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Bay Area retail development surges

Mon, 30 Sep 2013 02:25:09 +0000

The Bay Area is enjoying its strongest surge of retail expansion in years, fresh evidence that the wounds inflicted by the Great Recession are healing.

Developers are building retail projects at a brisk clip, demand for retail space has surged and vacancy rates have dwindled, and merchants are scouting for sites to open stores, according to realty experts who track the retail sector.

“This is definitely the strongest market for retail in the Bay Area since the downturn, no question about that,” said Garrick Brown, director of research with Terranomics, a realty brokerage that specializes in retail properties and tenants. “There is a lot of demand all over the Bay Area for retail space.”

At the end of June, the nine-county Bay Area had about 1.3 million square feet of retail sites in the pipeline — defined as actually under construction or about to launch construction — according to Terranomics. That is up from 1.1 million in mid-2012 — and well ahead of the 150,000 square feet in the retail pipeline in mid-2009, which was the year after the worst of the financial crisis of 2008, Terranomics experts said.

“We are leasing everything we can touch,” said David Taxin, a partner with Meacham/Oppenheimer, a commercial realty brokerage. “I’ve been doing this for a long time and this is definitely the strongest demand by retailers in years.”

All of this stems from the perceived economic strength of the region.

“You have the demographics and the economy, job creation and the relatively low unemployment rate,” Brown said. “That’s what retailers are looking for. They want a sure thing, and the Bay Area nails it on all fronts.”

In another sign of the health of the market, vacancy rates are declining steadily for retail spaces in the Bay Area. At the worst part of the current cycle, vacancy rates peaked at above 7 percent during 2010. Now the rate in the nine-county region is 5.8 percent, according to Terranomics.

In some spots, the demand is even higher. San Mateo County, San Francisco and Marin County are all regions where demand outstrips supply.

“On the Peninsula and in San Francisco, there is really nowhere to build, and the development process is very difficult, even if there are places to build,” Brown said. “The East Bay and Santa Clara County are the most welcoming for retail development.”

In Santa Clara County, the largest retail center now under construction is Village Oaks in South San Jose, a 320,000-square-foot complex that will be anchored by Target and Safeway. In the East Bay, the biggest retail projects under construction are a 140,000-square-foot Target store at Alameda Landing Shopping Center in Alameda, and an 80,000-square-foot Foods Co store in Oakland’s Foothill Square. San Francisco’s largest project is the 270,000-square-foot Market Street Place.

Retailers as big and familiar as Target, Safeway and Whole Foods are on the hunt for new space. But they are joined by a wide range of other stores, from Walmart and its neighborhood markets to Jamba Juice and Five Guys.

“We are ramping up our real estate efforts again in the Bay Area,” said Adam Smith, executive coordinator for store development with Whole Foods. “We are back where we were in the early 2000s, actively pursuing sites and leases.”

During those peak years, Whole Foods opened about five stores a year in the Bay Area. That’s down to about two stores a year. Whole Foods has 30 stores here.

Calling it “a great market for us,” Smith noted “the Bay Area is the birthplace of the natural and organic food movement.”

Whole Foods just opened its first store in Fremont, and is building a store near downtown San Jose at The Alameda and Stockton Avenue that should open during the second half of 2014. It also recently disclosed plans to open a new store in Dublin and its second store in Walnut Creek.

Target has been active with store openings in San Jose and the East Bay, and it is even finding sites in crowded San Francisco.

“The Bay Area is a region Target has an eye on,” said Matias Cavallin, a Target spokesman. “The economy here is really allowing us to gear up for more store openings.” Target has 54 stores in the Bay Area.

Bay Area cities welcome the heightened activity, because the increase in retail sales helps fill municipal coffers.

“During the downturn, when taxes were lean, we really felt the pinch,” said John Lang, chief economist with San Jose’s Economic Development Department. Now, he said, “retail sales are growing, and we are seeing a growth in tax revenue.”

During the 12 months ending in June, San Jose generated roughly $13 billion in taxable sales, up 3.4 percent from the same period that ended in June 2012. It also was 21 percent above the $11.03 billion in taxable sales during the trough of the retail downturn, the 12 months ending in June 2010.

Some of the shoppers at the opening of the new Whole Foods in Fremont appeared to be confident about their own economic circumstances.

