E. CAMPBELL AVE. OFFERING MEMORANDUM · 2017. 11. 14. · Cushman & Wakefield Commercial Real...

WIN

CH

ESTER BLVD.

E. CAMPBELL AVE.

SITE

24-28 E. CAMPBELL AVENUE, CAMPBELL, CA

OFFERING MEMORANDUM

CLARK STEELE+1 408 436 [email protected] #01995379

ERIK HALLGRIMSON+1 408 615 [email protected] #01274540

MARYANNA MCSWAIN+1 408 615 [email protected] #00696583

BUILDING HIGHLIGHTS

24-28 E. CAMPBELL AVENUEOWNER / USER OFFERING MEMORANDUM

TABLE OF CONTENTS

DISCLAIMER

GUIDELINES FOR SUBMITTING OFFERS

BAY AREA OVERVIEW Employement Trends Multifamily Trends Multifamily Submarket Breakdown

LOCAL MARKET INSIGHT Silicon Valley Retail Campbell Retail Statistics

EXECUTIVE SUMMARY Property Information Site Photos Parcel Map Income Projections Amenities Map Transportation Map

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CLARK STEELE+1 408 436 [email protected] #01995379

ERIK HALLGRIMSON+1 408 615 [email protected] #01274540

300 Santana Row, Fifth FloorSan Jose, CA 95128

P +1 408 615 3400F +1 408 615 3444

November 2017cushmanwakefield.com

MARYANNA MCSWAIN+1 408 615 [email protected] #00696583

24-28 E. CAMPBELL AVENUE | 3

DISCLAIMER

Cushman & Wakefield Commercial Real Estate Services, Inc., dba Cushman & Wakefield has been engaged as exclusive advisors to 1516 1st Avenue LLC (the “Seller”), in connection with Seller’s solicitation of offers for the purchase of 24-28 E. Campbell Avenue located in Campbell, California (“The Property”). Said solicitation and potential sale to be governed by this Confidential Offering Memorandum, as it may be modified or supplemented (the “Offering Memorandum”) and a purchase agreement. Prospective purchasers are advised that as part of the solicitation process, Seller will be evaluating a number of factors including the current financial qualifications of the prospective purchaser. Prospective purchasers are further advised that the Seller expressly reserves the right in its sole and absolute discretion to evaluate the terms and conditions of any offer and to reject any offer without providing a reason therefore. Further, Seller reserves the right to terminate the solicitation process at any time prior to final execution of a purchase agreement. The Property is being offered on an “AS IS” basis. This Offering Memorandum is furnished to prospective purchasers on a confidential basis solely for the purpose of prospective purchasers determining whether to submit an offer to purchase the Property. The information contained herein, or any other related information provided by Seller may not be reproduced or redistributed or used in whole or in part for any other purpose. No person has been authorized to give any information or to make any representation or warranty, either express or implied, other than those contained in an executed purchase agreement subject to any disclaimer or limitations set forth therein, and if given or made in any other form, such information or representation should not be relied upon. While Seller has no reason to believe that the information provided herein, or in the due diligence materials, contain any material inaccuracies, neither Seller nor any of its respective officers, directors, shareholders, owners, employees, agents, members, managers, etc., make any representations or warranties, express or implied, as to the validity, accuracy or completeness of the information provided or to be provided except as may be set forth in an executed purchase agreement, subject to any disclaimers or limitations set forth therein. Without limiting the generality of the foregoing sentence, nothing herein shall be deemed to constitute a representation, warranty or promise by Seller nor any of its respective officers, directors, shareholders, owners, employees, agents, members, managers, etc., as to the future performance of the Property or any other matters set forth herein. A prospective purchaser’s sole and exclusive rights with respect to this prospective transaction, the Property, or information provided herein or in the Due Diligence Materials, shall be limited to those expressly provided in an executed purchase agreement and shall be subject to the terms thereof. In no event shall a prospective purchaser have any other claims against Seller or any of its officers, directors, shareholders, owner’s employees, agents, members, managers, etc., for any damages, liability, or causes of action relating to this solicitation process or the marketing or sale of the Property. Prospective purchasers are not to construe the contents of this Offering Memorandum, any Due Diligence Materials or any prior or subsequent communications from Seller or any of its respective officers, directors, shareholders, owners, employees, agents, members, managers, etc. as legal, tax or other advice. Prior to submitting an offer, prospective purchasers should consult with their own legal counsel and personal and tax advisors to determine the consequences of an investment in the Property and arrive at an independent evaluation of such investment.


