Nothing really meaningful is going to happen until we fix the job situation, said Sinkuler.

Part 2 of 2

SAN FRANCISCO-In an earlier story, GlobeSt.com reported on ULI Real Estate Consensus Forecast from ULIs Real Estate Finance and Investment conference here, noting that real estate is much safer for investors than it has been for some time. It is an attractive environment, agreed panelists.

The discussion then moved on to the topic of returns, where David Lynn, EVP and chief investment strategist of Cole Real Estate Investments, predicted that, going forward, a majority of returns will come from income. According to Lynn, the 8% to 10% total return range is probably there.

Andrew Nelson, director of research and strategy at Deutsche Asset Wealth Management, added that We will see increasing NOI growth starting in 2014. We expect to see more income based returns.

Attendees watch the opening panel discussion at the ULI Real Estate Finance and Investment Conference.

Drilling down to each property type, Richard Sinkuler, partner and global real estate markets leader at Ernst Young, forecasts a big demand in warehouse. Office is having a sluggish time recovering, he said. Retail is doing well at the high end and the low end, but the folks in the middle are having a tough time.

In terms of unemployment, there is no more national average, said Sinkuler. Nothing really meaningful is going to happen until we fix the job situation.

To be considered unemployed, you have to be looking, he continued. That cuts behind all the numbers. Dont look at the flat percentage as a national average Look at the various places where the unemployment growth is taking place. That growth, he said, is where the demand is coming from. Demographics is playing more of an important role than it ever has before.

When discussing the 10-year treasury, Lynns prediction is that the Fed will scale back gradually because we have been in this period of free money for four years. But the change has occurred, he said, but it has to. They cant continue to stimulate the economy forever, and it will have an effect on cap rates, but that will be gradual as well.

According to Sinkuler, The Fed isnt going to do anything drastic. We are going to have stimulus for some time to come, but the question is whether you are going to get the central banks and everyone on the same playing field because everyone is at a different stage in the game and that remains to be seen.

Check back with GlobeSt.com for more from the ULI Investment conference.

Article source: http://www.globest.com/news/12_620/sanfrancisco/finance/Panelists-More-Income-Based-Returns-in-2014-334130.html

Those are just a few, but suffice it to say prices are rising based on higher demand and abnormally low supply. Supply, ironically, is low because so far regular home sellers who don’t have to move would rather not sell into a market that is just beginning to recovery.

Also, many homeowners are still underwater on their mortgages, and therefore they would have to pay into their current homes in addition to paying for a new one.

(Read More: Old Ills Still Hit Big Banks)

But why are the price jumps so high? Some say it’s all relative.

“Market observers shouldn’t be fooled by the large headline numbers,” warned Alex Villacorta, director of research and analytics at Clear Capital, a data provider. “Last year was a turning point for the market where the year started with prices at virtually their lowest point and saw a very strong correction through the year. Much of the gains we see right now in the yearly trends are a reflection of the market lows in 2012, rather than a function of recent short-term momentum.”

Villacorta expects these big gains to subside as the market stabilizes and more supply comes up for sale. He sees the recovery of housing itself, not some broader economic resurgence, as housing’s main driver.

“Moderate improvements in the broader economic landscape likely haven’t offered potential homebuyers strong reason to jump back in at the start of the season. We do expect to see more buyers and sellers ready to take action over the next several months as rising prices continue to free up some underwater mortgages,” he offered.

Article source: http://www.cnbc.com/id/100715894

(Read More: Is the Refi ‘Apocalypse’ Really Upon Us?)

Analysts at Clear Capital, which runs a four-month moving average price index, note that January’s numbers show, “momentum stalls.” While they blame this on seasonal slowdowns, they point to Florida as a concern.

“Florida metros, namely Miami, Orlando, Tampa, and Jacksonville, were all missing from the top 15 performing market list. Since September 2011, at least one of these markets made the list,” cautions Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. “While this isn’t confirmation that the recovery is finished in the sunshine state, it’s certainly something to keep an eye on. These markets led the recovery in late 2011, and share some of the hallmarks for recovering markets overall.”

Florida’s housing market has been driven by distressed homes, and investors buying them at a rapid pace.

Other markets that saw the most distress during the housing crash, like Phoenix, Las Vegas, and much of California, have also seen so much investor demand, that prices are up by double digits from a year ago.

(Read More: New Housing Fears: Home Prices Rising Too Fast?)

Article source: http://www.cnbc.com/id/100435276

Austin Allison grinned.

“This looks great; it’s a hip, high-tech vibe,” he said, snapping photos with his iPhone. “It’s open, collaborative space.”

Allison, 26, was seeking a San Francisco base for DotLoop, the technology company he founded in his hometown of Cincinnati three years ago.

He and his wife, Angela Allison, 28, who runs a decorative painting company, plan to relocate to the city this month with their Yorkshire terrier, Paris.

The couple’s move and their quest for living and work space epitomize a modern-day migration being played out continually in the city. San Francisco’s pull as a high-tech hub and cachet as a place to live is drawing growing numbers of entrepreneurs and technology workers who move here from as nearby as Mountain View or as far away as India.

