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San Francisco’s rental price decline picked up again in November, with data showing that it’s still a renter’s market in much of the Bay Area.

Decreases in San Francisco, still the most expensive rental market in the nation, are now looking a bit more like normal seasonal trends than the pandemic free-fall from the spring and summer, according to analysts from listing services Apartment List and Zumper.

But the pandemic is helping magnify those trends as an increase in vacancies has put downward pressure on prices. And analysts say a rebound in the market is unlikely during the winter months.

The spring remains a big unknown, with major factors including reopening, job trends and the anticipated rollout of coronavirus vaccines.

San Francisco

In November, the month-over-month decline in San Francisco rent was 3.4% with an average price of $2,054 for a one-bedroom apartment, and $2,377 for a two-bedroom unit, according to the December San Francisco rent report from listings site Apartment List.

The site uses U.S. Census and Department of Housing and Urban Development statistics to include older units and lower income neighborhoods in its analysis.

“This month’s numbers come as less of a surprise than previous months,” said Rob Warnock, research associate for Apartment List. “There is seasonality in the rental market. Prices typically rise during the summer and cool in the winter, so historically rents are dropping during this time of year.”

Warnock said a seasonal dip usually occurs around the holidays and lasts until early spring, when people start moving again. In November for the past three years, rental prices have dropped, but this year’s effect has been amplified by the pandemic.

“I think it’s safe to expect rents will stay cool for the coming few months,” he said. “When springtime rolls around, the market may start rebounding if it begins to attract renters back into the region.”

That will depend on several factors, Warnock said, including the strength of the local job market, whether offices are reopened, and the development and distribution of coronavirus vaccines.

Another major listings website, Zumper, analyzes rental data from more than 1 million active listings across the country and includes new construction, and excludes listings that are currently occupied or no longer available. Its December national rent report shows a month-over-month rental price decrease of 3.6% in San Francisco, compared to last month when it showed the lowest monthly decrease since April at 1.1%. The average one-bedroom cost $2,700, with the price of a two-bedroom at $3,570.

“Rent decreases in San Francisco picked up again last month after slowing down the month prior,” said Zumper analyst Neil Gerstein. “The decrease in pickup last month could indicate that the rental price fallout in the Bay Area is not over yet, and will likely persist into 2021, especially with migration out of the Bay Area trending upward.”

San Francisco still remains the most expensive market in the country but has seen the largest declines in rents year over year. Apartment List reports a 25.5% year over year decline in November compared to the same time last year, and a decrease of 24.5% since March. Zumper calculated a year over year drop of 22.6%.

National

Zumper’s national comparison of the largest cities shows New York as the second most expensive for renters, with a price decline of 3.1% in November and an average one-bedroom rent of $2,470. Boston was third, with a price decrease of 2.7% and an average rent of $2,150. San Jose was fourth, down 1.4% at $2,090, and Oakland in fifth, declining 1% month over month with a median rent of $2,000.

Apartment List’s national analysis found the biggest rent declines during the pandemic concentrated in large, expensive cities, particularly on the coasts. Seattle and Boston surged ahead of New York in month over month rental decreases. Prices dropped 5.6% in Seattle with a median two-bedroom rent of $1,739, and fell 5.2% in Boston for an average rent of $1,729. Phoenix saw the highest rental increase of 3.9% for a median two-bedroom rent of $1,150.

Bay Area

Across the Bay Area, the second largest rent decline in cities examined by Apartment List was in Oakland, down 3.3% in November for a median one-bedroom price of $1,660 and two-bedroom for $1,970. Redwood City declined 2.4% and San Mateo went down 2.2%. Zumper found significant rent drops in Menlo Park, San Mateo and Mountain View, all down 5.1% each for a one-bedroom.

The biggest month over month rental growth increase was in Livermore at 4.9%, followed by Milpitas with rent increasing 4.8% and Vallejo in third at 4.3%, according to Zumper.

Hayward was the only Bay Area city examined by Apartment List that saw an increase, at just 0.1%, with a median one-bedroom rental price of $1,950 and two-bedroom average of $2,180.

“Looking at the entire Bay Area metro, price growth again was negative on average,” Gerstein said. “Median 1-bedroom prices in Bay Area cities decreased 1.7% at a monthly rate on average last month. In year-over-year terms, median 1-bedroom prices were down 10.9% on average.”