GUIDELINES FOR SUBMITTING OFFERS

All proposals shall be submitted with escrow to be opened at First American Title National Commercial Services (2755 Campus Drive, Suite 125, San Mateo, CA 94403 Attn: Shelly Siegman 650.356.1732). The Seller will consider only those proposals submitted at the invitation of the Seller or its exclusive advisor, Cushman & Wakefield. The Seller reserves the right to reject any or all proposals, or to withdraw this offering at any time without notice. All offers must be based on “AS IS” and “WHERE IS” condition, with “NO FAULTS” in the broadest sense of the term. The Seller reserves the right to choose and negotiate exclusively with any party at any time. The Seller also reserves the right to agree to any terms and conditions at Seller’s sole discretion. All inquiries about this offering and the property are to be directed to Clark Steele, Maryanna McSwain or Erik Hallgrimson of Cushman & Wakefield at the address and phone numbers below:

CLARK STEELE+1 408 436 3653

[email protected] #01995379

ERIK HALLGRIMSON+1 408 615 3435


MARYANNA MCSWAIN+1 408 615 3446



NORTHERN CALIFORNIA | BAY AREA

BAY AREA OVERVIEW1BAY AREANORTHERN CALIFORNIA

MARKET INSIGHTSecond Quarter 2017

Q2 2015 Q2 2016 Q2 2017 FORECAST

Labor Force (% Change) 0.8% -0.2% -0.2%

EMPLOYMENT (% Change) 1.6% 0.3% -0.3%

UNEMPLOYMENT RATE (%) 4.3% 4.2% 3.7%

The following are select announcements from second quarter 2017:

• Total job growth has slowed across the region over the first half of 2017; that said, tech companies continue to look to add positions over the next year particularly in transit-oriented locations.

• Delivering by the end of this year will be Salesforce Tower in San Francisco, the tallest office building east of the Mississippi. It is expected to open at almost 100% leased.

• Tech companies are getting into the housing game with both Facebook and Google planning to construct “affordable” housing on or near their Silicon Valley campuses.

Q2 employment increased by 79,700 jobs.

Q2 unemployment decreased to 3.7%.

% Y O Y B P S Y O Y

ECONOMIC EXPANSION

OUTLOOKJOB GROWTH & UNEMPLOYMENT RATE

Leasing in San Francisco was driven by mid-sized deals in the second quarter though two large expansions were completed just after the close of the quarter– Airbnb for 287,000 square feet (sf) and Amazon for 180,000 sf.

Biotech was hot in the East Bay as Zymergen expanded by 303,000 sf in Emeryville while Exelixis expanded by 111,000 sf in Southern Alameda.

The Apple spaceship, otherwise known as Apple Park, officially opened in the second quarter in Silicon Valley; it will hold approximately 12,000 employees in its 3.4 million square feet.

For San Mateo County, it was about renewal/expansion leases under 100,000 sf in the second quarter including Coupa Software at 69,000 sf and IXL Learning at 67,000 sf.

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The unemployment rate in the Bay Area was 3.7% in June 2017, up from 3.6% in March and below the 4.2% one year ago. With a total labor force at 4.1 million, the region currently employs just under 4.0 million of its residents. The Bay Area continued its strong job growth momentum, adding 79,700 nonfarm jobs from a year ago. Since its unemployment peak of 11.7% in the first quarter of 2010, 699,800 jobs have been created across the region.

EMPLOYMENT & UNEMPLOYMENT TRENDS

BAY AREA JOB GROWTH TRENDS

BAY AREA

EMPLOYMENT IN MILLIONS & JOB GROWTH (%)

2.1 40

Forecast is 12-month outlook0.0%

1.0%

2.0%

3.0%

4.0%

3.50

3.60

3.70

3.80

3.90

4.00

4.10

4.20

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

2015 2016 2017 YOY % Job GrowthSource: BLS.Gov

1BAY AREANORTHERN CALIFORNIAMARKET INSIGHTSecond Quarter 2017

Q2 2015 Q2 2016 Q2 2017 FORECAST

Labor Force (% Change) 0.8% -0.2% -0.2%

EMPLOYMENT (% Change) 1.6% 0.3% -0.3%

UNEMPLOYMENT RATE (%) 4.3% 4.2% 3.7%

The following are select announcements from second quarter 2017:

• Total job growth has slowed across the region over the first half of 2017; that said, tech companies continue to look to add positions over the next year particularly in transit-oriented locations.