“Over the last year, the economy has improved a lot,” said Jessica Thompson, of Union City. “I feel better about spending money.”

Contact George Avalos at 408-859-5167 or 408-373-3556. Follow him at Twitter.com/georgeavalos.

Article source: http://www.mercurynews.com/business/ci_24193668/bay-area-retail-development-surges

Home prices in Bay Area up 17.5% in January

Wed, 27 Mar 2013 06:59:10 +0000

Home prices in the five-county San Francisco metro area surged 17.5 percent in January versus a year ago – one of the biggest gains nationwide – according to a key gauge released on Tuesday.

Overall, U.S. home prices registered their biggest annual climb since summer 2006, rising 8.1 percent compared with last year, according to the SP/Case-Shiller composite index. Every one of the 20 major metropolitan areas Case-Shiller tracks posted year-over-year gains. The annual gains accelerated in 19 of the markets, with Detroit the only exception.

“The number that jumps off the page is San Francisco’s 17.5 percent increase in the past 12 months,” David Blitzer, chairman of the index committee for SP Dow Jones Indices, said. “That’s pretty big. Only one city, Phoenix (with a 23.2 percent increase), did better. Compared to the low points, you’re way up there, about 25 percent over the low. It’s a strong comeback.”

Resale homes

Case-Shiller defines the San Francisco metro area as Alameda, Contra Costa, Marin, San Francisco and San Mateo counties. The index tracks sales of the same single-family houses over time, comparing changes with a base value of 100, which represents values as of January 2000.

The San Francisco index is now 147.45, meaning that prices are 47.45 percent above their January 2000 level. The region’s index peaked at 218.37 in May 2006 and hit a low of 117.74 in March 2009 – so prices are still 32.5 percent below their peak, according to the index.

Several forces propel the upward trend, notably an improving economy, low interest rates, tight inventory and fewer foreclosures.

The San Francisco area “is the second-leading place in the country in job creation (after Houston), and doesn’t build a lot of houses, so supply is very tight,” said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley. “We added 210,000 jobs to the Bay Area in the past 2 1/2 years – that’s a lot of people.”

Similar forces are driving the rental market, which is also experiencing big price run-ups. Exacerbating that situation, the tight for-sale inventory “is forcing a lot of people who want to be buyers to remain as renters,” Rosen said.

Rosen and others said Case-Shiller actually understates the turnaround – prices have risen even more than the index can capture. In part, that’s because it has a long lag time, measuring prices in January. Real estate service DataQuick, for instance, reported that February median sales prices in the nine-county Bay Area were up 24.6 percent compared with the same time in 2012.

“I would say Case-Shiller under-represents,” said Charmaine Frank, Redfin real estate’s area manager for San Francisco, San Mateo, Santa Clara and Marin counties. “The market has taken a pretty dramatic turn since January.”

Cash is the fuel

Like agents throughout the Bay Area, she said there are “enormous bidding wars going on. We see upwards of 40 to 60 offers on some properties; typically the top five to eight will be all-cash buyers.”

The numerous cash sales help fuel price appreciation, she said, because buyers skip getting an appraisal since they don’t have a mortgage. Appraisals, which rely on recent comparable sales, would moderate the rapid run-up.

“There’s a huge shortage of homes on the market right now,” said Cindi Hagley, a broker with the Hagley Group at Prudential California Realty in San Ramon. “For example, there are only 12 single-family homes for sale in Dublin right now. Ordinarily there should be 100 to 150 homes for sale there.”

Patrick Newport, U.S. economist with market analyst Global Insight, said that the rising home prices should help boost the economy further. “They stimulate new construction, and they also help consumer spending because they raise the value of people’s homes,” he said.

With multiple bids and properties selling well above asking price, could another real estate bubble be forming?

“Not yet,” said Rosen. “If they keep (interest) rates this low for two more years, the answer is yes.”

“This time, rapidly rising prices are a good thing,” Newport said. “A lot of homeowners are underwater; this helps them come out of that.”

Carolyn Said is a San Francisco Chronicle staff writer. E-mail: csaid@sfchronicle.com Twitter: @csaid

Article source: http://www.sfgate.com/business/article/Home-prices-in-Bay-Area-up-17-5-in-January-4386974.php

More Jobs in Housing, but Workers Aren’t Returning

Sat, 09 Mar 2013 02:50:39 +0000

“One of the reasons is because they are not paying well yet,” said Lisa Marquis Jackson, an analyst with John Burns Real Estate Consulting. “The wages were cut so much in the downturn, so until those prices get back to where they are attractive, the labor is not going to be attracted back to the industry.