Kellie Hwang is a San Francisco Chronicle staff writer. Email: kellie.hwang@sfchronicle.com Twitter: @KellieHwang

Article source: https://www.sfchronicle.com/bayarea/article/S-F-is-still-a-renter-s-market-for-now-Will-15766901.php

PALO ALTO — A big Midwest investment group has spent $111 million to buy five Bay Area hotels, including two in Silicon Valley, a strong indicator that veteran players see long-term potential in the region’s lodging market despite COVID 19-linked challenges.

Oxford Capital Group has bought a hotel in Palo Alto, one in Los Gatos, and three in San Francisco, in a series of just-completed transactions that arrive amid brutal economic woes unleashed by the coronavirus.

The purchase price of the entire package was $111 million, according to Oxford Capital.

Chicago-based Oxford Capital, acting through multiple affiliates, paid $53.8 million for the two hotels in Santa Clara County, according to public documents filed in Santa Clara County during December. That would point to a combined price of $57.2 million for the hotels in San Francisco, according to experts familiar with the deals.

Creekside Inn at 3400 El Camino Real in Palo Alto was bought for $$32.7 million, according to county documents filed on Dec. 11.

Hotel Los Gatos at 210 E. Main St. in Los Gatos was bought for $21.1 million, public records filed on Dec. 10 show.

“We have been contrarian, value-oriented investors in the lodging sector for nearly 30 years,” said John Rutledge, founder and chief executive officer of Oxford Capital Group.

Oxford Capital has launched significant investment gambits even during epic economic downturns of recent decades.

“Through multiple cycles we have consistently had the courage of our convictions to step up during periods of great uncertainty,” Rutledge said.

Oxford Capital bought the hotels at an excellent price compared to what their values would have been prior to the coronavirus-triggered economic slump, said Alan Reay, president of Atlas Hospitality Group, which tracks the lodging market in California.

“This is an excellent long term buy for Oxford Capital,” Reay said. “They have purchased quality hotel assets in ‘A’ locations, with huge barriers to entry.”

The $115 million price tag for the entire package of hotels, sold by affiliates of Greystone Hotels, is about 36% less than what would have been a typical value, Reay estimated.

“The purchase price is at a big discount to what we would expect to have seen pre-COVID,” Reay said. “I would have expected that pre-COVID, these hotels could have sold for $180 million.”

Oxford Capital Group assumed $15 million in debt as part of its $32.7 million purchase of Palo Alto’s Creekside Inn and also assumed $17 million in debt through its $21.1 million acquisition of Hotel Los Gatos, county public documents show. The debt had been incurred by the seller through separate mortgages in 2015 of the properties.

Among the details of the hotels:

King George Hotel in San Francisco, 153 rooms, opened in 1914.

Creekside Hotel in Palo Alto, 136 rooms, opened in 1955, includes CIBO restaurant

Hotel Los Gatos, 72 rooms, opened in 2002, Dio Deka restaurant.

Hotel Griffon, San Francisco, 62 rooms, opened in 1906, Perry’s restaurant.

The Inn at Union Square, San Francisco, 30 rooms, opened in 1980, includes Chloe’s Gallery.

• Google Maps

  Gathering areas of Hotel Los Gatos, 200 E. Main St. in Los Gatos. A big Midwest investment group has spent $111 million to buy five Bay Area hotels, including two in Silicon Valley, a strong indicator that veteran players see long-term potential in the region’s lodging market despite COVID 19-linked challenges.

• Google Maps

  Creek area of Creekside Inn, 3400 El Camino Real in Palo Alto. A big Midwest investment group has spent $111 million to buy five Bay Area hotels, including two in Silicon Valley, a strong indicator that veteran players see long-term potential in the region’s lodging market despite COVID 19-linked challenges.

• Google Maps

  Hotel Los Gatos, at 200 E. Main St. in Los Gatos, entryway. A big Midwest investment group has spent $111 million to buy five Bay Area hotels, including two in Silicon Valley, a strong indicator that veteran players see long-term potential in the region’s lodging market despite COVID 19-linked challenges.

• Google Maps

  Creekside Inn, 3400 El Camino Real in Palo Alto. Creekside Inn, 3400 El Camino Real in Palo Alto. A big Midwest investment group has spent $111 million to buy five Bay Area hotels, including two in Silicon Valley, a strong indicator that veteran players see long-term potential in the region’s lodging market despite COVID 19-linked challenges.

• Google Maps

  King George Hotel, 334 Mason St., San Francisco, front entrance. A big Midwest investment group has spent $111 million to buy five Bay Area hotels, including two in Silicon Valley, a strong indicator that veteran players see long-term potential in the region’s lodging market despite COVID 19-linked challenges.