• Delivering by the end of this year will be Salesforce Tower in San Francisco, the tallest office building east of the Mississippi. It is expected to open at almost 100% leased.

• Tech companies are getting into the housing game with both Facebook and Google planning to construct “affordable” housing on or near their Silicon Valley campuses.

Q2 employment increased by 79,700 jobs.

Q2 unemployment decreased to 3.7%.

% Y O Y B P S Y O Y

ECONOMIC EXPANSION

OUTLOOKJOB GROWTH & UNEMPLOYMENT RATE

Leasing in San Francisco was driven by mid-sized deals in the second quarter though two large expansions were completed just after the close of the quarter– Airbnb for 287,000 square feet (sf) and Amazon for 180,000 sf.

Biotech was hot in the East Bay as Zymergen expanded by 303,000 sf in Emeryville while Exelixis expanded by 111,000 sf in Southern Alameda.

The Apple spaceship, otherwise known as Apple Park, officially opened in the second quarter in Silicon Valley; it will hold approximately 12,000 employees in its 3.4 million square feet.

For San Mateo County, it was about renewal/expansion leases under 100,000 sf in the second quarter including Coupa Software at 69,000 sf and IXL Learning at 67,000 sf.

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The unemployment rate in the Bay Area was 3.7% in June 2017, up from 3.6% in March and below the 4.2% one year ago. With a total labor force at 4.1 million, the region currently employs just under 4.0 million of its residents. The Bay Area continued its strong job growth momentum, adding 79,700 nonfarm jobs from a year ago. Since its unemployment peak of 11.7% in the first quarter of 2010, 699,800 jobs have been created across the region.

EMPLOYMENT & UNEMPLOYMENT TRENDS

BAY AREA JOB GROWTH TRENDS

BAY AREA

EMPLOYMENT IN MILLIONS & JOB GROWTH (%)

2.1 40

Forecast is 12-month outlook0.0%

1.0%

2.0%

3.0%

4.0%

3.50

3.60

3.70

3.80

3.90

4.00

4.10

4.20

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17

2015 2016 2017 YOY % Job GrowthSource: BLS.Gov


NORTHERN CALIFORNIA | BAY AREA

BAY AREA OVERVIEW2BAY AREANORTHERN CALIFORNIA

MARKET INSIGHTSecond Quarter 2017

Year-over-year asking rent growth showed signs of cooling off, sliding by -1.4% to $2,639 while vacancy ticked up +10 basis points (bps) to 3.9%. Asking rent and vacancy are still forecasted to increase over the next 12 months.

The average one-year historical asking rent growth rate decreased modestly, -1.4% from second quarter 2016 to second quarter 2017, compared to +8.9% over the previous one-year period. Both new construction and value-add properties are contributing a higher percentage of affordable housing to curb increasing rental rates. The one year projection still calls for a +3.8% increase by the end of 2017 while the five year projection is for a +20.1% increase by year-end 2021. These rates will add further stress to the nation’s most expensive market.

The number of units under construction in the Bay Area is currently over 25,000. In the past 12 months, approximately 14,600 units have delivered. Over 3,100 units were built in the second quarter and more than 6,400 have been delivered year-to-date. This indicates that, while supply is robust, renter demand and demographic growth are also strong. Inventory has grown year-over-year at a rate of 2.0% and will likely reach 2.7% by the end of 2017.

The Bay Area is continuing to attract residents in a flourishing tech-boom cycle. Millenials are attracted to urban living with convenient amenities, efficient transportation and on-demand services. Residents age 25-34 years making $150,000+ account for 29.6% of the population in San Francisco County and 23.6% of the population in Santa Clara County.

The following are Cushman & Wakefield’s projections over the near term.

MULTIFAMILY TRENDS

HISTORICAL & FORECASTED METRO RENT GROWTH RATES

DEVELOPMENT / INVENTORY

DEMOGRAPHIC FUNDAMENTALSAverage asking rentdecreased to $2,639.

Vacancy increased

to 3.9%.

BAY AREA RENT GROWTH RATES

% Y O Y B P S Y O Y

2010: 7,265,0002015: 7,721,0002016: 7,763,0002020: 8,009,000

2010: $105,1832015: $146,8352016: $155,2422020: $182,281

2010: $74,9782015: $90,2802016: $94,0152020: $110,589

POPULATION

PERSONALINCOME

MEDIAN HOUSEHOLD

INCOME

MULTIFAMILY FORECAST

VACA N CYREN TS P IP EL INE % GR OWTH

-1.4 10

-0.8%

-0.2% -0.1%

-1.4%

24.0%

38.9%

24.8%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

4Q16 1Q17 2Q17 1 YearHistorical

3 YearHistorical

5 YearHistorical

5 YearForecast

Bay Area California United StatesSource: REIS


Year-over-year asking rent growth showed signs of cooling off, sliding by -1.4% to $2,639 while vacancy ticked up +10 basis points (bps) to 3.9%. Asking rent and vacancy are still forecasted to increase over the next 12 months.

