California

Chesapeake Lodging Trust Acquires Ace Hotel, Theater in Downtown Los Angeles

by Nellie Day May 1, 2015

LOS ANGELES – Chesapeake Lodging Trust (NYSE: CHSP) has acquired the 182-room Ace Hotel Downtown Los Angeles and The Theater at Ace Hotel for $103 million. The seller was Greenfield Partners. The property is located at South Broadway and 9th Street in the Broadway and Fashion corridors of Downtown Los Angeles. The Ace Hotel occupies a historic, 1920s Spanish Gothic-style property that was previously home to United Artists and Texaco. The Ace Hotel Downtown opened in January 2014. The property also contains a 1,600-seat theater that was restored prior to the opening. The space features the original salvaged theatrical lights. “We are thrilled to announce our acquisition of the Ace Hotel and Theatre and further expand our presence in the dynamic Los Angeles market,” says James L. Francis, Chesapeake’s president and CEO. “This historic building and theater were completely restored and reopened early last year. The level of detail and immaculate condition of the facility is remarkable. We are very excited to add another first-class asset to our growing high-quality portfolio.” The hotel also contains a rooftop bar called Upstairs at Ace Hotel Downtown Los Angeles. It is situated between the pool and a 2,000-square-foot indoor/outdoor lounge area. The building …

May 1, 2015

PIMCO Names Former Fed. Chairman Ben Bernanke as Senior Advisor

by Nellie Day May 1, 2015

NEWPORT BEACH, CALIF. — PIMCO has announced Dr. Ben Bernanke, former Chairman of the Federal Reserve, as a senior advisor to the firm. Bernanke will utilize his economic expertise to advise the firm throughout the investment process. He will also engage with PIMCO’s clients from time to time. Bernanke served a 14-year term as a member of the Federal Reserve Board of Governors. He spent eight of those years as Chairman of the Board. Bernanke maintained a seat on the Financial Stability Oversight Board, which oversaw the Troubled Asset Relief Program, throughout his two terms as Chairman. Bernanke was succeeded as Chairman of the Federal Reserve by Janet Yellen, the first woman to hold the position. She overtook the role on Jan. 6 of last year.

May 1, 2015

California Western

Fred Sands Establishes Institute of Real Estate at Pepperdine University

by Nellie Day March 20, 2015

LOS ANGELES — Fred Sands, the man behind California’s second largest real estate and financial services company, has partnered with Pepperdine University in Malibu to establish the Fred Sands Institute of Real Estate within the Graziadio School of Business and Management. The Sands Institute will include Master’s degree and certification programs, the Fred Sands Chair in real estate, the Fred Sands Fellows Program and Sands real estate conferences. According to a release issued by the school, the “Sands Institute will engage students and real estate professionals at both practical and policy levels. Conferences will explore real estate development trends and best practices, acquisitions, the brokerage business, financing opportunities, and other timely industry topics.” Sands is the former chairman of Fred Sands Realtors, which, along with its franchised operations, employed 4,000 people and generated $9.4 billion in annual volume. The debt-free company was sold to Coldwell Banker in 2000. Today, Sands is the chair and sole owner of Vintage Real Estate LLC, which acquires and revitalizes regional malls across the nation. He also chairs Vintage Fund Management LLC, which invests in growth companies and has historically generated returns that would place it in the top quartile of comparable private equity firms. …

March 20, 2015

California Market Reports Office Western Western Market Reports

San Diego’s Office Landscape is Changing

by Nellie Day March 10, 2015

San Diego’s core commercial office markets continue to tighten. Less than 1 million square feet was added last year, while more than 1.2 million square feet was absorbed. In 2014, construction commenced on the first speculative high-rise office project since Hines’ La Jolla Commons I in 2008. The Irvine Company plans to deliver a 306,000-square-foot, Class A development called One La Jolla Center in UTC this year. This project follows on the heels of the adjacent 415,000-square-foot, build-to-suit for LPL. This activity points to a strengthening market as developers, equity partners and lenders believe the benefit outweighs the risk of speculative development. Sorrento Mesa also received 410,000 square feet of new office space at 10001 Pacific Heights Blvd. last year that was pre-committed by owner-user Qualcomm. The overall vacancy rate for the core markets in three San Diego regions (Downtown, Central and North County) was reduced to 11.5 percent by year’s end, indicating a tight market for users. Rent spikes can be anticipated when vacancy rates shrink to single digits. This should occur this year in submarkets like the Uptown area (5.5 percent), Poway (5.4 percent), Rancho Bernardo (6.8 percent), North Beach Cities (5.7 percent), Torrey Pines (8.0 percent), Sorrento …

March 10, 2015

California Market Reports Multifamily Western Western Market Reports

Demand for Apartments Grows in San Diego

by Nellie Day February 10, 2015

The San Diego multi-housing market is poised for significant growth in 2015. The third quarter of last year recorded 4.5 percent annual rent growth countywide, the highest rent growth numbers seen in more than a decade, according to CBRE Econometric Advisors (CBRE EA). Vacancy, meanthile, remained at 2.7 percent, the lowest level seen since 2007. Countywide average rents are at $1,548, an 8 percent premium over the 2008 peak levels. CBRE EA found that UTC/La Jolla remains the top rental market in the county, with overall rents averaging $1,958. UTC also witnessed the second-highest rent growth in the county last year, at 7.3 percent. UTC/La Jolla solidifies its position as the county’s top rental market due to strong resident demographics, planned infrastructure improvements and the trolley addition, Westfield’s expansion, and the presence of several major employers, as well as the University of San Diego and the biotech cluster of Torrey Pines. Downtown has emerged as San Diego’s hottest development market, with Class A projects now commanding rents of $2,652, or $2.98 per square foot. There were 929 units in four projects added last year, bringing the total inventory in Downtown to 4,840 units in 23 buildings (100-plus+ units, market-rate only). …

