Industrial & Investment Real Estate Brokerage
Brand New Industrial Bldg Sells for $27.3M
Logistics Co Acquires Property on Cerritos
April 16, 2014
Western Realco sold the newly-constructed industrial building at 2201 E.
Cerritos Ave. in Anaheim, CA to Rangar West, Inc. for more than $27.26 million,
or $130 per square foot.

The 5-Star distribution facility was a
speculative project which delivered with 32-foot clear heights, 46 loading
docks, and a fenced lot. The buyer provides logistic services and will occupy
the entire 209,715-square-foot property.

Rancho Cucamonga Flex Bldg Nets $6.5M
Owner User Takes 103,000 SF
April 14, 2014
A private investor purchased the flex building at 10655 E. 7th St. in Rancho Cucamonga, CA for $6.5 million, or about $63 per square foot, from Ruby Group Companies.
The buyer will be occupying the property for a start-up packaging business.
Built in 1985, the property totals 103,216 square feet on 4.7 acres at the southwest corner of Utica Ave., in the Airport Area submarket.
Kerry Cole with DAUM Commercial Real Estate Services represented the seller. Macy Lau with Mark III Properties represented the buyer.
Temecula Industrial Sells for $6.7M
Bomatic Moving Into New Space
April 16, 2014
Bomatic, Inc. purchased the industrial building at 43225 Business Park Dr. in Temecula, CA for $6.75 million, or about $39 per square foot, from a private trust.
Located on a 9.4-acre parcel, the 173,948-square-foot property was built in 1987 and contains 26,698 square feet of office mezzanine space.
Price Momentum Continues to Build for Commercial Real Estate
Latest CoStar Commercial Repeat Sale Analysis Finds Property Pricing Benefitting from Broad Recovery in Market Fundamentals
April 16, 2014
This month’s CoStar Commercial Repeat Sale Indices (CCRSI) provides more evidence of two broad trends in the commercial real estate investment market: the continued strong demand for top quality institutional-grade assets by big investors, and widening investor demand for mid- and lower-quality commercial property as the pricing recovery extended to smaller markets and secondary property types.
Based on an analysis of 1,028 repeat sales in February 2014 and more than 125,000 repeat sales since 1996, the CCRSI found commercial real estate prices registered broad gains during that month. The two broadest measures of aggregate pricing for commercial properties within the CCRSI-the value-weighted U.S. Composite Index and the equal-weighted U.S. Composite Index-gained 1.1% and 1.7%, both reached double-digit growth over the previous 12-month period.
The value-weighted U.S. Composite Index, which is more heavily influenced by high-value property sales that have seen prices skyrocket over the last two years, has risen to levels not seen since early 2008, reaching to within 5% of its pre-recession peak.
Meanwhile, the equal-weighted U.S. Composite Index, which is more heavily influenced by the more-numerous lower-value trades, remained 22.3% below its prior peak. However, pricing for lower-end properties appears to be gaining momentum. The index made its strongest annual gain in February 2014 since the current recovery began, advancing by 15.7% over the last 12 months as investors continued to expand their buying activity in non-prime markets.
The momentum shift to lower quality and smaller properties also appeared in the recent growth of the General Commercial segment, which grew by a similar 15.7% over the previous year, while its counterpart, the Investment Grade Index, advanced by an equally strong 15% over the same period.
In reporting on commercial property pricing trends, CoStar’s CCRSI made note of the continued positive net absorption across the three major property types - office, retail and industrial - which totaled 378.2 million square feet, a 15.3% increase from the prior 12-month period. Consistent with recent pricing trends, net absorption within the General Commercial segment rose 48% during the same period, compared with a 5% annual gain for the same period in the Investment Grade segment.
In keeping with the pattern set in previous years, the number of properties trading hands over the first three months of year is typically one-third lower than year-end sale volume. However, despite the slowdown, the CCRSI noted that transaction activity through February 2014 suggests that the year as a whole will be very active for commercial real estate investment. Having racked up a composite pair volume of nearly $10 billion through the first two months of the year, 2014 has already exceeded first quarter 2013 totals.
The full CoStar Commercial Repeat Sale Indices (CCRSI) report, including an accompanying data set analyzing commercial property sales through February 2014, is available here.
Some La Verne residents want to say no to Walmart

By on April 14, 2014

WalMart Looking to Expand

The mega-retailer is considering putting a grocery store in the city, but some residents and merchants say they would prefer someone else. Meanwhile, the city says it has to fill the space as soon as it can.