Show Caption

Expand

“We are optimistic about the recovery potential of the Bay Area lodging market,” said Sarang Peruri, Oxford Capital Group’s chief operating officer. “These properties are poised to outperform given unique product offerings and locations.”

The investment firm has bought properties even during cataclysms such as the savings and loan debacle, the 9/11 terrorist attacks and the worldwide financial crisis..

“Despite the current challenging environment in the travel and hospitality space, we remain sanguine about the medium- to long-term desirability of downtown San Francisco and Silicon Valley,” Rutledge said.

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Article source: https://www.mercurynews.com/2020/12/14/real-estate-big-silicon-valley-s-f-hotel-deal-price-111-million-covid

“The Lake Tahoe housing market is hotter than ever. People are coming from San Francisco in droves and they’re bringing their Bay Area salaries with them — everyone here drives a Tesla now,” Redfin real estate agent Jaime Moore said in a statement. “City folks have decided that if they have to work from home and shelter in place, they might as well do it in the mountains. In their mind, Lake Tahoe is affordable because they can buy a second home with three bedrooms and two bathrooms for $750,000. In the Bay Area, they’d be lucky to find a one-bedroom condo for that price.”

The median sale price for a home in 96145 is $945,000, up 28% from the same time last year. Home sales overall are up 87% from the previous year, with 35% of homes selling above list price.

While many locations on the list were already sought-after vacation destinations, others are increasing in popularity due to their proximity to major metropolitan areas combined with reasonable prices. Mountain House, Calif., which took the No. 10 spot on the list, is just 60 miles from San Francisco and has a median sale price of $712,500 (up 23% from last year). Median views per listing were up 265% from the previous year and 79% of homes are selling above list price.

Redfin agent Ali Schneider said homes in Mountain House were already increasing in demand before the pandemic, largely due to the quality of schools and ability to get more space for your money. “The market is very competitive, in part because inventory is extremely scarce,” she said in a statement. “To win a home in Mountain House, you basically have to remove all contingencies and offer $50,000 to $75,000 over the listing price. We had bidding wars before the pandemic, but buyers certainly didn’t need to offer that much over asking to win.”

Neither Lake Tahoe nor Mountain House were on the list for 2020, though Redfin did slightly tweak the methodology this year. The only town within driving distance of the Bay Area that made the top 10 last year was Old Town Rocklin, Calif.

“What stands out most about this year’s top 10 list is that every place is either a vacation spot or a suburb,” said Redfin chief economist Daryl Fairweather. “You’ve got people who have been dreaming about moving to Lake Tahoe, who thought they’d have to wait for retirement. But now they’ve learned they never need to return to the office, so they don’t have to put it off anymore. And then there are families who have been living in cramped San Francisco apartments who want to stay in the Bay Area, but they’re spending all their time at home, they need more space, and they’re less concerned about a long commute. Mountain House offers more house for your money than San Francisco, plus the schools are top notch.”

Amazon paid $200 million to buy a San Francisco site where it plans to build a new delivery station, expanding its massive shipping infrastructure in an urban center.

The project could draw opposition simply for the identity of its new owner, the $1.6 trillion Seattle e-commerce behemoth whose interests stretch from Hollywood productions to Silicon Valley gadgets to organic produce. It also shows continuing tensions over land use in the dense city: Under one recent proposal, a thousand homes could have been built on the site.

The online shopping giant said Tuesday it will propose a delivery station at 900 7th St., which it bought from solid waste recycling company Recology, which had owned the property since 1970.

The 6-acre site by the Caltrain tracks is mostly parking lots and waste maintenance buildings, a throwback to the area’s industrial heritage, and a sharp contrast to gleaming new housing projects and the offices of tech powerhouses like Airbnb and Adobe nearby.

Recology proposed a much larger redevelopment of the site in 2018 with over 1,000 new homes and up to 580,700 square feet of office and maker space, including two 240-foot towers. The project size was reduced after city planners objected to the height and noted that the site is currently zoned for industrial use but not housing.

Amazon’s investment is one of the largest local real estate deals this year. It comes as many tech companies have listed office space for sublease and some have moved their headquarters out of the Bay Area entirely. In contrast, Amazon’s business has boomed during the coronavirus pandemic and its sprawling delivery network, which is dependent on in-person work, continues to grow.

Amazon’s proposal, filed with the city earlier this month, calls for a three-story, 510,150-square-foot building that includes a 122,200-square-foot logistics facility and 22,700 square feet of accessory office space, along with 145 parking spaces and vehicle loading space. The building includes 10 loading docks on the ground floor and would rise to 57 feet tall, within the site’s current zoning limit.