“The Bay Area has one of the most educated and creative workforces anywhere on the planet,” said Gabriel Metcalf, president of the San Francisco Planning and Urban Research Association. “For companies trying to be innovative, the Bay Area is one of the best locations there is. This sets up a ‘virtuous cycle’: The more companies that locate here, the more talent wants to be here, which then improves the attractiveness to more companies.”

Since early 2010, San Francisco’s number of tech sector workers has grown by 13,000, hitting 44,000, according to an analysis of state Employment Development Department data, said Colin Yasukochi, director of research and analysis at CNRE, a commercial real estate firm.

Growing tech hub

In the same time frame, 150 tech firms have set up shop in the city, bringing the total number of such enterprises to 1,850.

Meanwhile, 18 firms from outside the city are seeking office space here.

“We’re seeing the office market explode with an influx of tech companies,” said Donnette Clarens of Cornish Carey Commercial Newmark Knight Frank, DotLoop’s broker.

The Allisons – high school sweethearts – did an initial foray in May, seeking a base for DotLoop and an apartment for themselves, and lost out on some places by not pouncing quickly enough. They returned for two whirlwind days of hunting in late June.

Austin Allison dropped out of his second year of law school in 2009 to found DotLoop, which automates paperwork for real estate agents. Launched with angel capital, the company became profitable in 17 months, he said. In May, to accelerate growth, it took $7 million in funding from Trinity Ventures.

San Francisco is the clear place for that expansion to happen, he said.

“San Francisco has a talent pool that is different and more robust than the talent pool that exists in the Midwest,” he said. “Our office here will become our bleeding-edge tech arm, but our internal operations will stay in Cincinnati.”

He wants to hire 10 to 20 people in San Francisco within the next year. Having an office that projects the right vibe – “fun, cool, energetic, with lots of natural light, high ceilings and an open floor plan” and near amenities and transit – is a key part of recruitment, he said. Another big consideration is flexibility: a space that can grow with the company, or a shorter lease period in case it needs to relocate.

Then there’s price. “We want to be scrappy and prudent, but we don’t want to scrimp by holing up in a cave,” he said.

Average rents

DotLoop wanted to pay in the mid-$40s per square foot per year. That’s on target with the city’s first-quarter average rent of $46.66 a square foot, as tracked by Jones Lang LaSalle, which notes that rates are up 39 percent from the market bottom in 2010. The firm needs about 2,000 square feet to start.

Austin Allison has a strong preference to be in SoMa, near other up-and-coming tech firms. SoMa’s vacancy rate is 3.8 percent, Jones Lang LaSalle said; it hasn’t been that low since the height of the dot-com boom in 2000.

While incubator spaces offer flexibility, he feels DotLoop is past the startup phase of working cheek by jowl with other nascent companies, just as people outgrow group houses after college.

“We are a real company with products, revenue and customers, not a three-person startup with an idea,” he said. “Our space should reflect that.”

Like other tech folks, he eschews the type of traditional offices inhabited by lawyers and accountants.

That’s spurred an odd trend downtown: Landlords rip out walls and ceilings so Class A offices will look more like old warehouses.

“They are exposing natural brick that’s been sheet-rocked up for years, opening up the ceilings, trying to maximize window lines to get great light,” Clarens said. “It’s all about making it more attractive to creative-user tenants.”

Austin Allison made offers on two offices: A space one floor above the open-floor-plan Second Street office and a cheaper sublet. After two weeks of negotiations, DotLoop signed for the Second Street space, agreeing to a two-year lease on 1,900 square feet in the low $40s. A big plus was a contiguous office that will be available in a year, offering room to grow.

Housing budget

On the housing front, the Allisons were in the lucky position of having a $4,000-a-month budget. At that price range, they didn’t have to deal with cattle-call open houses where dozens of hopefuls jostle for favor with a rental agent.

Still, it was competitive. In May, they were surprised when apartments they toured got snapped up within hours.

The couple’s apartment wish list mirrored that for DotLoop’s office space.

“We’re steeped in that world of lofts with high ceilings and an industrial feel,” Angela said. “Most San Francisco places are older in style; SoMa and South Beach are the only areas with robust modern architecture.”

They decided to boost their monthly budget to $6,000, because a second bedroom to host DotLoop’s Cincinnati employees was a must.

They looked at condos being sublet and apartments for rent in several high-end high-rises: The Infinity near the Ferry Building, the Paramount and the Metropolitan in SoMa.

Sticker shock

A converted loft in a smaller building in Mint Plaza appealed to both for its industrial aesthetic – but it had just one bedroom. At the Brannan in South Park, a stunning view of the bay and ATT Park was a draw, but the $6,000-a-month condo’s biggest pluses were that it came fully furnished in a sleek, modern style; had two bed/bath suites separated by the living/dining room; and was near Highway 101 for quick access to SFO.

They decided to go for it and signed a one-year lease.

Not surprisingly, the couple had some sticker shock.

