The 3Q16 was a period of tremendous activity across the Southwest. Several brokerage houses released third quarter reports this week, showing that the region is still strong, despite the long recovery. The office and industrial sectors are showing the most impressive growth, with some record-breaking price-per square foot numbers in office and large deals in industrial. Both sectors are expected to remain strong in 2017.

BY THE NUMBERS

RENO, NV—The Reno, NV industrial market was highly active in the 3Q16, with 1.9 million square feet of positive net absorption. The activity brought the year-to- date gain in occupied space past 4.7 million square feet. The vacancy rate also fell in the market, from 7.58% to 6.64%, and more than 1 million square feet of new construction space was delivered to the market during the quarter. Asking rents in the quarter varied by size: from $0.34 for vast distribution spaces over 100,000 square feet to $0.57 for smaller offerings. The average rate was %0.36 per square foot.

(Source: Kidder Matthews)

LOS ANGELES, CA—Los Angeles homeownership is steadily declining. In 2016, homeownership dipped to 46.5%, compared to 53.8% homeownership in 2006. The city also has the lowest homeownership in the State of California.

(Source: JLL)

LOS ANGELES—Class-A office space is leading activity in the L.A. office market. 3Q16 was the strongest so far this year, with 681,000 square feet of positive net absorption, bringing the year-to-date total to over 1.7 million square feet. The vacancy fell 50 basis points 13.7%, the lowest vacancy rate since 2009, although the rate is still higher than the 9.2% rate in 2007, the previous peak. Rental rates are also up for the ninth straight quarter to $3.11/SF, a 5.1% year-over-year increase.

(Source: NGKF)

LOS ANGELES—Consumer spending increased throughout the greater Los Angeles area in the third quarter, fueling momentum that is expected to continue to fuel the market through next year. In 3Q16, the vacancy rate was down 4.6%; net absorption was up to 477,819 square feet; and triple net lease rates were up to $2.47. Experts forecast that retail rents next year will increase by 4% by Q317, an occupancy rates are expected to decline by an additional 40 basis points over the next 12 months.

(Source: CBRE)

NEWS & NOTABLES

IRVINE, CA—CapRock Partners has promoted commercial real estate veteran Nicholas Ilagan as regional property manager. Ilagan joined the firm in 2015, and has developed a best-in-class property management system for the firm. Ilagan formerly served as National Director and Product Council Chair for the Property and Asset Management Division of Sperry Van Ness International.

SAN DIEGO, CA—Westcore Properties has hired construction professional Ryan Childs as construction manager. In this new role, Childs will support the firm's focus on acquiring and transforming properties to achieve the highest and best use, and will evaluate future development and existing buildings. Childs has formerly worked as Pacific Building Group, ETC Building & Design and Bycor.

LOS ANGELES—CBRE has promoted Troy Pollet to SVP. Pollet has been with the firm for nine years and in that time has closed some of the largest deals in the region, including the sale of the 120,000-square-foot renamed Tech Park @ Canwood campus in Agoura Hills for $21 million earlier this year on behalf of Majestic Asset Management. He is based in the firm's North Los Angeles office at the Masonic Temple in Glendale, California.

LADERA RANCH, CA—SmartStop Asset Management has announced that it has nearly $1 billion in assets under management in its first year of business. The company is focused on self-storage facilities and has approximately 59,400 self storage units and approximately 6.7 million rentable square feet. The company has now launched a new division for student and senior housing and self storage properties for exchanges.

LONG BEACH, CA—The Port of Long Beach launched the Port of Long Beach Academy of Global Logistics at Cabrillo High School to open a new pathway to careers in international trade for young students in the city. The school is a four year academy, and has already awarded $59,500 in scholarships to 40 students from Long Beach-area high schools, Cal State Long Beach and Long Beach City College.

DEALTRACKER

RANCHO CUCAMONGA, CA—Inland Empire Health Plan has acquired Empire Lakes Corporate Center in Rancho Cucamonga for $43.3 million from Utah State Retirement Fund. The class-A, 241,292-square-foot office building is in a 380-acre masterplanned development and has a tenant mix that includes Southern California Edison and State Farm Insurance. The buyer also owns the neighboring building. Savills Studley's Josh Gorin represented the buyer in the transaction.

SANTA FE SPRINGS, CA—Chalmer's Equity Group has sold a newly constructed industrial building for $11 million to Changing Chen. The buyer will occupy the 63,458-square-foot property for its wholesale airsoft business, and will move into the building by the end of the year. Jeff Hubbard, Jeff Rinkov and David Brandt of Lee & Associates Central Los Angeles represented the seller in the deal.

ENCINITAS, CA—Restaurant Breakfast Republic has signed a 10-year 3,500-square-foot lease with Villa Encinitas Plaza Partnership at 251 El Camino Real in Encinitas, CA. The lease is valued at $1.5 million. Bo Havlik and Victor Aquilina of Lee Associates – North San Diego County represented the tenant, while Malinda Louie of CFI represented the landlord.