Apartment rents have plunged across the Bay Area during the pandemic, while construction costs remain high, making major housing projects more challenging to build. Meanwhile, the industrial sector, which includes warehouses, has been more resilient in part because of the rise in online shopping.

Amazon will now seek approval for the delivery station, which is an industrial use and stores packages before the last leg in the delivery process. Amazon said the project will help speed package distribution and support hundreds of full- and part-time jobs.

“We are excited to make this investment in San Francisco that will create jobs and help ensure we can reliably and efficiently deliver to our growing number of customers in the Bay Area,” Michelle Godwin-Watts, director of operations at Amazon, said in a statement. “We are committed to being a good community partner and we will continue to engage with the city and community members as we develop this new site.”

The company has more than 250 delivery stations in the U.S., but this will be its first in San Francisco.

Amazon could face pushback. Last month, the Board of Supervisors rejected a new store from Amazon’s Whole Foods subsidiary after opposition from a labor union and concerns from neighbors over traffic.

Supervisor Shamann Walton, whose district includes the 7th Street site, said he had “several concerns with a company like Amazon, from how they treat their employees, to how they treat the surrounding community.

“Their site in Dogpatch has caused continuous problems for neighbors and they have been extremely dilatory in presenting and providing solutions. They would never treat neighbors at their facility in Seattle the way they have in my district. That needs to change,” Walton said, referring to an existing Amazon Fresh facility at 888 Tennessee St. in San Francisco.

Issues include trash around the facility including cigarette butts; noise complaints; and major congestion, Walton said. The company also hasn’t benefited the community with access to jobs, Walton said.

Amazon said the 7th Street facility would pay competitive rates and have career growth options, and that it would partner with the city and community.

A San Francisco employee sued Amazon in June alleging that worker uniforms weren’t cleaned at the Dogpatch facility. Amazon said at the time that it has offered leave to employees and invested in safety measures.

Though headquartered in Seattle, Amazon has major real estate holdings in the Bay Area and as of last year, the region was the company’s second-biggest tech hub, with 7,000 white-collar workers. Locations include major offices at 525 Market St. in San Francisco and in Sunnyvale, Palo Alto and East Palo Alto. The company has numerous local retail locations for its cashierless Amazon Go stores and Whole Foods. Amazon’s video game-focused streaming site Twitch is headquartered in San Francisco, and Lab126, a hardware subsidiary which develops devices like the Kindle e-reader and Fire TV streaming sticks, is in Sunnyvale.

Amazon has been one of the biggest winners during the coronavirus pandemic, as customers flocked to online shopping. In its most recent quarter, revenue soared 37% from the prior year to $96.1 billion, with net income of $6.3 billion, a record high for the company.

The 7th Street site is centrally located, making it attractive for Amazon, and an industrial project is currently more viable than housing, said Alexander Quinn, director of Northern California research at real estate brokerage JLL.

“Development feasibility for new residential is incredibly difficult right now,” Quinn said. “This is currently the highest and best use of that property.”

The shift to online shopping has hurt the already struggling physical retail sector. San Francisco was previously grappling with a wave of store vacancies, which has worsened considerably as businesses have been forced to close or restrict capacity. Amazon is reportedly looking at coverting vacant U.S. malls into distribution hubs.

“COVID was a disruptive event. It resulted in an acceleration of trends that were happening before,” Quinn said.

Kate Sofis, CEO of SFMade, a manufacturing group, said she was excited that the 7th Street site would remain an industrial business and add local jobs. SFMade is headquartered at 150 Hooper St. next to the site.

“We hope to find ways to collaborate with Amazon and look forward to exploring ways that Amazon could more directly serve our local manufacturing sector,” said Sofis.

Amazon continues to aggressively expand after hiring 400,000 people between January and October, a staggering rate with little historic precedent. It had more than 1.12 million workers worldwide in October, making it the second-largest U.S. private employer, behind only Walmart.

The pandemic remains a major safety issue for Amazon, and some employees have criticized the company for inadequate protections. Nearly 20,000 Amazon and Whole Foods employees tested positive between March 1 and Sept. 19. California’s attorney general is also seeking more data regarding Amazon’s coronavirus safety policies.

Amazon said it had invested more than $800 million on coronavirus safety measures including personal protective equipment, enhanced cleaning and testing.

