Offering Memorandum - LoopNet · 2018. 11. 14. · 902 NEWHALL STREET 902 Newhall St • San Jose,...

902 NEWHALL STREET902 Newhall St • San Jose, CA 95126

Offering Memorandum

1

N O N - E N D O R S E M E N T A N D D I S C L A I M E R N O T I C E

Confidentiality and DisclaimerThe information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant's plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. Marcus & Millichap is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2018 Marcus & Millichap. All rights reserved.

Non-Endorsement NoticeMarcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation's logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY.PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

902 NEWHALL STREET

PLEASE CONTACT LISTING AGENT FOR A TOUR OF THE PROPERTY- DO NOT DISTURB OCCUPANTS San Jose, CAACT ID Z0010684

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TABLE OF CONTENTS

SECTION

INVESTMENT OVERVIEW 01Offering Summary

Regional Map

Local Map

Aerial Photo

FINANCIAL ANALYSIS 02Tenant Summary

Lease Expiration Summary

Operating Statement

Notes

Pricing Detail

Acquisition Financing

MARKET COMPARABLES 03Sales Comparables

Lease Comparables

MARKET OVERVIEW 04Market Analysis

Demographic Analysis

902 NEWHALL STREET

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902 NEWHALL STREET

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INVESTMENT

OVERVIEW

902 NEWHALL STREET

#

OFFERING SUMMARY

5

EXECUTIVE SUMMARY

EXPENSES

CURRENT $/SF PRO FORMA $/SF

Electric $5,996 $2.42 $5,996 $2.42

Janitorial $2,400 $0.97 $2,400 $0.97

Water $609 $0.25 $609 $0.25

Sewer $833 $0.34 $833 $0.34

Trash Removal $1,657 $0.67 $1,657 $0.67

Repairs & Maintenance $2,000 $0.81 $2,000 $0.81

Landscaping $2,400 $0.97 $2,400 $0.97

Flood Insurance $1,702 $0.69 $1,702 $0.69

Special Assessments $1,158 $0.47 $1,158 $0.47

Insurance $1,221 $0.49 $1,221 $0.49

Real Estate Taxes $16,161 $6.52 $16,161 $6.52

Management Fee $0

Total Expenses $36,137 $14.57 $36,137 $14.57

VITAL DATA

CURRENT PRO FORMA

Price $1,375,000 CAP Rate 5.95% 5.95%

Loan Type All Cash Net Operating Income $81,840 $81,840

Rentable SF 2,480 Net Cash Flow After Debt Service 5.95% / $81,840 5.95% / $81,840

Price/SF $554.44 Total Return 5.95% / $81,840 5.95% / $81,840

Current Occupancy 100.0%

Year Built 1945/1975Lot Size 0.14 acre(s)

DEMOGRAPHICS

1-Miles 3-Miles 5-Miles

2017 Estimate Pop 15,584 202,591 638,347

2010 Census Pop 14,508 183,023 574,116

2017 Estimate HH 5,092 76,437 224,888

2010 Census HH 4,678 68,418 202,147

Median HH Income $93,837 $75,762 $89,925

Per Capita Income $48,957 $44,282 $44,460

Average HH Income $140,973 $114,860 $125,064

902 NEWHALL STREET

Corner Lot Office Building with Parking

Located within 2 miles of Proposed Google Campus

6 min drive to San Jose International Airport

INVESTMENT HIGHLIGHTS

OFFERING SUMMARY

INVESTMENT OVERVIEW

Marcus & Millichap has been selected to exclusively market for sale 902 Newhall Street. A uniquely located corner medical office building boasting 2,408 square feet with a lot size of 6,250 square feet. Originally constructed in 1945, 902 Newhall Street offers three offices, a large waiting room, a receptionists office, three large storage rooms, restrooms, a secretary's office and a large presidential office. Currently the building is being used for a pain and rehabilitation center with ample parking on site and street parking in front of the building.

Located between the largely growing Downtown San Jose and the highly regarded Santa Clara University, 902 Newhall Street's investment appeal is driven by San Jose's strong employment fundamentals and low vacancy levels. Google has acquired 6-8 million square feet in commercial space, and is expected to hire 15,000 - 20,000 new employees for the San Jose Campuses, located within a mile of 902 Newhall St.. Adobe, who has announced plans to build their 4th office tower across from existing Downtown San Jose headquarters will double their workforce as well. The City also has plans for constructing more than 3,500 residential and mixed use units, which makes this San Jose office site ideal for a Medical, Dental, Chiropractic, Veterinarian, Law, Real Estate, Contractor's and many other office space possibilities.