IRVINE, CA—Deloitte has renewed its 54,900-square-foot lease at Park Tower in Costa Mesa. The 17-story LEED-certified property is located at 695 Town Center Drive. Park Tower is owned by One Town Center Associates. Cushman & Wakefield's Rick Kaplan, Robert Lambert and Brian Booth represented the landlord in the transaction. The loan value was not disclosed.

CALEXICO, CA—A Portico Self-Storage has traded hands between Calexico Self-Storage LLC and StaxUp Storage-Portico for $4.1 million. The 55,510-square-foot facility is situated on 3.46 acres, and is comprised of 47,710 square feet of storage, 7,800 square feet of covered RV parking, with a total of 451 storage units. Garrett Sholer of Lee & Associates – North San Diego County represented the buyer, and Clifford Crowe, also of Lee & Associates – North San Diego County, represented the seller in the deal.

CARLSBAD, CA—Meridian Capital Group's Carlsbad office has secured $116.4 million in financing on behalf of PB Bell Properties for four properties located in Arizona. The four properties include Tela Verde and Tuscany Palms in Glendale, AZ and Alante at the Islands and Laguna Village in Chandler, AZ. The two loans have a fixed rate and are non-recourse. Meridian managing director Seth Grossman, VP Sarah Kuebler and associate Ryan Gandell secured the funding on behalf of the borrower.

RIVERSIDE, CA—Meridian Capital has secured $12.5 million on behalf of the Festival Cos. to refinance the Tyler Gateway Shopping Center in Riverside. A CMBS lender funded the 10-year loan, which features five-years of interest-only payments and a low fixed interest rate. The property has two single-story buildings that total 25,000 square feet and has Ulta Beauty, AT&T, Habit Grill, Panera Bread, Chipotle and Yogurtland in its tenant mix. Meridian managing director, Seth Grossman and analyst Andy Strauss secured the funding on behalf of the borrower.

IRVINE, CA—A Chipotle Mexican Grill-leased retail property has traded hands in Santa Ana, CA, for $3.7 million. 99 Hotel bought the 2,336-square-foot property from Santa Ana HM Property. It is 100% leased on a 20-year ground lease. NAI Capital SVP Barry Blake and Steve Liu represented the buyer and seller in the transaction.

CHINO, CA—An unnamed owner/user has acquired the Chino Gateway Corp. Plaza for $9.1 million from Chino Central Park. The property consists of four freestanding multi-tenant buildings located at 15342 and 15302 El Prado Road and 15341 and 15361 Central Avenue in the San Bernardino County submarket, and was purchased in two transactions. Brett Lockwood with Cushman & Wakefield's Irvine office represented the seller and the buyer in the transaction.

COSTA MESA, CA—The owner of Newport Apartment Homes has secured a $24.1 million in financing for the 136-unit property. The loan was structured with a five-year interest-only term fixed at 3.15 percent with a loan-to-value of 55%. Sharone Sabar, SVP of capital markets in MMCC's Encino office, arranged the debt placement.

PHOENIX, AZ—The owner of Vista Verde has secured a $4.95 million loan to refinance the 181-unit workforce apartment community. The loan has a fixed rate 10-year loan on a 30-year amortization schedule through New York Community Bank. Neal Churney, managing director of Cohen Financial secured the funds on behalf of the borrower.

LONG BEACH, CA—An unnamed partnership has secured a $22.8 million loan to refinance a 156-unit apartment community at 3787 East 11th Street in Long Beach, CA. The loan has a 10-year, fixed-rate with only full-term interest-only through the Fannie Mae Green Rewards program. Jason Krupoff and Doug Taylor, both senior vice presidents in Bellwether Enterprise's Irvine office, arranged the loan for the partnership.

LOS ANGELES—Stiletto Entertainment has sold a 13,298-square-foot creative office warehouse at 8295 La Cienega Boulevard for $3.5 million or $267 per square foot. This is one of the highest per square foot prices this year. Mike Diamond Plumbing purchased the property. CBRE's Izzy Eichenstein and Todd LaPlante represented the seller in the transaction.

IRVINE, CA—Talonvest Capital has secured a $58 million loan for a 21-property self-storage portfolio located in Texas, California, Wisconsin and Tennessee. Devon Self Storage is the borrower and The three-year balance sheet loan was priced at Libor plus 2.75% and includes interest only payments for the term, partial releases, no prepayment penalty after eighteen months, extension options, and a creative interest hedging structure that allowed the borrower to save money. It was funded by a large nation bank.

BUILDING BLOCKS

LOS ANGELES—The General Service Administration's new United States Courthouse officially opened last week with a ribbon-cutting ceremony. The 12-story, 631,000-square-foot facility features 24 courtrooms and 32 judicial chambers and is being widely recognized for its groundbreaking energy-efficient design. Syska Hennessy Group provided engineering services for the project, along with SOM and Clark Construction.

Instant Insights /

Middle Market Digest: This Week in Southwest

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