Housing starts are up 24 percent from a year ago, but residential construction employment is up only 3.1 percent, according to the U.S. Commerce and Labor Departments. Former construction workers headed to higher paying jobs, such as the trucking industry. Some in the Southwest headed north to the newly thriving energy sector, said Marquis Jackson. Others headed to highway construction jobs in Texas.

(Read More: Job Creation Surges as Rate Falls to 7.7%)

In Las Vegas, where Pardee Homes is building 150 percent more homes this year than they did last year, finding workers is increasingly difficult.

“We lost quite a bit of labor to the oil fields and to places like Wyoming and North Dakota, where you would not expect it to go,” noted Klif Andrews, Pardee’s Las Vegas president.

Andrews said he is paying workers five to ten percent more now, and that has pushed his home prices higher. “We’ve raised median home prices up over 15 percent, so we’ve been able to stay a little bit ahead of it, but cost increases, it’s not just labor, it’s also materials,” he added.

Nationwide, the median price for newly built homes rose 2 percent in January and new home prices now far exceed the median price for existing homes.

(Read More: Housing: Picking Up the Pieces)

Another factor is weighing on workers. Contractors, who hire the specialty workers for builders, are small businessmen themselves. In order to fund their operations, they need to hire people to have ready, and that takes capital. Unfortunately, despite the housing recovery, banks are still not lending freely to builders. Builders are trying to find ways around that, by paying subcontractors more frequently, essentially bankrolling them so they can hire more workers.

“The wheels are starting to work, but all the gears are not working in alignment,” said Marquis Jackson.

Article source: http://www.cnbc.com/id/100537494

Silicon Valley job growth has reached dot-com boom levels, report says – Alameda Times

Sat, 09 Feb 2013 04:29:41 +0000

MOUNTAIN VIEW — Silicon Valley’s job growth has returned to dot-com boom levels and San Francisco has emerged as a major new tech hub. But good times have not returned for all area residents and ethnic groups.

Those are among the findings released Tuesday from the 2013 Silicon Valley Index, a closely watched annual study produced by San Jose-based Joint Venture Silicon Valley and the Mountain View-based Silicon Valley Community Foundation.

“Employment growth in Silicon Valley is impressive, very impressive,” said Russell Hancock, president of Joint Venture Silicon Valley. “Some might even say the job growth is cause for euphoria.”

Last year, the nine-county Bay Area added about 92,000 jobs, according

to the study. Of that total, Silicon Valley — defined as Santa Clara and San Mateo counties — accounted for 46 percent, or 42,000 jobs.

“This is prodigious job creation,” Hancock said. “The growth is crazy and it’s getting crazier.”

Both he and Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy and an adviser for the report, said Santa Clara County now is above its job totals of the dot-com boom.

Recent Bay Area job growth goes well beyond social media, software, the Internet and other technology industries, showing that the recession is clearly over for the region.

“The tech phenomenon is rippling into other categories,” Hancock said. Construction is one of the

fastest-growing industries in the region, according to the report.

The study also found that San Francisco has emerged as a prominent contributor to what is known as Silicon Valley.

“For a long time we thought of San Francisco as an old-line town — banking, legal, retail, real estate,” Hancock said. “Now it’s tech, software, media, social networks, the Web.”

And that means the definition of Silicon Valley is expanding, the researchers said.

“We have two very dynamic entities, San Jose and San Francisco,” said Doug Henton, CEO of San Mateo-based Collaborative Economics, which did the primary research for the Silicon Valley Index. “They are very complementary to each other.”

During 2012, Santa Clara and San Mateo counties increased their combined job totals by 3.6 percent, while San Francisco grew its job totals by 3.7 percent.

Emmett Carson, CEO of Silicon Valley Community Foundation, said San Jose and San Francisco “are becoming the bookends with many tech companies in between.”

Despite the sturdy job gains, the report found that the upswing in employment and wages has not benefited Bay Area residents equitably.

“Income growth in Silicon Valley is uneven,” it said. “The gap between

high and low income earners is increasing.”