“Our Cincinnati condo is about $350,000; it easily would be $1.5 million out here,” Austin said. “Our Cincinnati office is less than $10 a square foot. It’s extremely competitive out here; the landlord has more leverage to dictate how the game is played.”

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

Article source: http://www.sfgate.com/realestate/article/Tech-firms-seeks-perfect-space-in-S-F-3691082.php

One example of this surge in tech positions in the Bay Area comes from Lookout Mobile Security, which relocated near San Francisco’s South Park in order to acquire more space.

Six months after relocating, the smartphone security firm is looking to add even more office space, with the goal of doubling its staff by the end of 2011, according to the news provider.

“Every person who is buying a smart phone today has a computer in their pocket and they realize they need to keep it safe,” John Hering, chief executive officer (CEO) and co-founder of the firm, told the news source. “That has created a major opportunity for Lookout.”

The Lookout expansion is indicative of tech jobs throughout the area, has San Francisco had an estimated 30,700 such positions by the end of last year, according to the news source. That number is just below the 32,800 peak of early 2001, according to analysis conducted by real estate firm Jones Lang LaSalle.

In the Silicon Valley, there were 106,300 tech jobs in the fourth quarter, just shy of the 112,700 peak, according to the analysis.

“Silicon Valley really caught fire,” Colin Yasukochi, director of research at Jones Lang LaSalle, told the Chronicle. “The economic recovery here is being led by technology.”

Some of the major companies that have contributed to the surging tech industry throughout the region include Facebook, Motorola, Google and Hewlett-Packard, the news source said.

The San Francisco Business Times reports that the increasing number of tech jobs has also caused the price of office space rental to increase by between 10 and 25 percent over the past year in the area.
 

Article source: http://www.job.com/career-advice/local-job-news/tech-jobs-surging-in-san-francisco-$438031524-1230.html

Six months, millions of new users and a doubling of its staff later, the smart-phone security company is already on the hunt for additional real estate, with the hope of moving in the second half of the year. By the end of 2011, the company expects to double its staff again, to about 100 employees.

“Every person who is buying a smart phone today has a computer in their pocket and they realize they need to keep it safe,” said John Hering, chief executive officer and co-founder of the firm. “That has created a major opportunity for Lookout.”

This growth story is playing out repeatedly in the Bay Area, pushing tech sector jobs near the all-time highs set during the dot-com boom – if they haven’t already surpassed them. Niches that hardly existed a few years ago, like mobile apps, social media and cloud computing, are now driving the region’s economic recovery.

Near peak levels

By the end of last year, San Francisco had an estimated 30,700 tech jobs, just shy of the 32,800 around the peak in early 2001, real estate firm Jones Lang LaSalle found in an analysis of state employment data. In Silicon Valley, tech positions reached 106,300 in the fourth quarter, nearing the 112,700 crest.

Figures for the first three months of the year aren’t yet available, but it’s clear the numbers have continued to rise. Tech companies like Facebook, Motorola, VMware, Hewlett-Packard and Google have leased 3.5 million square feet of space in Silicon Valley this year alone, Jones Lang LaSalle said in its report. That’s the equivalent of filling the Transamerica Pyramid seven times.

“Silicon Valley really caught fire,” said Colin Yasukochi, director of research at Jones Lang LaSalle. “The economic recovery here is being led by technology.”

San Francisco had 2.5 million square feet of tech leasing since the beginning of 2010, and has 90 firms scouting the market for another 2.3 million square feet.

The recent growth in the industry is single-handedly transforming the conditions of the commercial real estate sector in key tech markets. In Palo Alto, Cupertino and San Francisco’s South of Market district, office rents increased by 10 to 25 percent in the last year, as vacancies dropped by half, according to Jones Lang LaSalle.

For the most common type of office buildings in SoMa, average rents climbed 16.4 percent to nearly $33.50 per square foot, as vacancy plummeted from 17.4 percent to 8 percent.

It’s become the place many tech companies want to be, with Zynga, Google, TechCrunch and Mozilla leasing significant space in the district during the last year. Hering said it’s the only place Lookout plans to search for its new space.

“There’s a huge advantage of being in SoMa, in terms of being surrounded by great resources and great minds,” he said.

Growing sector

But the tech sector represents a large and growing part of the Bay Area’s economy overall.

Jobs in the industry now account for 16.6 percent of private-sector employment in San Francisco, up from a low of 12.5 percent in September 2003, according to data from the Fisher Center for Real Estate and Urban Economics in Berkeley. Tech represents 25.2 percent of employment in Silicon Valley, up from 24 percent in December 2006.

Still, in an area badly burned by the last technology-sector meltdown, concerns have already begun to surface about the sustainability of the new boom.

Yasukochi took a hard look at this issue in the first-quarter report, and concluded that there’s “no bubble in sight.”

He noted that price-to-earnings ratios, which represent the amount of money investors are willing to pay for every dollar of company profit, are far more reasonable today than they were in 2000. At the time, the P/E ratio for the SP Information Technology Index stood above 70. Today it’s just more than 16.

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/05/03/BUHP1JB97H.DTL