The average one-year historical asking rent growth rate decreased modestly, -1.4% from second quarter 2016 to second quarter 2017, compared to +8.9% over the previous one-year period. Both new construction and value-add properties are contributing a higher percentage of affordable housing to curb increasing rental rates. The one year projection still calls for a +3.8% increase by the end of 2017 while the five year projection is for a +20.1% increase by year-end 2021. These rates will add further stress to the nation’s most expensive market.

The number of units under construction in the Bay Area is currently over 25,000. In the past 12 months, approximately 14,600 units have delivered. Over 3,100 units were built in the second quarter and more than 6,400 have been delivered year-to-date. This indicates that, while supply is robust, renter demand and demographic growth are also strong. Inventory has grown year-over-year at a rate of 2.0% and will likely reach 2.7% by the end of 2017.

The Bay Area is continuing to attract residents in a flourishing tech-boom cycle. Millenials are attracted to urban living with convenient amenities, efficient transportation and on-demand services. Residents age 25-34 years making $150,000+ account for 29.6% of the population in San Francisco County and 23.6% of the population in Santa Clara County.

The following are Cushman & Wakefield’s projections over the near term.

MULTIFAMILY TRENDS

HISTORICAL & FORECASTED METRO RENT GROWTH RATES

DEVELOPMENT / INVENTORY

DEMOGRAPHIC FUNDAMENTALSAverage asking rentdecreased to $2,639.

Vacancy increased

to 3.9%.

BAY AREA RENT GROWTH RATES

% Y O Y B P S Y O Y

2010: 7,265,0002015: 7,721,0002016: 7,763,0002020: 8,009,000

2010: $105,1832015: $146,8352016: $155,2422020: $182,281

2010: $74,9782015: $90,2802016: $94,0152020: $110,589

POPULATION

PERSONALINCOME

MEDIAN HOUSEHOLD

INCOME

MULTIFAMILY FORECAST

VACANCYREN TS P IP EL INE % GR OWTH

-1.4 10

-0.8%

-0.2% -0.1%

-1.4%

24.0%

38.9%

24.8%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

4Q16 1Q17 2Q17 1 YearHistorical

3 YearHistorical

5 YearHistorical

5 YearForecast

Bay Area California United StatesSource: REIS


MULTIFAMILY SUBMARKET BREAKDOWN

BAY AREA OVERVIEW


It was a mixed bag regarding the year-over-year changes in average asking rents across the Bay Area: East Bay (+4.1%), San Mateo (+3.7%), North Bay (+3.7%), Santa Clara (+1.3%), San Francisco (-3.6%). San Francisco’s housing crisis has begun to wane partially due to the spillover effect in neighboring East Bay ($2,259) and San Mateo ($2,781); rental rates in these markets are forecasted to reach $2,560 and $3,283 by 2021. Construction of roughly 29,000 units over the next five years should provide some relief to the Bay Area’s housing shortage driving inventory to 482,000 units. About a third of the units are slated to be delivered by end of 2017.

SUBMARKET OVERVIEW

SELECT SUBMARKET NEWS

East Bay

• Carmel Partners has been given the green light by Oakland’s Planning Commission to build a 400-foot, 634 unit apartment building making it the largest single residential skyscraper yet to be approved. It has not yet been announced when the project, located at 1314 Franklin, would start construction; earlier this year it raised a $1 billion fund to finance this and other projects around the country.

• Hines is scheduled to deliver MacArthur Commons by November 2018. The 395 unit apartment project will consist of three separate residential buildings located conveniently adjacent to the MacArthur BART station.

North Bay

• The Wolff Company is delivering the second phase of Annadel Apartments by year-end 2017. The downtown Santa Rosa project will include up to 120 units in five residential buildings and cost approximately $20 million. Phase one delivered 270 units in 2015 and cost up to $50 million.

Peninsula

• Greystar Real Estate Partners is constructing the second phase of Franklin 299, a 7-story, 175 unit market rate development located in Redwood City. First phase of Franklin 299 was completed in 2015 with 300 units.

