2019-06-27_DTZ戴德梁行_FOURTH_QUARTER_2016_MARKET_INSIGHT_10页_768kb

Cushman & Wakefield Multifamily Advisory Group - Northern California Market Insight (Fourth Quarter 2016)

Core Content Overview

This report provides an in-depth analysis of multifamily market trends in Northern California, focusing on the Bay Area and Sacramento regions. It highlights employment and economic developments, rent and vacancy rates, investment activity, and submarket-specific news.

Key Trends in the Bay Area

Employment & Unemployment

• Unemployment rate in December 2016 was 3.5%, down from 3.9% in September and 4.0% one year ago.
• Total labor force approached 4.2 million, with 4.0 million employed.
• 743,100 jobs were added since the unemployment peak in Q1-10.
• Job growth was +65,500 nonfarm jobs in Q4, with a 1.7% YoY increase in employment.

Economic Expansion

• Major announcements include:
  • Charles Schwab renewing 435,000 sq ft in San Francisco.
  • Adobe expanding into 315,000 sq ft at 100 Hooper Street.
  • Lab126 (Amazon) expanding in Sunnyvale.
• New office and housing developments are expected to increase employee activity and housing supply.

Multifamily Trends

• Fourth quarter asking rent growth was 2.1% YoY, with an average of $2,657.
• Vacancy rate increased by 10 BPS to 3.9%.
• Historical asking rent growth rate was 4.4% in Q3 and 2.1% in Q4, indicating continued growth despite new construction.
• Five-year rent growth projections increased from 2.0% to 12.1% by 2021.

Development & Inventory

• Over 25,000 units under construction, with 11,000 units delivered in the past 12 months.
• 90% construction-to-absorption rate in Q4, showing strong demand.
• Inventory growth at 1.8% YoY, expected to reach 3.5% by end of 2017.

Demographic Fundamentals

• The Bay Area continues to attract a large number of residents, with foreign-born migrants concentrated in Santa Clara, San Francisco, Alameda, and Contra Costa Counties.
• Population increased from 7.265 million (2010) to 7.788 million (2016), projected to 8.071 million by 2020.
• Median household income rose from $74,978 (2010) to $94,255 (2016), expected to reach $112,264 by 2020.

Investment Activity

• Cumulative sales volume reached $5.0 billion, up 10.4% YoY.
• Private capital (56%) and institutional investors (31%) dominated investment activity.
• Class A sales saw the highest price per unit at $532,000 (Ascent in Walnut Creek), while Class C had the highest at $422,000 (Francis of Assisi in San Francisco).

Most Active Market Players

• Top 5 Bay Area Buyers:
  1. Acacia Capital Corporation - $264.6 million
  2. Pacific Urban Residential - $203.15 million
  3. Chinatown Community Development Center - $120.28 million
  4. TH Real Estate - $96 million
  5. Tenderloin Neighborhood Development - $90.775 million
• Top 5 Bay Area Sellers:
  1. San Francisco Housing Authority - $360.625 million
  2. Acacia Capital Corporation - $121 million
  3. TruAmerica Multifamily LLC - $109 million
  4. Kennedy-Wilson Properties, Ltd. - $96 million
  5. LeFrat Organization - $95.5 million

Pricing & Cap Rates

• Cap rates ranged from 1.5% to 9.94%, averaging 4.23%.
• Annual cap rates increased to 4.43%, still below 2009's high of 6.29%.

Submarket Overview

• Asking rents in several submarkets showed marginal changes:
  • Sonoma: +1.3%
  • San Francisco: +0.4%
  • Santa Clara: -0.5%
  • San Mateo: -1.7%
  • Contra Costa: -2.0%
• San Mateo saw a 40 BPS decrease in vacancy rate to 4.0%.