902 Newhall Street is located just blocks away from Bill's Cafe a well known breakfast delight. Many of the largest technology companies have began to move into San Jose's communities including Google, Apple, Adobe, and Yahoo. The robust high-tech job growth, shortage of housing units, rent growth, and proximity to large Silicon

Valley employers and Santa Clara University make 902 Newhall Street a great opportunity for both the cash flow and appreciation minded investor. PLEASE CONTACT LISTING AGENT FOR A TOUR OF THE PROPERTY- DO NOT DISTURB OCCUPANTS

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902 NEWHALL STREET

#

PROPERTY SUMMARY

OFFERING SUMMARY

THE OFFERING

Property 902 Newhall Street

Price $1,375,000

Property Address 902 Newhall St, San Jose, CA

Assessor’s Parcel Number 230-21-066

Zoning M1, San Jose

SITE DESCRIPTION

Year Built/Renovated 1945/1975Rentable Square Feet 2,480

Ownership Fee Simple

Lot Size 0.14 acre(s)

7

REGIONAL MAP

902 NEWHALL STREET

8

LOCAL MAP

902 NEWHALL STREET

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AERIAL PHOTO

902 NEWHALL STREET

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PROPERTY PHOTO

902 NEWHALL STREET

11

902 NEWHALL STREET

12

FINANCIAL

ANALYSIS

FINANCIAL ANALYSIS

902 NEWHALL STREET

13

TENANT SUMMARY

FINANCIAL ANALYSIS

902 NEWHALL STREET

OPERATING STATEMENT

15

FINANCIAL ANALYSIS

902 NEWHALL STREET

PRICING DETAIL

17

MARCUS & MILLICHAP CAPITAL CORPORATION CAPABILITIESMMCC—our fully integrated, dedicated financing arm—is committed to providing superior capital market expertise, precisely managed execution, and unparalleled access to capital sources providing the most competitive rates and terms.

We leverage our prominent capital market relationships with commercial banks, life insurance companies, CMBS, private and public debt/equity funds, Fannie Mae, Freddie Mac and HUD to provide our clients with the greatest range of financing options.

Our dedicated, knowledgeable experts understand the challenges of financingand work tirelessly to resolve all potential issues to the benefit of our clients.

National platform operating

within the firm’s brokerage

offices

$5.63 billion total national

volume in 2017

Access to more capital sources than any other firm in the industry

Optimum financing solutions to enhance value

Our ability to enhance buyer pool by expanding finance options

Our ability to enhance seller control

• Through buyerqualification support

• Our ability to manage buyersfinance expectations

• Ability to monitor andmanage buyer/lenderprogress, insuring timely,predictable closings

• By relying on a world classset of debt/equity sourcesand presenting a tightlyunderwritten credit file

WHY MMCC?