• Anton Development Company is scheduled next quarter to deliver Anton Menlo phase two in Menlo Park. The development will offer 265 market rate apartments with a wide variety of amenities. When complete, Anton Menlo will have 394 units

San Francisco

• Along the Van Ness Corridor, Emerald Fund is developing 150 Van Ness, a 13-story residential mid-rise tower including 420 affordable rate units and 9,000 sf of retail. The project is designed by Solomon Cordwell Buenz (SCB). Anticipated completion will be late-2018.

• In the heart of the South Financial District, Hines is nearing the completion of 33 Tehama, a 35-story 400 unit tower. The project is designed by Arquitectonica with interiors by Edmonds + Lee and art installation by Yayoi Kusama.

Santa Clara

• The most ambitious development in Silicon Valley is Santa Clara Square by the Irvine Company. The project has been approved for eight separate buildings with up to 1,800 units at market rate. The project is to also include 1.7 million square feet of office, 40,000 square feet of retail, and a 125,000 square foot Whole Foods.

• The Lyon Living development project - The Fields in Milpitas - will deliver in spring 2018. The mixed-use project will include 371 apartment units, 50,000 square feet of retail, a 25,000 square feet grocery tenant, and a Virgin Hotel with 200 rooms.

$1,873

$2,211

$2,515

$2,781

$3,373

North Bay

East Bay

South Bay

Peninsula

San Francisco

Source: REIS

2.75%

3.09%

3.61%

4.28%

5.01%

North Bay

East Bay

Peninsula

South Bay

San Francisco

RENTS & VACANCY BY SUBMARKET

It was a mixed bag regarding the year-over-year changes in average asking rents across the Bay Area: East Bay (+4.1%), San Mateo (+3.7%), North Bay (+3.7%), Santa Clara (+1.3%), San Francisco (-3.6%). San Francisco’s housing crisis has begun to wane partially due to the spillover effect in neighboring East Bay ($2,259) and San Mateo ($2,781); rental rates in these markets are forecasted to reach $2,560 and $3,283 by 2021. Construction of roughly 29,000 units over the next five years should provide some relief to the Bay Area’s housing shortage driving inventory to 482,000 units. About a third of the units are slated to be delivered by end of 2017.


SILICON VALLEY RETAIL

LOCAL MARKET INSIGHT

cushmanwakefield.com I 1

MARKETBEAT

Silicon ValleyRetail Q3 2017

National

Regional

Rental Rate vs. Overall Vacancy

Availability by Type

Q3 16 Q3 17 12-Month Forecast**

GDP Growth 1.2% 2.2%*

CPI Growth 1.1% 2.0%

Consumer Spending Growth 2.8% 2.7%*

Retail Sales Growth 2.3% 3.9%

*Q2 values. ** Forecast by Cushman & Wakefield. Values represent year-over-year % change

Q3 16 Q3 17 12-Month Forecast**

Median Household Income $107,900 $112,300

Population Growth 0.4% 0.1%

Unemployment 4.0% 3.9%

Source: Moody’s Analytics

EconomyJob growth in the San Jose metropolitan statistical area (MSA) continued to tick up modestly with just over 10,000 new jobs added, increasing +1.0% year-over year (YoY) to nearly 1.1 million. Private sector positions closed August at 998,800, up+1.0% YoY, but retail trade lost -900 jobs or -1.0% from last year’s figure to 86,400 positions. The recent slowing of overall job growth is a result of restructuring, increasing M&A activities, and the relocation of jobs to lower cost markets. The unemployment rate for the San Jose MSA slightly declined -10basis points (bps) across the same time period to 3.9% from 4.0%, well below the national figure of 4.5%.

Market OverviewAt the third quarter of 2017, shopping center vacancy in Silicon Valley was recorded at 4.6%, unchanged from last quarter’s figure, but down -40 bps from the 5.0% one year ago.

Sunnyvale/Cupertino had the lowest vacancy rate in the region at 3.5% (up from 2.7% one year ago), followed by Palo Alto/Mountain View/Los Altos with a 3.7% vacancy rate (down from 4.3% one year ago). Meanwhile, Milpitas/North San Jose recorded the highest vacancy rate in the area at 6.9% (down from 7.1% one year ago).

By center type, the vacancy rates at the end of September 2017 were as follows: for power & regional malls the figure was 5.9%; neighborhood & community centers reported 4.8% vacancy; strip centers came in at a 3.1% vacancy rate; and finally, lifestyle centers recorded a 1.6% figure.