Select Submarket News

• East Bay: Signature Development Group planning Brooklyn Basin (3,100 units, 200,000 sf retail).
• North Bay: Bisno Development starting Bell Village Windsor (387 units, 83,500 sf retail).
• Peninsula: Anton Development planning 801 Brewster (250 units, 50 affordable).
• San Francisco: FivePoint Communities launching Treasure Island (8,000 units).
• San Jose: The Irvine Company expanding The Hamptons (total 1,300 units).
• Sacramento Region:
  • Downtown Sacramento: Weidner Apartment Homes planning Sacramento Commons (2,400 units, 300-room hotel).
  • Folsom: Pique at Iron Point (327 units), Talavera Ridge (293 units), Cresleigh Ravine (230 units).
  • South Natomas: Natomas Park Drive Apartments (232 units).
  • Roseville/Rocklin: Place Vineyards (14,132 units, 107 acres office, 166 acres retail), Campus Oaks (396 units), Garnet Creek (260 units).

Key Trends in Sacramento

Employment & Unemployment

• Unemployment rate in December 2016 was 5.4%, down from 5.6% in September and 5.6% one year ago.
• Total labor force approached 1.1 million, with 1.0 million employed.
• 29,300 jobs added since the unemployment peak in Q1-10.
• Job growth was +2.9% YoY in Q4.

Economic Expansion

• Key announcements include:
  • Verizon Wireless closing a call center in Rancho Cordova (1,070 jobs).
  • California Correctional Health leasing 54,000 sq ft in Elk Grove.
  • BMC Stock leasing 24,000 sq ft in Woodland.
  • Amazon expanding with a new fulfillment center in North Sacramento.

Multifamily Trends

• Fourth quarter asking rent growth was 8.0% YoY, with an average of $1,189.
• Vacancy rate decreased by 20 BPS to 2.5%.
• Historical asking rent growth rate was +6.4% in Q3 and +8.0% in Q4.
• Five-year projections increased from 3.8% to 14.6% by 2021.

Development & Inventory

• Over 1,400 units under construction, with 600 units delivered in the past 12 months.
• 80% construction-to-absorption rate in Q4.
• Inventory growth at 0.3% YoY, expected to reach 3.0% by end of 2021.

Demographic Fundamentals

• Sacramento County is the most populous with 1.5 million residents.
• Median household income increased from $56,073 (2010) to $65,651 (2016), projected to $74,690 by 2020.
• 30% of residents hold a Bachelor's degree or higher.

Investment Activity

• Cumulative sales volume reached $1.1 billion, down 17.6% YoY.
• Private capital accounted for 100% of investment activity.
• Class A sales saw a 25% increase in price per unit to $225,000 (Capitol Towers & Villas).
• Class C sales had a price per unit of $99,000 (Riverglen).

Most Active Market Players

• Top 5 Sacramento Buyers:
  1. Weidner Property Management LLC - $92 million
  2. Stonesfair Financial Corporation - $29.1 million
  3. DTI Investments, Inc. - $16.6 million
  4. K&C Investments, Inc. - $10.5 million
  5. United Development Group - $10.25 million
• Top 5 Sacramento Sellers:
  1. Kennedy-Wilson Properties, Ltd. - $92 million
  2. R.K. Properties - $29.1 million
  3. Gary R Edwards Inc - $16.6 million
  4. Ruth Bleau - $10.5 million
  5. Asset Management Consultants, Inc. - $10.25 million

Pricing & Cap Rates

• Cap rates ranged from 4.6% to 7.1%, averaging 5.58%.
• Annual cap rates decreased to 5.77%, still below 2009's high of 7.79%.

Outlook

Bay Area

• Layoffs from some tech firms, but overall job growth continues.
• High cost of living and traffic congestion remain key challenges.
• New development is expected to be fueled by transit hubs like BART and Caltrain.

Sacramento

• Despite Verizon Wireless layoffs, job growth remains strong.
• Housing demand is robust, with new developments expected to provide relief.
• Transit and infrastructure projects like the Golden 1 Center are expected to boost the region's economic profile.

Office Locations

• Burlingame: 1350 Bayshore Highway, Suite 900
• Oakland: 555 12th Street, Suite 1400
• Palo Alto: 1950 University Avenue, Suite 220
• San Jose: 300 Santana Row, Fifth Floor
• San Francisco: 425 Market Street, Suite 2300
• Walnut Creek: 1333 N. California Boulevard, Suite 550
• Pleasanton: 5000 Hopyard Road, Suite 205
• Sacramento: 400 Capitol Mall, Suite 1800
• Stockton: 3439 Brookside Road, Suite 209
• Larkspur/North Bay: 900 Larkspur Landing Circle, Suite 925