Closed 1,707 debt and equity

financings in 2017

ACQUISITION FINANCING

902 NEWHALL STREET

18

902 NEWHALL STREET

19

MARKET

COMPARABLES

902 NEWHALL STREET

SALES COMPARABLES MAP

20

902 NEWHALL STREET(SUBJECT)

Psychiatric & Counseling Center

80 Manning Ave

2945 The Villages Pkwy

1360 N Winchester Blvd

667 N 1st St

Parkside Villa

760 Meridian Way

508 S Almaden Ave

1490 Kiely Blvd

Minerva Building

2160 The Alameda

Family Optometry of Silicon Valley

595 N 1st St

O'Connor Hospital Medical Office Building

295 N 10th St

1706 Hamilton Ave

507 S Bascom Ave

SALES COMPARABLES

IN ESCROW COMPARABLES

ON MARKET COMPARABLES

1

2

3

4

5

7

8

13

14

15

16

17

6

9

10

11

12

21

Avg. 4.50%

Avg. 5.61%

Avg. 0.00%

0.0

0.6

1.2

1.8

2.4

3.0

3.6

4.2

4.8

5.4

6.0

902 NewhallStreet

Psychiatric&

CounselingCenter

80 ManningAve

2945 TheVillagesPkwy

1360 NWinchester

Blvd

667N 1st St

ParksideVilla

760Meridian

Way

508 SAlmaden Ave

1490 KielyBlvd

MinervaBuilding

2160 TheAlameda

FamilyOptometryof Silicon

Valley

595N 1st St

O'ConnorHospitalMedicalOffice

Building

295N 10th St

1706Hamilton

Ave

507 SBascom Ave

PROPERTY NAME902 NEWHALL STREET

SALES COMPARABLES

Average Cap Rate

SALES COMPARABLES



SALES COMPS AVG

IN ESCROW COMPS AVG

ON MARKET COMPS AVG

22

Avg. $495.19

Avg. $643.81

Avg. $950.02

$0.00

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

$1,400.00

$1,600.00

$1,800.00

$2,000.00

902 NewhallStreet

Psychiatric&

CounselingCenter

80 ManningAve


1360 NWinchester

Blvd

667N 1st St

ParksideVilla

760Meridian

Way

508 SAlmaden Ave

1490 KielyBlvd

MinervaBuilding

2160 TheAlameda


Valley

595N 1st St


Building

295N 10th St

1706Hamilton

Ave

507 SBascom Ave


SALES COMPARABLES

Average Price Per Square Foot

SALES COMPARABLES



SALES COMPS AVG

IN ESCROW COMPS AVG

ON MARKET COMPS AVG

23

Avg. $495.19

Avg. $643.81

Avg. $950.02

$0.00

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

$1,400.00

$1,600.00

$1,800.00

$2,000.00

902 NewhallStreet

Psychiatric&

CounselingCenter

80 ManningAve


1360 NWinchester

Blvd

667N 1st St

ParksideVilla

760Meridian

Way

508 SAlmaden Ave

1490 KielyBlvd

MinervaBuilding

2160 TheAlameda


Valley

595N 1st St


Building

295N 10th St

1706Hamilton

Ave

507 SBascom Ave


SALES COMPARABLES

Average Price Per Gross Square Foot

SALES COMPARABLES



SALES COMPS AVG

IN ESCROW COMPS AVG

ON MARKET COMPS AVG

PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

SALES COMPARABLES

rentpropertyname1

rentpropertyaddress1

rentpropertyname1


rentpropertyname1


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SALES COMPARABLES IN ESCROW COMPARABLES ON MARKET COMPARABLES

Asking Price $1,375,000

Price/SF $554.44

CAP Rate 5.95%

Year Built 1945/1975

Occupancy 100%

Parking Ratio 3/1000

902 NEWHALL STREET902 Newhall St, San Jose, CA, 95126

1

Close of Escrow 7/31/2018

Sales Price $1,350,000

Rentable SF 2,600

Price/SF $519.23

Year Built 1946

Occupancy 100%

Parking Ratio 2.30/1000SF

NOTESCurrent use Counseling Office. Perfect for Real Estate Services, Attorneys, Contractor's office etc. Divided into reception/ waiting area, seven offices and two restrooms. Excellent location on The Alameda just south of highway 880. Close to downtown, airport, and San Jose Retail.

PSYCHIATRIC & COUNSELING CENTER1939 The Alameda, San Jose, CA, 95126

2



Rentable SF 1,672

Price/SF $598.09

CAP Rate 4.96%

Year Built 1946

Occupancy 100%

Parking Ratio 5:1

80 MANNING AVE80 Manning Ave, San Jose, CA, 95127

PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

SALES COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


25


NOTES

Property was vacant at the COE. .