Negative absorption of -27,000 square feet (sf) was recorded in the third quarter. Neighborhood & community centers contributed to the most negative absorption of -46,000 sf and lifestyle centers had negative absorption of -2,000 sf. Meanwhile, power & regional malls and strip centers positively absorbed +11,000 sfand +10,000 sf, respectively, in the third quarter.

Some significant new openings in Silicon Valley in the third quarter were the first Amazon Bookstore in the Bay Area on Santana Row, San Jose; and Target in Ravenswood Shopping Center, East Palo Alto, at the former Sports Authority site.

Of the roughly 37.3 million square feet (msf) of shopping center inventory that we track in the region, approximately 1.7 msf of space was available as of the third quarter 2017. Most of the available space was in Class B or C projects.

ECONOMIC INDICATORS

71%

11%

18%0%

Neighborhood &CommunityStrip

Power & Regional Mall

Lifestyle

0%1%2%3%4%5%6%7%8%

$0

$5

$10

$15

$20

$25

$30

$35

2012 2013 2014 2015 2016 Q3 17

Asking Rent, $ PSF (NNN) Overall Vacancy Rate

1.7 MSF


MARKETBEAT


Market Indicators

Average Asking Rent by Market (NNN)

Average Asking Rate by Type (NNN)

$43.83

$36.11

$31.25 $30.26

$26.30 $26.07

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Altos

Sunnyvale/Cupertino

San Jose(DT/South)/

Campbell/ LosGatos

Milpitas/ NorthSan Jose

Morgan Hill/Gilroy

Santa Clara

There was no new retail space delivered during the third quarter of 2017.

We are currently tracking 673,000 sf of retail space under construction. Three major projects under construction in Silicon Valley are Sunnyvale Town Center (217,000 sf), a lifestyle in Sunnyvale, Cochrane Commons (153,000 sf), a power center in Morgan Hill and The Village at San Antonio Center (144,000 sf), a community center in Mountain View. With most of the occupancy gains in new projects, we expect net absorption will climb following their completions.

The average asking rent in the region as of the end of September 2017 was $31.22 per square foot (psf) on anannual triple net basis, up +5.9% from the last year’s figure of $29.48 psf. The rental rates ranged from $26.07 psf in Santa Clara to $43.83 psf in Palo Alto/Mountain View/Los Altos. These rates reflect what is currently available in the marketplace, most of which is Class B or C space. Asking rates for small shop space in Class A or newly completed projects are typically topping the $70.00 psf mark with some projects exceeding $80.00 psf.

The largest retail sales transaction in Silicon Valley in the third quarter was Monta Loma Plaza in Mountain View, which was sold by CNT Investment to Retail Opportunity Investment Corporation for $26.6 million or $607 per sf. It is a 43,800-square foot neighborhood center, anchored by Safeway.

SILICON VALEY MAINTAINED LOW VACANCY RATE OF 4.6% IN THIRD QUARTER OF 2017

Outlook

• Food related retail (grocery and restaurants) will continue to dominate leasing transactions.

• Occupancy gains will be concentrated in newly constructed space. Residential growth, low unemployment and top national income stats will drive significant retailer interest in Silicon Valley.

• Rental rates will continue to rise for quality space while the leasing environment for older Class B-/C centers will remain competitive.

Q3 16 Q3 17 % Growth (1 Year)

12-Month Forecast

Overall Vacancy 5.0% 4.6% -40 BPS

Net Absorption (SF) 192,000 -27,000 -114.0%

Under Construction (SF) 574,000 673,000 17.2%

Average Asking Rent (NNN) $29.48 $31.22 5.9%

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2012 2013 2014 2015 2016 2017

Neighborhood & CommunityStripPower & RegionalLifestyle


MARKETBEAT


Market Indicators

Average Asking Rent by Market (NNN)

Average Asking Rate by Type (NNN)

$43.83

$36.11

$31.25 $30.26

$26.30 $26.07

$10

$15

$20

$25

$30

$35

$40

$45

$50

Palo Alto/MountainView/ Los

Altos

Sunnyvale/Cupertino

San Jose(DT/South)/

Campbell/ LosGatos

Milpitas/ NorthSan Jose

Morgan Hill/Gilroy

Santa Clara

There was no new retail space delivered during the third quarter of 2017.