Most retailers come to a city with little or no local opposition. So long as they can demonstrate a need for their product and they agree not to bother their neighbors, they’ll be allowed to set up shop.

With Walmart, that’s not always the case.

The world’s largest and most powerful retailer is a lightning rod for public controversy and protest, whether it’s small to medium-sized businesses who fear the Arkansas-based behemoth will put them out of business, or union organizers that protest perceived poor wages and unsafe working conditions at Walmart stores.

In the Inland Empire, a group of concerned citizens in Redlands has spent the last seven years battling the development of a Walmart supercenter in that city, a battle that shows no sign of being resolved soon, according to one person who has been involved in the dispute from its start.

In Ontario, more than 100 Walmart warehouse workers and employees from various Walmart stores in Southern California protested on Black Friday last year in front of the Walmart supercenter at 1333 E. North Mountain Ave. That demonstration, which led to 10 arrests for unlawful assembly after it moved into the intersection of Mountain Avenue and Fifth Street, was held to call attention to the fact that many full-time Walmart workers make less than $25,000 a year.

The protest was co-sponsored by Warehouse Workers United, a group that supports non-union warehouse workers in Riverside and San Bernardino counties. Similar demonstrations were held the same day in Los Angeles, San Francisco, Sacramento, Chicago and Seattle.

“I think the most important thing if you’re going to fight Walmart is you have to form a group, and then everyone has to stick together,” said Keith Osajima, a 20-year Redlands resident who has helped lead the anti-Walmart effort in that city, the Redlands Good Neighbor Coalition. “And understand that it’s going to be a tough fight because Walmart is a tough opponent.”

La Verne can now be added to the list of Inland cities with a potential Walmart controversy to deal with, one that doesn’t involve a supercenter or a major warehouse-distribution center. The retailer is considering developing one of its neighborhood grocery stores where the discount retailer Stein Mart used to be located.

That site, which covers nearly 40,000 square feet, is in the shopping center at the northwest corner of Foothill Boulevard and Wheeler Avenue. That shopping center is fronted by a Bank of America and includes a dry cleaner, a Pick Up Stix and Frisella’s Roastery, a sit-down restaurant.

The Stein Mart space has been vacant for about two years. “No city wants retail space to sit empty for long, so filling the former Stein Mart space is a major priority for La Verne,” said Hal Fredericksen, the city’s community development director.

However, La Verne officials knew there is potential opposition to signing Walmart, so they held a public hearing last month at the La Verne Community Center that was attended by about 70 people.

Residents voiced the usual concerns about traffic, noise and overall disruption of their neighborhoods, and one speaker even claimed that Walmart attracts a “bad element” that La Verne should avoid at all costs.

While everyone agreed that the space needs be filled, about half of those who spoke said they were against Walmart locating there.

Instead, they suggested that other retailers – Bristol Farms, Sprouts, Whole Foods, Smart and Final and Trader Joe’s – might be persuaded to sign a lease, but none of those retailers have expressed an interest in coming to La Verne. Trader Joe’s has a store in Claremont and another in Upland, so it’s not likely it will want to put another store so close to those locations.

“Cities trying to attract retailers are subject to the whims of the market and must negotiate the best deal they can with whoever is available,” Fredericksen said.

“We understand the frustration with not being able to get a Trader Joe’s and a Whole Foods,” Fredericksen said. “We would like to have them, but I think some people have misconceptions about how retail operates. The city can’t go out and sign just anyone, any more than we can control lease rates.”