3



Rentable SF 2,800

Price/SF $524.29

CAP Rate 5.01%

Year Built 1975

Parking Ratio 4:1

2945 THE VILLAGES PKWY2945 The Villages Pkwy, San Jose, CA, 95135

4


Days On Market 60


Rentable SF 4,374

Price/SF $422.95

CAP Rate 3.33%

Year Built 1957

Occupancy 100%

Parking Ratio 2.2/1000

1360 N WINCHESTER BLVD1360 N Winchester Blvd, San Jose, CA, 95128

5


Days On Market 45


Rentable SF 3,300

Price/SF $424.24

Year Built 1901

Occupancy 100%


667 N 1ST ST667 N 1st St, San Jose, CA, 95112

PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

SALES COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


26


6


Days On Market 25


Rentable SF 2,500

Price/SF $640.00

CAP Rate 4.35%

Year Built 1900

Occupancy 100%

Parking Ratio 5:1

PARKSIDE VILLA300 S 22nd St, San Jose, CA, 95116

7



Rentable SF 4,017

Price/SF $353.50

Year Built 1982


760 MERIDIAN WAY760 Meridian Way, San Jose, CA, 95126

8


Days On Market 210


Rentable SF 2,000

Price/SF $575.00

Year Built 1905

Occupancy 100%

Parking Ratio .50/1000

508 S ALMADEN AVE508 S Almaden Ave, San Jose, CA, 95110

PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

SALES COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


27


9



Rentable SF 1,937

Price/SF $583.38

Year Built 1947

Occupancy 100%


1490 KIELY BLVD1490 Kiely Blvd, Santa Clara, CA, 95051

10



Rentable SF 2,502

Price/SF $399.68

CAP Rate 4.02%

Year Built 1925

Occupancy 100%

Parking Ratio 4:1

MINERVA BUILDING2142 The Alameda, San Jose, CA, 95126

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Rentable SF 3,082

Price/SF $412.07

Year Built 1900

Occupancy 100%


NOTESPrime location along The Alameda in Rosegarden neighborhood. Easy access to 880, 101 and 87. Short distance to Santa Clara University and Downtown San Jose. Elegant Spanish Tile and Spanish Revival features.

2160 THE ALAMEDA2160 The Alameda, San Jose, CA, 95126

PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

SALES COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


28


NOTESThe property was marketed as a medical office building investment sale.The NOI was reported as $96,000, which would yield a caprate on the sale price of 5.33%.

It was noted that the previous owner had renovated the property with $575,000 of CapEx in 2009.

12



Rentable SF 3,850

Price/SF $467.53

CAP Rate 5.33%

Year Built 1981

Occupancy 100%


FAMILY OPTOMETRY OF SILICON VALLEY 19040 Graystone Ln, San Jose, CA, 95120

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Rentable SF 2,261

Price/SF $517.47

Year Built 1900

Occupancy 100%


NOTESThe property was built out as a medical office space. The buyer is converting it into a pet clinic and was able to use the medical office space for their needs. The above normal price per square foot is in the medical office upgrades that the buyer needs.

