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Thursday, Oct 6, 2022

Local Commercial Property Financing Expected to Surpass 2012

Commercial property deal volume in San Diego County topped $1.6 billion in 2012, a significant improvement over the last several years. But debt and equity financing have yet to return to pre-recession peaks, according to a recently released capital markets report by the brokerage firm CBRE.

The firm’s researchers said local investment financing activity in 2013 should surpass 2012, with high expectations for continued participation by government-sponsored entities such as Freddie Mac and Fannie Mae.

Life insurance companies have higher allocations planned for 2013, as lenders overall seek to make quality loans to good borrowers. Even with relatively modest expectations for returns thanks to the continued low-interest-rate environment, the lack of alternative investments has kept commercial real estate a viable option for lenders, according to CBRE.

There was more than $1 billion in local office property transaction volume involving assets priced at more than $5 million in 2012, slightly lower than $1.3 billion in 2011, though well short of the region’s all-time high of $4.8 billion in 2007. Declining vacancy rates and rising rents are expected to stoke investor demand for Class A and well located Class B properties in 2013.

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Industrial sales activity reached $553 million in 2012, up 15 percent from 2011. Institutional buyers made up 48 percent of those investments, up from 14 percent of 2011’s total, and are expected to remain a big presence locally in 2013.

Meanwhile, private investors accounted for just 22 percent of the total in the industrial market in the past year, down from 50 percent in 2011. The biggest challenge facing the industrial investment market is a shortage of available quality product, researchers said.

Local retail fundamentals remain sound, and capital will continue to flow to that sector this year, though product is also limited in that arena. Retail investment deal volume, at $473 million, dipped slightly in 2012 compared with the prior year, largely because of three big transactions that occurred in 2011.

Multifamily deal volume reached $773 million in 2012 — down from $938 million in 2011 — with most transactions involving Class B and C properties as local fundamentals continued to improve. CBRE expects multifamily to see a modest increase in deal volume in 2013, with occupancy rates in some neighborhoods declining slightly as new product comes on the market in the latter half of the year and early 2014.

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Coronado Hotel Wraps $12 Million Makeover: Operators have completed a $12 million renovation of Loews Coronado Bay Resort, following phased-in work on the 440-room Coronado property over the past nine months.

A statement from New York-based Loews Hotels said the hotel’s lobby has been completely redesigned, along with its Bay Terrace, Cays Lounge, Market Café eatery and Market-to-Go. Earlier renovations were done over the last three years to meeting spaces, corridors and guest bathrooms.

The property now has a new floating bar, and a nine-screen media wall at Cay’s Lounge. The Bay Terrace has oversized teak sofas for gathering near outdoor fire pits in evening hours.

Spaces were redesigned by the luxury design firm BAMO of San Francisco.

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Mixed-Use Development Sold Via Receivership: The Lofts at Moonlight Beach, a newly constructed mixed-use development in Encinitas, has been sold out of receivership at an undisclosed price. The property at 90 North Coast Highway 101, with a total of 40,709 square feet, was built in 2008 and includes 15 residential condos and 15 retail suites.

The seller was receiver Gregg Williams of Trident Pacific Real Estate Group, represented by brokerage firm CBRE. According to a CBRE statement, the property was acquired by two separate legal entities.

The residential component was acquired by MB Lofts LLC, and the retail part was purchased by Equity Two Properties LLC.

All but three of the retail suites are occupied, with tenants including Curran & Curran law offices, Matthew Pequignot Legal Services, Mosaic Sports Management and Lofty Bean Coffee Bar.

• • •

Foley Corporate Sells for $18 Million: The Carmel Valley office property known as Foley Corporate Center, at 11943 El Camino Real, has been sold for $18 million.

Carmel Valley Office Building LLC was the buyer, and the seller was Diamante Office Building LLC, according to a statement from brokerage firm Cushman & Wakefield, which represented the seller.

The buyer was represented by Colliers International. The 34,600-square-foot property was built in 2005 and was fully leased at the time of the transaction, with current tenants including Comerica Inc., Global Media Outreach and Fidelity Investments.

The building is located in the Del Mar Heights submarket of Carmel Valley, near Interstate 5 and state Route 56.

Send commercial real estate and development news of general local interest to Lou Hirsh via email at lhirsh@sdbj.com. He can be reached at 858-277-8904.


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