The city is preparing a study regarding the store’s fiscal impact on the community. That report is expected to be ready by the end of May.

After that, the proposal will go before the planning commission, which will vote up or down on the project.

Either side could then appeal the commission’s decision to the city council. If the city OK’s the project, Walmart must still decide if it wants to locate there.

“There can be a lot of mystery involved in why a retailer chooses one location over another,” Fredericksen said. “They might pass on a spot one year and come back the next year and decide to go there.”

Walmart officials did not return calls seeking comment for this story.

So far, no business owners in the area have raised the possibility of a Walmart grocery store, with its large inventory and mega-discount prices, putting other small to medium-sized retailers out of business.

A man who once owned a business in the shopping center and is still familiar with the property might have summed up the attitude of local merchants toward Walmart’s proposed grocery store: he’d rather see another retailer there, but a Walmart Neighborhood Market is preferable to empty space, because empty space drives down property values and hurts other businesses.

“Trader Joe’s would be beautiful there, but I don’t know how much good a Walmart will do us,” said the former owner, who spoke on condition that his name not be published. “A lot of the businesses have been here 10 or 15 years, and they have an established clientele. They don’t get a lot of ‘walk-up’ business.”

Battling Walmart means battling its financial and political clout. When Redlands  placed the proposed supercenter near Tennessee Street and Redlands Avenue on the local ballot four years ago, Walmart overwhelmed the project’s foes and won a comfortable victory: voters approved the project by eight percent.

“They got the police and firefighters against us, and they paid people to canvas neighborhoods,” Osajima said. “We appealed to the city council, and that bought us one more year, but sometimes I think there’s no way we can beat them. All we can do is slow them down.”

Land Rights

In what is a hopeful sign for the Inland Empire economy, land brokers and developers are starting to move forward with plans to develop in multiple cities around the region. I know this because my public relations firm, Desmond & Louis, which has overseen many local project-advocacy campaigns over the years is currently working on several new projects of various sizes throughout the Inland Empire. And the rules and stakes remain the same. The same old battle lines are being drawn, the Nimby’s and no-growthers on one side, and the business community and residents who want more amenities mostly on the other.

One of the key arguments people in my line of work often hear from residents opposed to development is that they want to see the open space around them remain open. In essence they want to deny the right of the landowner to develop their land, which is a fantasy.

Under the U.S. Constitution you cannot violate someone’s rights to their assets by simply declaring that you do not want them to use said assets.  There is no particular distinction between stealing someone’s money and denying them the right to develop a piece of land they own.  In both cases it is theft.

Theft by denial of use has the same practical effect of having stolen all of the money the property owner used to buy the land and prepare it for development.

The question the opposition often fails to address is not if a piece of property will be developed, but how it will be developed. In most cases vacant sites and lots are part of a city’s overall vision and development plan usually put in place many years before. However, time and circumstances change often, necessitating a change in how the plan is zoned and/or developed.

The choices that are made must be weighed by the local community and their input respected, but we do not live in a mob-rule society.  Elected leaders must act within the margins of the law, or face setting their city up for being sued and losing out.

Members of the community who are anti-development need to keep this in mind as they pressure their elected officials to see their point of view. If their point of view is that a piece of land owned by someone else should never be developed because the neighboring resident enjoy having the open space around them, than I, as an elected official, would say to them “go ahead and contact the owner and buy the land from them.  Otherwise that owner has a right to develop it as they see fit within the boundaries of the law.

Top Commercial Real Estate Firms and Brokers in Inland Empire Win CoStar Power Broker Awards
The winners of the annual CoStar Power Broker Awards have been announced, and several top firms and real estate brokers in Inland Empire are among the winners.
Recognizing the “best of the best” in commercial real estate brokerage, the CoStar Power Broker Awards are presented each year to a select group of local real estate firms and individual brokers who achieved the highest overall transaction volumes in commercial property sales and leases in their market during 2013.
The following top commercial real estate firms in Inland Empire have been awarded CoStar Power Broker Awards for their exceptional deal-making accomplishments last year:

Top Leasing Firms

CBRE Coldwell Banker Commercial Lyle & Associates Coldwell Banker Commercial Sudweeks Group Colliers International Cushman & Wakefield, Inc. Delmar Commercial R.E. Services JLL Lee & Associates Martin Associates Brokerage
MGR Real Estate NAI Capital Commercial Newmark Grubb Knight Frank
Progressive Real Estate Partners Voit Real Estate Services WestMar Commercial Brokerage, Inc.