595 N 1ST ST595 N 1st St, San Jose, CA, 95112

14

In Escrow

List Price $2,800,000

Rentable SF 6,764

Price/SF $413.96

CAP Rate 5.61%

Year Built 1961

Occupancy 100%


O'CONNOR HOSPITAL MEDICAL OFFICE BUILDING2020 Forest Ave, San Jose, CA, 95128

PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

SALES COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


29


15

In Escrow


Rentable SF 1,488

Price/SF $873.66

CAP Rate 5.60%

Year Built 1947

Occupancy 100%

Parking Ratio 3:1

295 N 10TH ST295 N 10th St, San Jose, CA, 95112

16

On Market


Rentable SF 2,030

Price/SF $874.38

Year Built 1925

Parking Ratio 3:1

1706 HAMILTON AVE1706 Hamilton Ave, San Jose, CA, 95125

17

On Market


Rentable SF 1,169

Price/SF $1,025.66

Year Built 1942

Occupancy 100%

Parking Ratio 6:1

507 S BASCOM AVE507 S Bascom Ave, San Jose, CA, 95128

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902 NEWHALL STREET

LEASE COMPARABLES MAP

902 NEWHALL STREET(SUBJECT)

1972 The Alameda

561 W Hedding St

800 Park Ave

Geno Bldg

173 N Morrison Ave

2175 The Alameda

NCR Building

919 The Alameda

1211 Park Ave

1885 The Alameda

Meridian Medical-Dental

1585 The Alameda

1034 W Taylor St

1449 Park Ave

4

7

8

9

11

20

12

14

15

16

17

13

18

10

4

7

8

9

11

12

14

13

10

1

2

3

5

6

30


LEASE COMPARABLES

31

AVERAGE OCCUPANCY

Avg. 84.48%

0

10

20

30

40

50

60

70

80

90

100

902 NewhallStreet

1972 TheAlameda

561 WHedding St

800 ParkAve

Geno Bldg 173 NMorrison

Ave

2175 TheAlameda

NCRBuilding

919 TheAlameda

1211Park Ave

1885 TheAlameda

MeridianMedical-Dental

1585 TheAlameda

1034 WTaylor St

1449Park Ave


LEASE COMPARABLES

32

AVERAGE RENT PER SQUARE FOOT

Avg. $29

$0

$6

$12

$17

$23

$29

$35

$41

$46

$52

$58

902 NewhallStreet

1972 TheAlameda

561 WHedding St

800 ParkAve

Geno Bldg 173 NMorrison

Ave

2175 TheAlameda

NCRBuilding

919 TheAlameda

1211Park Ave

1885 TheAlameda

MeridianMedical-Dental

1585 TheAlameda

1034 WTaylor St

1449Park Ave

PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

LEASE COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


33

Asking Rent/SF $33.00

Year Built 1945/1975

Occupancy 100%

Lease Type NNN

Lot Size 0.14 acre(s)


902 NEWHALL STREET902 Newhall St, San Jose, CA, 95126

1

Survey Date 10/29/2018

Rentable SF 2,821

Available SF 390


Year Built 1994

Occupancy 86%

Lease Type Modified Gross

Lot Size .23


NOTESTenant responsible for about 30% of the cost for Internet and telephone. Once a year fee for supplies, which is about $60.Taxes $1.98 per sqftOpex: $0.53 per sqftZoning CL


2


Rentable SF 2,036

Available SF 1,748


Year Built 1966

Occupancy 85%


Lot Size 6534


NOTESZoned Light IndustrialAdvertised on Craigslist

561 W HEDDING ST561 W Hedding St, San Jose, CA, 95110

PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

LEASE COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


34


Rentable SF 16,630

Available SF 700


Year Built 1953

Occupancy 76%

Lease Type NNN

Lot Size 33541


NOTES- Spacious Ground Floor Office Space Near San Jose Diridon Light Rail Station - Double-Pane Windows - Two Wash Rooms - Three Designated Parking Spaces - Easy Access To Highways 87/280 -Listed on Craigslist

3

800 PARK AVE800 Park Ave, San Jose, CA, 95126

4


Rentable SF 11,700

Available SF 3,037


Year Built 1983

Occupancy 74%


Lot Size .43

Parking Ratio 2.56/1,000

NOTESZoning CL SJ Taxes $2.06

GENO BLDG1042 W Hedding St, San Jose, CA, 95126

5


Rentable SF 8,652

Available SF 1,150


Year Built 1955

Occupancy 87%

Lease Type NNN

Lot Size .65


NOTESTaxes $2.18 per square feetZoning MI SJ

173 N MORRISON AVE173 N Morrison Ave, San Jose, CA, 95126

PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

LEASE COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


35


Rentable SF 15,067

Available SF 1,994


Year Built 1955

Occupancy 80%


Lot Size .54


NOTES3 office spaces available. Suite 103, 660 sqft for $27.68/sqftSuite 101, 400 sqft for $27.68/sqftSuite 200, 934 sqft for $27.68/sqftZoning CL SJTaxes $2.32 per Sqft

6


7


Rentable SF 37,800

Available SF 2,339


Year Built 1969

Occupancy 94%


Lot Size .72


NOTES2 Office Spaces available Suite 205, 1,844 sqft for $30.60/sqftSuite 311, 495 sqft for $30.60/sqftZoning CL Taxes $1.33 per sqft