We are currently tracking 673,000 sf of retail space under construction. Three major projects under construction in Silicon Valley are Sunnyvale Town Center (217,000 sf), a lifestyle in Sunnyvale, Cochrane Commons (153,000 sf), a power center in Morgan Hill and The Village at San Antonio Center (144,000 sf), a community center in Mountain View. With most of the occupancy gains in new projects, we expect net absorption will climb following their completions.

The average asking rent in the region as of the end of September 2017 was $31.22 per square foot (psf) on anannual triple net basis, up +5.9% from the last year’s figure of $29.48 psf. The rental rates ranged from $26.07 psf in Santa Clara to $43.83 psf in Palo Alto/Mountain View/Los Altos. These rates reflect what is currently available in the marketplace, most of which is Class B or C space. Asking rates for small shop space in Class A or newly completed projects are typically topping the $70.00 psf mark with some projects exceeding $80.00 psf.

The largest retail sales transaction in Silicon Valley in the third quarter was Monta Loma Plaza in Mountain View, which was sold by CNT Investment to Retail Opportunity Investment Corporation for $26.6 million or $607 per sf. It is a 43,800-square foot neighborhood center, anchored by Safeway.

SILICON VALEY MAINTAINED LOW VACANCY RATE OF 4.6% IN THIRD QUARTER OF 2017

Outlook

• Food related retail (grocery and restaurants) will continue to dominate leasing transactions.

• Occupancy gains will be concentrated in newly constructed space. Residential growth, low unemployment and top national income stats will drive significant retailer interest in Silicon Valley.

• Rental rates will continue to rise for quality space while the leasing environment for older Class B-/C centers will remain competitive.

Q3 16 Q3 17 % Growth (1 Year)

12-Month Forecast

Overall Vacancy 5.0% 4.6% -40 BPS

Net Absorption (SF) 192,000 -27,000 -114.0%

Under Construction (SF) 574,000 673,000 17.2%

Average Asking Rent (NNN) $29.48 $31.22 5.9%

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2012 2013 2014 2015 2016 2017

Neighborhood & CommunityStripPower & RegionalLifestyle

SUBMARKET OVERALL VACANCY RATE

OVERALL AVERAGE ASKING RENT (NNN)

Campbell 4.0% $37.86

Sunnyvale/Cupertino 3.5% $36.11

Santa Clara 5.0% $26.07

Palo Alto/Mountain View/Los Altos

3.7% $43.83

Milpitas/North San Jose 6.9% $30.26

Morgan Hill/Gilroy 5.4% $26.30


CAMPBELL RETAIL STATISTICS

LOCAL MARKET INSIGHT

4.0% 2.1%

$37.86 2.7%

VACANCY YOY RENT GROWTH

AVG. NNN ASKING RATE

YOY RENTGROWTH


LOCAL CAMPBELL MARKET

MULTIFAMILY

RETAIL

OFFICE

EXECUTIVE SUMMARY

24-28 E Campbell Avenue is located in the heart of downtown Campbell. The site is a short walk to light rail and minutes away from Highway 17. From Campbell, you also have easy access to Highways 87, 280, 101 and the San Jose International Airport. Both San Jose International Airport and Downtown San Jose are only 10 minutes away. All major freeways can easily be accessed from the site along with San Tomas Expressway. These abundant transportation options offer a brief 15-20 minute drive to all major destinations in the South Bay Area.

In recent years, the local Campbell market has undergone significant redevelopment in all major sectors. Nearly 300 residential units are under construction in the immediate downtown area alone with numerous other projects in the planning or construction phase. Transportation oriented development in the region continues to boom and Campbell itself is no exception. Several other developments have been announced along Bascom Avenue and Union Avenue, as residential growth in the city remains very strong.

The Retail market in Campbell remains robust with rates increasing 2.7% from this time last year to $3.16 per square foot on a monthly triple net basis. With new product coming to the market and a diminishing inventory of Class B/C retail options, rates are projected to rise further in the quarters ahead. Vacancy is holding very low at 4.0%, down from it’s peak of 7.9% in 2009. As more residential development rises in the city, expect a greater concentration of retailers to continue moving into the city. Supported by a very popular downtown core and great access to transportation, Campbell’s retail market is poised for continued growth.

The cities office market continues to surge and add product nearby with 177,000 SF recently completed on Creekside Way along with another 150,000 SF planned in The Pruneyard. One example of an overall uptick in investment activity throughout the city is the former fruit canning plant named The Cannery in downtown Campbell which is undergoing a significant renovation. Upon completion, the project will deliver nearly 100,000 SF of creative SOMA style space to the downtown core, adding even more support to a very strong downtown retail climate.