Top Sales Firms

CBRE Colliers International Cushman & Wakefield, Inc. Hendricks-Berkadia JLL Lee & Associates
Marcus & Millichap Newmark Grubb Knight Frank RE/MAX Commercial
Voit Real Estate Services

The full list of individual CoStar Power Broker Award winners in Inland Empire can be found here.

The winners range from national powerhouse firms to small boutiques, and recognize the outstanding deal-making achievements in 2013 by the top brokers and firms in over 90 markets across the U.S.
All CoStar Power Broker Awards are based on transaction data in CoStar’s commercial real estate database, believed to be the largest, independently researched source of commercial real estate property information in a unified database ever produced. Each year, CoStar tabulates the commercial real estate sales and lease transactions that closed during the previous year and presents CoStar Power Broker Awards to the brokerage firms and individual brokers who closed the highest transaction volumes in commercial property sales and leases in each market.
"CoStar is proud to honor the individual brokers and firms who perform at the industry’s highest level each year," said CoStar Group founder and CEO Andrew C. Florance. "We extend our congratulations to this year’s winners on their exceptional sales and leasing success."
Lincoln Property, Angelo Gordon Sell Santa Ana Office Towers for $129M
CBRE Brokers Largest Commercial Sale Transaction This Year in Orange County
April 8, 2014
< prev 1 of 2 next > Joint-venture partners Lincoln Property Co. and Angelo, Gordon & Co. sold the Griffin Towers at 5 and 6 Hutton Centre Dr. in Santa Ana, CA to Blackstone office property affiliate Equity Office. At $129 million, the property sale represents the largest commercial transaction in Orange County so far this year.
The 12-story twin office buildings in the MacArthur Place office park total about 550,000 square feet of rentable square feet plus penthouses along with a six-story parking garage, retail plaza area, and a three-story atrium lobby.
Since acquiring the property in March 2010 from LA-based MPG Office Trust, Lincoln Property and its investment partner upgraded the lobbies and made improvements to common areas. Additionally the firm redeployed a dormant co-generation plant that now produces nearly 77 percent of the buildings’ power on-site.
"Our acquisition and subsequent sale of the Griffin Towers is representative of Lincoln’s value-add strategy as an owner, operator and manager of Class-A office space across Southern California,” said Kevin Hayes, senior vice president at Lincoln Property. “We identified a trophy asset in financial distress, invested energy and capital into alleviating deferred maintenance, and took a hands-on approach to improving occupancy in a challenging leasing environment.”
The assets are now 88 percent occupied, anchored by Corinthian Colleges, CH2M Hill, Ultimate Software, and Premier Business Centers.
New CRE Loans Hit All-Time High
Loan Performance Improving, but Loan Maturities Coming Down the Pike
April 2, 2014
During the fourth quarter of 2013, commercial and multifamily mortgage originations were strong, boosting mortgage debt outstanding to a new all-time high.
In fact, the fourth quarter marked the highest volume of commercial and multifamily mortgage originations since 2007, with all investor groups increasing their activity, according to the Mortgage Bankers Association’s just-released 2013 Data Book.
The level of commercial/multifamily mortgage debt outstanding reached $41.2 billion, or 1.7%, over the previous quarter.
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Originations for commercial bank portfolios increased by 54% from last year’s fourth quarter. There was a 40% increase for life insurance companies, a 15% increase for CMBS and a 43% decrease in dollar volume of loans originated for the two big Government Sponsored Enterprises (Fannie Mae and Freddie Mac) loans.
Multifamily mortgage debt outstanding separate from CRE lending also rose to $895 billion, an increase of $11.5 billion, or 1.3%, from the third quarter and $36.6 billion, or 4.3%, from the fourth quarter of 2012.
Rising property incomes and values continue to boost the performance of commercial and multifamily mortgage loans, the MBA noted.
Commercial and multifamily mortgages performed relatively well during the downturn, and for most investor groups, delinquency rates are now back in the lower end of their historical range.