NCR BUILDING1671 The Alameda, San Jose, CA, 95126

8


Rentable SF 5,723

Available SF 3,000


Year Built 1951

Occupancy 74%


Lot Size .28

Parking Ratio 0.87

NOTESZoning C3, San JoseTaxes $2.31 per Sqft


PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

LEASE COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


36


Rentable SF 8,000

Available SF 448


Year Built 1968

Occupancy 92%


Lot Size .56


NOTESZoning R3 Taxes $0.74 per sqft

9


10


Rentable SF 22,538

Available SF 715


Year Built 1960

Occupancy 96%


Lot Size .60


NOTESZoning CL SJTaxes $0.62


11


Rentable SF 15,522

Available SF 915


Year Built 1958

Occupancy 94%

Lease Type NNN

Lot Size 1.29


NOTESZoning CTaxes $4.80 per sqftOpex $7.19 per sqft

MERIDIAN MEDICAL-DENTAL259 Meridian Ave, San Jose, CA, 95126

PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

LEASE COMPARABLES

rentpropertyname1


rentpropertyname1


rentpropertyname1


37


Rentable SF 4,650

Available SF 1,580


Year Built 1940

Occupancy 66%


Lot Size .43


NOTESZoning C1 Taxes $1.98 per sqft

12


13


Rentable SF 12,349

Available SF 552


Year Built 1963

Occupancy 96%


Lot Size .57


NOTESZoning C SJTaxes $2.09 per sqft

1034 W TAYLOR ST1034 W Taylor St, San Jose, CA, 95126

14


Rentable SF 6,000

Available SF 750


Year Built 1960

Occupancy 84%


Lot Size .15


NOTESZoning C1 SJ Taxes $0.82 per sqft


902 NEWHALL STREET

38

MARKET

OVERVIEW

MARKET OVERVIEW

902 NEWHALL STREET

39

SAN JOSE METRO AREA

Historic Development Weighs on Silicon Valley; Investors Undertake More Conservative Endeavors

Hectic 2017 gives way to slower pipeline; transition year to follow as supply pressures are alleviated.

Following the incredible delivery slate of 2017, the sharp slowdown in development in 2018 will offer the

market a chance to stabilize. The pipeline reached 8.4 million square feet last year, led by the completion of

headquarters for Apple and Palo Alto Networks, along with additional space for Nvidia and Facebook. As a

result, the metro vacancy rate rose considerably as corporations moved to new spaces, leaving

underutilized existing product on the market. The sharp surge in vacancy corresponded with a decline in the

average effective rent as heated competition among property managers sparked higher concessions. In

2018, completions will fall by more than 60 percent, ushering in a transition year as older spaces are leased

up and asking rents stabilize. As a result, asking rents will resume an upward climb, albeit at far more

moderate rates than previous years in the current cycle.

Investor activity moderating as development surges. As construction picked up in 2017, transaction

velocity slowed considerably as buyers took a more cautious stance toward allocations amid the greatest

supply growth in nearly 20 years. Owner-users including Samsung, Facebook and Google remain active in

acquiring space to make room for expansion. As a result, prices per square foot remain elevated, supporting

cap rates in the low- to mid-5 percent band, particularly for product near major transportation routes and

corporate campuses. Meanwhile, investors are focused on properties with long-term leases already in

place, reducing lease-up risk as elevated development prompts a shuffling of tenants throughout the metro.

More robust returns can be obtained through site improvements or taking risks associated with higher

vacancy at locations farther away from public transportation and amenities.

* ForecastSources: Marcus & Millichap Research Services; BLS; CoStar Group, Inc.

MARKET OVERVIEW

902 NEWHALL STREET

40

SAN JOSE METRO AREA

2018 Market Forecast

A sharp increase in vacancy drops San Jose four places in the Index this

year.

San Jose employers create 17,000 jobs this year as low unemployment

weighs on the labor market. Last year, 22,200 positions were added to

payrolls.

Following the delivery of 8.4 million square feet in 2017, builders will

complete 3.4 million square feet. New additions will be concentrated in San

Jose and Palo Alto.

Vacancy rises to 13 percent as considerable development impacts vacancy.

Last year, vacancy jumped 110 basis points.

The average asking rent ticks up to $49.20 per square foot as new Class A

buildings lease up above the metro average. The average asking rent

declined 0.1 percent in the prior year.

Outdated assets where retail and other services can be added to existing

spaces will provide investors with the potential for increased NOI and

valuation growth.* ForecastSources: Marcus & Millichap Research Services; CoStar Group, Inc.; Real Capital Analytics

NOPI Rank

5, down 4 places

Employment

up 1.5%

Construction

3.4 million sq. ft.