What’s more, certain ethnic groups appear to have been left behind by Silicon Valley’s current surge in hiring and rising wages.

Between 2009 and 2011, per capita income levels increased for whites, Asians and certain other groups. But blacks and Latinos suffered financial erosion. Income levels fell 18 percent among African-Americans and by 5 percent among Latinos, according to the report, but it offered no explanation for the declines.

“Silicon Valley is two valleys,” Hancock said. “There is a valley of haves, and a valley of have-nots.”

Contact George Avalos at 408-373-3556 or 925-977-8477. Follow him at Twitter.com/george_avalos.

The nine-county Bay Area gained about 92,000 jobs during 2012, and 42,000 of those were in Silicon Valley, defined as Santa Clara and San Mateo counties.

Average real per capita income (adjusted for inflation) in Silicon Valley in 2012 was $67,420, up 2.2 percent from 2011.

The fastest-growing employment sector in Silicon Valley was innovation and specialized services, with job growth of 8.7 percent for the year; this sector includes technical services, research and development, legal services and personnel.

Software jobs in Silicon Valley increased by 9.8 percent in 2012, while Internet and innovation services jobs were up 8.7 percent. Among nontech industries, construction was one of the leaders, with an 11 percent gain in jobs.

Source: Silicon Valley Index

Article source: http://www.insidebayarea.com/business/ci_22524360/silicon-valley-job-growth-prodigious-returned-dot-com-boom-levels?source=most_emailed

Real Wealth Network’s Fettke: Bubbles Swelling in US Housing Sector

Sat, 29 Dec 2012 00:42:35 +0000

Bubbles are swelling in pockets of the U.S. housing sector, especially in those areas that fell the hardest and are soaring back in part due to speculative demand, said Kathy Fettke, founder and CEO of Real Wealth Network, a California real estate services and consulting company.

“When inventory levels are so low, that has everybody kind of in a panic and diving in to buy, and that is driving up prices in some areas that I think personally is creating another bubble,” Fettke told Newsmax TV in an exclusive interview.

As a nation, the housing sector is showing signs of life after the Great Recession.

Watch our exclusive video. Story continues below.

U.S. homebuilding permits touched their highest level in more than four years in November, pointing to strength in the housing market, even though groundbreaking activity dropped 3 percent last month.

Home prices have shown signs of life as well, though some areas of the country in particular may be overheating.

Editor’s Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

Areas hit the hardest after the housing bubble burst in 2007 are shooting back the hardest, as many investors have scooped in to buy cheap and distressed properties.

“In Phoenix, Las Vegas we are seeing prices rise so rapidly, and we really believe that a lot of it is speculative, with investors all over the world coming in and buying up those properties. That makes me nervous,” she said.

“But other areas that are more stable — let’s say Dallas, Houston, Atlanta — these are the fastest growing population areas in the country, with the fastest job creation. So there really are fundamentals there to support the housing market.”

Metropolitan areas with little land are seeing prices shoot up as well, including the San Francisco bay area.

“We work with a lot of teams there selling real estate and just in the last few months they have bumped up their prices in some areas up 30 percent from last year,” Fettke explained.

“That feels like bubble market to me. Our salaries haven’t increased by 30 percent,” she added.

“So really what that reflects to me is very low interest rates that could cause a bubble in some of these markets where people think they are going to see a rise in prices.”

Turning to fiscal matters, successful aversion to the year-end fiscal cliff could affect the housing sector, whose recovery is tied heavily to improvements taking place in the labor market.

The White House and Congressional Republicans are debating a fiscal framework for 2013, with the Obama administration’s proposal calling for tax hikes on those with incomes over $400,000 a year, with Republican countering with a proposed hike on those with incomes of over $1 million a year.

Should wealthier Americans get hit with tax hikes to the point that they cannot hire, the housing sector could feel the fallout.

“The housing market depends so much on job creation so if employers are going to be facing massive taxes, is that going to create more jobs or not?” Fettke asked.

“What we do know is that places like Texas where taxes are very low for employers — they are high on property taxes, but have low employer taxes and no state taxes — we are seeing a very strong economy there, and I do believe that when you tax companies they can’t hire.”

Editor’s Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

Article source: http://www.moneynews.com/Markets/Fettke-housing-bubble-swelling/2012/12/28/id/469314