Loan Maturities Hit Nadir, but Expected to Increase Dramatically

Although 2014 will mark the fourth straight year of declining commercial/multifamily mortgage maturities, volumes are expected to spike - by 72% in 2015 and an additional 34% in 2016, as 10-year loans made in 2005, 2006 and 2007 begin to come due.
The loan maturities vary significantly by investor group. Just 3% ($12.7 billion) of the outstanding balance of multifamily and health care mortgages held or guaranteed by Fannie Mae, Freddie Mac, FHA and Ginnie Mae will mature in 2014.
Life insurance companies will see 5% ($18 billion) of their outstanding mortgage balances mature in 2014. Among loans held in CMBS, 7% ($41.8 billion) will come due in 2014. About 15% ($19.2 billion) of commercial mortgages held by credit companies and other investors will mature in 2014.

Top Lenders

Wells Fargo was the top commercial/multifamily mortgage originator in 2013, according to MBA. Other top originators include J.P. Morgan Chase, Bank of America Merrill Lynch, Eastdil Secured, KeyBank, PNC Real Estate, HFF LP, Meridian Capital Group, CBRE Capital Markets and Prudential Mortgage Capital Co.
Keep up weekly on national news, trends and property leads with the Watch List Newsletter, a weekly pdf that includes other news and leads not found on the CoStar Group web news pages. Sign up for the Watch List E-Mail Alert. A new issue is published Monday mornings.
China Says to Ease Restrictions on Overseas Investments

SHANGHAI — China will ease restrictions on overseas investments by local firms and deals below $1 billion (596 million pounds) will no longer need approval, the country’s economic planner said in another step to cut red-tape and facilitate the growth of private investment.

Starting from May 8, Chinese firms planning to invest less than $1 billion will only need to register with authorities rather than seek approvals from the National Development and Reform Commission (NDRC), the commission said in a statement late on Thursday.

In a series of sweeping reforms published in November, China

promised to free up the market by simplifying administrative controls and to restrict central government management of microeconomic issues.

Lengthy approval times, which can take up to six months, have dented the competitive edge of privately-owned Chinese firms in their overseas acquisitions, since other foreign companies can adjust to changes in economic conditions at a much quicker pace, analysts have said.

Overseas targets are often also reluctant to work with non-state Chinese firms due to uncertainties on whether regulators would reject the investment applications.

The NDRC said the new rules do not apply to investment projects in “sensitive countries, regions or sectors.”

The relaxation of rules also comes as Beijing is pushing its companies to venture abroad and is seeking to diversify its $4 trillion foreign-exchange reserves investments.

Currently, overseas resource-related investments above $300 million are subject to approvals by the NDRC, while the threshold for deals in other sectors is capped at $100 million.

Deals of above $1 billion will still need the approval by the NDRC, while those valued at $2 billion and above will need the approval of the State Council, China’s cabinet, according to the new regulations.

Among other improvements aimed at reducing red-tape, the NDRC also promised to complete investment reviews and issue a decision within 20 days of receiving the application.

The relaxation of overseas investments comes as Beijing takes incremental steps to loosen its capital account in line with a reform agenda that seeks to let market forces play a bigger role in the economy.

China said on Thursday it will allow cross-border stock investment between Shanghai and Hong Kong, a small step towards opening China’s capital account and letting Chinese individuals buy foreign equities overseas.

China’s non-financial outbound foreign direct investment rose 17 percent in 2013 to $90.2 billion, according to Ministry of Commerce data.

(Reporting by Lu Jianxin and Fayen Wong; Editing by Shri Navaratnam)