February 10, 2015

California Market Reports Office Western Western Market Reports

LA’s Office Market is Alive

by Nellie Day February 3, 2015

Construction on the 73-story Wilshire Grand Hotel, office and retail complex in Downtown Los Angeles’ Financial District, coupled with Google’s recent purchase of 12 acres for development in Playa Vista prove the region’s office market is alive and well. It may even be enjoying a bit of a rebirth in this post-recovery period. Los Angeles, unlike many other comparable U.S. metropolitans, is composed of several distinct business centers that make it difficult to generalize about the overall market. Separated by only a few miles, there are nonetheless very distinct markets that comprise LA, due, in no small part, to the lack of a fully integrated public transportation system and long-standing traffic that remain a barrier to full connectivity between the various areas. With that in mind, there are some very evident trends emerging out of Downtown and the Westside, which includes Century City, Westwood, Santa Monica, Playa Vista and adjacent cities. Downtown is enjoying a resurgence. It now has a real live-work vibe due, in large part, to the highly successful LA Live mixed-use hotel, retail and entertainment development adjacent to Staples Center. A variety of high-rise condominiums and apartments now make it possible to actually live Downtown. With new …

February 3, 2015

California Market Reports Multifamily Western Market Reports

LA’S Multifamily Market Continues Upward Trend

by Nellie Day January 27, 2015

The multifamily market in Los Angeles continues to be a hot property sector as the economy improves and jobs are added throughout the region. I believe we’ll hear much of the same buzz about the market in 2015 that we’ve heard for the past few years. This includes statements like vacancy rates are very low and demand outweighs supply. This results in rising rents, strong demand for multifamily investment property, climbing prices climbing and cap rates that continue to compress. Los Angeles County ended the third quarter of 2014 with a vacancy rate of just 3.2 percent. Asking rents continued to increase, with third-quarter rents coming in at an average rate of $1,521 per month. This is up 0.9 percent from the second quarter of this year, according to Reis. On the investment side, properties are trading at sub-4 percent cap rates. There were 80 apartment sales totaling $693 million in the third quarter, with an average per-unit price of $300,000. Some of LA’s hottest multifamily submarkets include the Westside, Beverly Hills, West Hollywood, Hollywood, Echo Park, Silverlake and Downtown LA. The most in-demand and promising submarket for multifamily is likely Playa Vista, however. Google recently announced it purchased 12 …

January 27, 2015

California Market Reports Retail Western Western Market Reports

Global Fundamentals Favor OC’s Retail Market

by Nellie Day January 21, 2015

There are many opportunities for Orange County tenants and landlords in this ever-evolving region of more than 3 million residents. The county’s unemployment rate was 6.2 percent in 2013, compared to the nationwide rate of 7.3 percent. Homeowners have also prospered over the past two years as Orange County home values rose a whopping 25.8 percent on average in 2013. The median home price is a stout $560,000 and climbing. What does this spell? Opportunity – for businesses, jobs and investors. Tenants are back full throttle with expansion plans for the Southern California basin. The big issue tenants and developers will have to face is a lack of available entitled land where they can construct and occupy a retail strip center or single-tenant restaurant. Tight governmental regulation and healthy city development fee structures can drive the costs of development too high, thereby stunting development growth. Conversely, if you currently own property, the prospects for continued yield growth are promising due to the lack of supply and a global “uber appetite” to own California commercial real estate. We will see a tremendous transition of generational wealth over the next five years, the magnitude of which we have not seen before. This …

January 21, 2015

California Industrial Market Reports Western Western Market Reports

OC’s Industrial Market is About to Get Tighter

by Nellie Day January 13, 2015

The Southern California Leading Economic Indicator is continuing its upward trend. It has been on the incline for more than four years, since the last decrease in 2009. This suggests a rise in economic activity over the next six months that will continue the solid fundamentals for the Orange County industrial market well into 2015. A near record low industrial vacancy rate of 3.5 percent, along with an unemployment rate of less than 6 percent, has caused an aggressive search for viable land amongst developers. Numerous cities in Orange County have modified their industrial zoning regulations this year to permit a variety of additional uses that encourage new development. As a result, residential and retail property developers have been removing existing industrial buildings from current inventory. Growing companies in Orange County are starting to feel the inventory squeeze. The lack of available space is making it difficult to meet a client’s needs. This is causing landlords, buyers and tenants to make extensive renovations to the few buildings left available to them. The limited supply has been a major factor in the increase in value for larger assets, as clients are willing to pay more for properties. Sale prices are up …

January 13, 2015

California Market Reports Office Western Western Market Reports

OC Office Market Recovers

by Nellie Day January 6, 2015

The Orange County office market continues to experience steady growth as it moves into 2015, with three straight years of positive net absorption under its belt. The county’s unemployment rate has dropped to 5.4 percent over the past 12 months, while the job growth rate has averaged 1.8 percent over the same period. The overall signs for the office market are very positive as we head into the growth phase of this real estate cycle. Orange County’s office market has experienced almost 1.7 million square feet of net absorption in the past 12 months, according to CoStar. This net absorption has been spread out evenly over Class A and B properties. The current vacancy rate of 11.4 percent has steadily declined on an average of 1 percent per year for the past four years. Based on current absorption trends, the office vacancy could dip below 10 percent in 2016, which may usher in significant speculative development. The majority of the tenant activity is home grown, with limited growth from companies outside of Orange County. Net absorption is mainly due to recent larger space transactions. These occupiers include Pacific Investment Management absorbing 380,000 square feet, Belkin International (128,000 square feet), Yokohama …

January 6, 2015

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