BUILDING HIGHLIGHTS

PROPERTY INFORMATION

SITE SUMMARY

• Downtown Campbell location• 0.12 acres on two parcels• Mixed-use site with residential & retail• Downtown Specific Plan Zoning• In-place retail lease income until 2021• Below market apartment rates• Local landmark retail location• Near Winchester Blvd Urban Village area• 7 minute walk to Campbell Light Rail Station• 15 minute walk to The Pruneyard

• Address - 24-28 E. Campbell Avenue, Campbell• Owner - 1516 1st Avenue LLC• Building Size – Retail: ±1,563 SF / Residential: ±600 SF• Lot Size: 0.12 acres (2 parcels)• Year Built – 1939• APN - 412-05-038 & 412-05-034• Purchase Price - $1,700,000• Current Occupancy – Fully Leased

WIN

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ESTER BLVD.

E. CAMPBELL AVE.

SITE


SITE PHOTOS


PARCEL MAP


ANNUAL RETAIL LEASE INCOME - NNN PROJECTED ANNUAL INCOME - RETAIL & RESIDENTIAL

INCOME PROJECTIONS

Graphs

In-place Lease Income Projected Income - Option Term

- Assumes 3% standard market increase upon renewal.- Option to renew includes 4% increases reflected in years 2022-2026.

$56K $59K $61K $63K $66K $68K $71K $73K $76K $79K

$

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2018 -2019

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2025 -2026

Annual Retail Lease Income - NNN

$71K $73K $75K $78K $80K $82K $85K $88K $91K $94K

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2025 -2026

Projected Annual Income - Retail & Residential

- Assumes flat in-place residential rent of $1,200/month throughout both periods.


Graphs


- Assumes 3% standard market increase upon renewal.- Option to renew includes 4% increases reflected in years 2022-2026.

$56K $59K $61K $63K $66K $68K $71K $73K $76K $79K

$

$10K

$20K

$30K

$40K

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2016 -2017

2017 -2018

2018 -2019

2019 -2020

2020 -2021

2021 -2022

2022 -2023

2023 -2024

2024 -2025

2025 -2026

Annual Retail Lease Income - NNN

$71K $73K $75K $78K $80K $82K $85K $88K $91K $94K

$

$10K

$20K

$30K

$40K

$50K

$60K

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2016 -2017

2017 -2018

2018 -2019

2019 -2020

2020 -2021

2021 -2022

2022 -2023

2023 -2024

2024 -2025

2025 -2026

Projected Annual Income - Retail & Residential

- Assumes flat in-place residential rent of $1,200/month throughout both periods.



AMENITIES MAP

EAT1 . Willard Hicks2. Opa3. Aqui’s4. Brown Chicken

Brown Cow5. Nashmarkt6. Liquid Bread

Gastropub7. A Bellagio Italian8. Blueline Pizza9. Stacks10. Mo’s Breakfast and

Burger Joint11 . Tigelleria Organic

Restaurant12 . La PanotiQ

SEE1 . Downtown Campbell

Farmer’s Market2. Ainsley House3. Heritage Theaters4. Campbell Historical

Museum

PL AY1 . Recycled Bookstore2. Orchard Valley Coffee3. Starbucks4. Flights5. Tessora’s Barra De Vino6. Khartoum

STAY1 . The Doubletree Campbell2. Bristol Hotel3. Courtyard San Jose

Campbell4. Larkspur Landing

Campbell5. Campbell Inn6. Residence Inn

BANK1 . Bank of America2. Bank of the West3. Chase Bank4. Citibank5. Wells Fargo

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Civic Center DrCivic Center Dr

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PROPERTY


TRANSPORTATION MAP

G4

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PRUNEYARD

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Camden Rd

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Monterey Rd

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Stevens Creek Blvd

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Tully Rd

Hamilton Ave Hamilton Ave

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Lawren ce Expy

Hillsdale Ave

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PROPERTY

SUNNY VALE20 MIN. SANTA CL ARA

15 MIN.

CUPERTINO10 MIN.

11 MIN. VIA LIGHT RAIL

DOWNTOWN SAN JOSE

10 MIN.

SAN JO SE

IN T ERNAT IONAL AIRP OR T

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E. CAMPBELL AVE. OFFERING MEMORANDUM · 2017. 11. 14. · Cushman & Wakefield Commercial Real...

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Transcript of E. CAMPBELL AVE. OFFERING MEMORANDUM · 2017. 11. 14. · Cushman & Wakefield Commercial Real...