Roland Li is a San Francisco Chronicle staff writer. Email: roland.li@sfchronicle.com Twitter: @rolandlisf

Article source: https://www.sfchronicle.com/business/article/Amazon-spends-200-million-on-S-F-site-for-15801880.php

PALO ALTO — A big Midwest investment group has spent $115 million to buy five Bay Area hotels, including two in Silicon Valley, a strong indicator that veteran players see long-term potential in the region’s lodging market despite COVID 19-linked challenges.

Oxford Capital Group has bought a hotel in Palo Alto, one in Los Gatos, and three in San Francisco, in a series of just-completed transactions that arrive amid brutal economic woes unleashed by the coronavirus.

Chicago-based Oxford Capital, acting through multiple affiliates, paid $53.8 million for the two hotels in Santa Clara County and $61.2 million for the hotels in San Francisco, according to public documents and property experts familiar with the transaction.

Creekside Inn at 3400 El Camino Real in Palo Alto was bought for $$32.7 million, according to county documents filed on Dec. 11.

Hotel Los Gatos at 210 E. Main St. in Los Gatos was bought for $21.1 million, public records filed on Dec. 10 show.

“We have been contrarian, value-oriented investors in the lodging sector for nearly 30 years,” said John Rutledge, founder and chief executive officer of Oxford Capital Group.

Oxford Capital has launched significant investment gambits even during epic economic downturns of recent decades.

“Through multiple cycles we have consistently had the courage of our convictions to step up during periods of great uncertainty,” Rutledge said.

Oxford Capital bought the hotels at an excellent price compared to what their values would have been prior to the coronavirus-triggered economic slump, said Alan Reay, president of Atlas Hospitality Group, which tracks the lodging market in California.

“This is an excellent long term buy for Oxford Capital,” Reay said. “They have purchased quality hotel assets in ‘A’ locations, with huge barriers to entry.”

The $115 million price tag for the entire package of hotels, sold by affiliates of Greystone Hotels, is about 36% less than what would have been a typical value, Reay estimated.

“The purchase price is at a big discount to what we would expect to have seen pre-COVID,” Reay said. “I would have expected that pre-COVID, these hotels could have sold for $180 million.”

Oxford Capital Group assumed $15 million in debt as part of its $32.7 million purchase of Palo Alto’s Creekside Inn and also assumed $17 million in debt through its $21.1 million acquisition of Hotel Los Gatos, county public documents show. The debt had been incurred by the seller through separate mortgages in 2015 of the properties.

Among the details of the hotels:

King George Hotel in San Francisco, 153 rooms, opened in 1914.

Creekside Hotel in Palo Alto, 136 rooms, opened in 1955, includes CIBO restaurant

Hotel Los Gatos, 72 rooms, opened in 2002, Dio Deka restaurant.

Hotel Griffon, San Francisco, 62 rooms, opened in 1906, Perry’s restaurant.

The Inn at Union Square, San Francisco, 30 rooms, opened in 1980, includes Chloe’s Gallery.

• Gathering areas of Hotel Los Gatos, 200 E. Main St. in Los Gatos.

  Google Maps

• Google Maps

  Creek area of Creekside Inn, 3400 El Camino Real in Palo Alto. A big Midwest investment group has spent $115 million to buy five Bay Area hotels, including two in Silicon Valley, a strong indicator that veteran players see long-term potential in the region’s lodging market despite COVID 19-linked challenges.

• Hotel Los Gatos, at 200 E. Main St. in Los Gatos, entryway.

  Google Maps

• Google Maps

  Creekside Inn, 3400 El Camino Real in Palo Alto. A big Midwest investment group has spent $115 million to buy five Bay Area hotels, including two in Silicon Valley, a strong indicator that veteran players see long-term potential in the region’s lodging market despite COVID 19-linked challenges.

• King George Hotel, 334 Mason St., San Francisco, front entrance.

  Google Maps

Show Caption

Expand

“We are optimistic about the recovery potential of the Bay Area lodging market,” said Sarang Peruri, Oxford Capital Group’s chief operating officer. “These properties are poised to outperform given unique product offerings and locations.”

The investment firm has bought properties even during cataclysms such as the savings and loan debacle, the 9/11 terrorist attacks and the worldwide financial crisis..

“Despite the current challenging environment in the travel and hospitality space, we remain sanguine about the medium- to long-term desirability of downtown San Francisco and Silicon Valley,” Rutledge said.

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Article source: https://www.mercurynews.com/2020/12/14/real-estate-big-silicon-valley-s-f-hotel-deal-price-115-million-covid