongest markets for the property type. Here, Mr. Fielding discusses some of the best areas to own office spaces in the coming year.

  1. San Francisco: Brian Fielding reveals that this city has always been a good choice for office spaces, but this year especially it is experiencing very fast employment growth in office related jobs. Additionally there is a high level of new construction projects being conducted in the area as well. Vacancy rates for office spaces are very low and the rent for office spaces is high. San Francisco properties may be more costly than properties in other areas, but these appealing factors still make it a profitable choice.
  2. Pittsburgh: This city has regained over 200% of the office jobs that were lost in the recession leading to a high demand for quality office spaces. Additionally, there is a shortage of these quality spaces in the city so when an investor is able to get such a property, they will face low vacancy rates.
  3. Boston: This city is benefiting from many of the same positive trends that other cities are seeing. However, it is also a good choice for investors because the initial investment for these properties is usually lower than it is in other top cities. There is low competition over quality properties as well so investors are better able to find the best properties to fit their own needs.

When investors are looking for the perfect property to purchase, they must look in the areas that are sure to give them success. The cities listed here by Brian Fielding of Fielding Investments are sure to offer investors a variety of quality properties to choose from and desirable market advantages. For more information go to http://www.brianfielding.com/.

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Brian Fielding Shares How to Get Started in Commercial Real Estate Investing

Business Commercial Real Estate

Commercial real estate advisor Brian Fielding knows that oftentimes people are more likely to invest in residential real estate because it is something with which they are more familiar. They own a home, and they know what it takes to keep up a home, approximate the taxes, and be more aware of local laws and regulations when buying, selling or adding onto a residential property. However, commercial real estate advisor Brian Fielding has been quoted numerous times saying that savvy investors often find that commercial real estate is the way to go for both short- and long-term financial gains.

There are several things that investors need to know about commercial real estate, but with some time and effort, everyone can learn the ins and outs very quickly and enjoy the many benefits of commercial real estate ownership.

1. The benefits of commercial real estate.

There is a wide range of benefits that come along with investing in commercial real estate. For one, it helps to diversify an investor’s risk in their real estate and overall investment portfolio. When commercial real estate owners lose one or two tenants out of the ten tenants in the building, the owner only loses 10-20% of their income, as opposed to losing a renter in a residential piece of real estate, where the owner would lose all of their income. Tenant rights are also almost always much stronger for residential tenants than commercial tenants. Courts tend to be more lenient with apartment and home residents, recognizing the basic needs for personal housing.

2. Cash flow.

Commercial real estate leases tend to have longer-term commitments than what one finds in residential property investments, and often, those tenants have an established financial history.  While it is true that a local pizza parlor might have limited historical financial data, many commercial tenants are extremely strong and their credit can be financeable. Indeed, if the tenant has a good Moody’s rating, investors will find that lenders will be more than willing to lend monies on the basis of their term. For example, if the investor has a very creditworthy tenant with a 20-year lease commitment, lenders will often tailor their terms to that period of time, allowing the investor to leverage their investment heavily.

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Essential Commercial Real Estate Terms Shared by Brian Fielding

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Before getting involved in the commercial real estate market, Brian Fielding believes that it is essential investors take the time to learn all that they can about the market. While commercial real estate can be a great investment, it is important that no one goes into the market blind, and the more that each investor knows, the easier it will be for them to be able to make smart decisions about how and when to invest and which properties to choose. To help these new investors, Brian Fielding offers understanding about common industry terms and how they are used.

  1. Cash on Cash: This term refers to the relationship between the return annually on a property and the investment first made on the property. By diving the income on the property each year by the amount of the investment on the property, this number can be determined. This number can be used to compare competing or similar properties to determine their performance.
  2. NOI: Also known as the Net Operating Income, a positive NOI indicates that a property’s annual income is actually profitable. A negative NOI means that the property is losing money. To find the NOI of a property, Brian Fielding shares that the operating costs for a year must be subtracted from the total income on the property for a year. The resulting number will be positive or negative and reveal whether the property is profitable.
  3. Capitalization Rate: This number will show the value of a property and can help determine future profits that the property may produce. Brian Fielding shares that this number can be found by dividing the income of the property by its total value. This method works for properties that are regularly producing an income for the investor.
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Understanding Different Types of Leases from Brian Fielding

When considering investing in commercial real estate, Brian Fielding of Fielding Investments and Fielding Companies knows that there are many things to consider. One of the biggest factors of a great commercial real estate investment is the type of lease that tenants will sign. Here, this commercial real estate advisor gives a quick overview of the four most common types of leases: Gross Lease, Single-Net Lease, Double-Net Lease and Triple-Net Lease. He gives some bullet points about what each lease and how it can benefit you, the investor.

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Q and A: Capitalization Rates and Property Investment Discussed by Brian Fielding

Dear Mr. F.

Everything that I read about buying and owning commercial real estate references “Cap Rate.” What is “cap rate” and what is its importance to the investor?

 

Dear Dean,

Thanks for writing me and for authoring such a good question. The actual term is capitalization rate but mostly everyone uses the abbreviation. It is a standardized valuation method using the ratio of Net income to selling price. By way of example, consider an investment that is netting [after all expenses] $10,000 and is available for sale at $200,000. A prospective investor would calculate the property by dividing the net return [$20,000] by the sales price [$200,000] and compute that the prospective cap rate is 5%!

Cap rate is a simple tool to measure return and to compare properties against each other. Generally the difference in cap rate between similar properties will be explained by differing inherent risk of the tenancies and the term remaining on the underlying leases.

As an investor, you can use Cap Rate to compare your intended acquisition to others that have occurred in that market. You can also follow trends within that marketplace, perhaps giving you a sense of where investment properties are headed in the future.

A quick warning, however … cap rate is best when used for comparing consistent cash flow and is thus highly emphasized in offerings such as net leased investments and rarely used where rents fluctuate greatly and there is a high risk for tenant turnover.

I hope this helps get you started. Please let us know how your efforts to become financially independent progress.

 

Brian Fielding

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