Vacancy

up 30 bps

Rent

up 1.1%

Investment

PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

DEMOGRAPHICS

Source: © 2017 Experian

Created on November 2018

POPULATION 1 Miles 3 Miles 5 Miles 2022 Projection

Total Population 16,527 208,346 654,311

2017 Estimate


2010 Census


2000 Census


Current Daytime Population

2017 Estimate 28,211 331,668 820,923

HOUSEHOLDS 1 Miles 3 Miles 5 Miles 2022 Projection

Total Households 5,514 80,232 235,472

2017 Estimate


Average (Mean) Household Size 2.42 2.47 2.71

2010 Census


2000 Census


HOUSEHOLDS BY INCOME 1 Miles 3 Miles 5 Miles 2017 Estimate

$200,000 or More 17.88% 11.64% 13.50%

$150,000 - $199,999 12.06% 10.58% 11.92%

$100,000 - $149,000 17.74% 17.97% 20.16%

$75,000 - $99,999 9.81% 10.16% 11.09%

$50,000 - $74,999 13.88% 14.32% 13.02%

$35,000 - $49,999 9.38% 10.54% 9.22%

$25,000 - $34,999 6.31% 7.25% 6.23%

$15,000 - $24,999 4.83% 7.60% 6.67%

Under $15,000 8.96% 10.28% 8.53%

Average Household Income $140,973 $114,860 $125,064

Median Household Income $93,837 $75,762 $89,925

Per Capita Income $48,957 $44,282 $44,460

POPULATION PROFILE 1 Miles 3 Miles 5 Miles Population By Age

2017 Estimate Total Population 15,584 202,591 638,347

Under 20 22.26% 21.95% 23.93%

20 to 34 Years 38.19% 30.16% 26.11%

35 to 39 Years 6.41% 8.10% 8.57%

40 to 49 Years 11.89% 13.66% 14.18%

50 to 64 Years 14.05% 16.26% 16.65%

Age 65+ 7.19% 9.89% 10.53%

Median Age 28.75 33.89 34.97

Population 25+ by Education Level

2017 Estimate Population Age 25+ 8,867 138,579 440,116

Elementary (0-8) 3.04% 6.91% 6.47%

Some High School (9-11) 6.72% 8.10% 7.10%

High School Graduate (12) 16.28% 18.21% 17.18%

Some College (13-15) 17.66% 18.56% 16.83%

Associate Degree Only 5.15% 6.96% 7.19%

Bachelors Degree Only 27.19% 23.84% 25.19%

Graduate Degree 22.01% 15.46% 17.55%

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PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

DEMOGRAPHICS


Created on November 2018

POPULATION BY TRANSPORTATION TO WORK

1 Miles 3 Miles 5 Miles

2017 Estimate Total Population

Bicycle 1.48% 1.79% 1.29%

Bus or Trolley Bus 2.44% 3.65% 3.16%

Carpooled 7.45% 7.76% 9.43%

Drove Alone 66.93% 73.29% 76.18%

Ferryboat 0.00% 0.00% 0.00%

Motorcycle 0.40% 0.28% 0.24%

Other Means 0.03% 1.47% 1.43%

Railroad 2.49% 1.15% 0.81%

Streetcar or Trolley Car 0.03% 0.41% 0.30%

Subway or Elevated 0.30% 0.45% 0.28%

Taxicab 0.00% 0.06% 0.05%

Walked 12.61% 5.69% 3.17%

Worked at Home 5.85% 4.00% 3.67%

POPULATION BY TRAVEL TIME TO WORK

1 Miles 3 Miles 5 Miles

2017 Estimate Total Population

Under 15 Minutes 36.94% 25.97% 22.34%

15 - 29 Minutes 35.53% 43.44% 44.54%

30 - 59 Minutes 14.26% 18.41% 21.68%

60 - 89 Minutes 4.20% 3.89% 3.93%

90 or More Minutes 1.64% 1.53% 1.47%

Worked at Home 5.85% 4.00% 3.67%

Average Travel Time in Minutes 23 25 26

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IncomeIn 2017, the median household income for your selected geography is$78,302, compare this to the US average which is currently $56,286.The median household income for your area has changed by 52.52%since 2000. It is estimated that the median household income in yourarea will be $101,286 five years from now, which represents a changeof 29.35% from the current year.

The current year per capita income in your area is $46,417, comparethis to the US average, which is $30,982. The current year averagehousehold income in your area is $114,814, compare this to the USaverage which is $81,217.

PopulationIn 2017, the population in your selected geography is 83,780. Thepopulation has changed by 26.83% since 2000. It is estimated thatthe population in your area will be 87,755.00 five years from now,which represents a change of 4.74% from the current year. Thecurrent population is 52.43% male and 47.57% female. The medianage of the population in your area is 34.02, compare this to the USaverage which is 37.83. The population density in your area is6,661.17 people per square mile.

HouseholdsThere are currently 33,017 households in your selected geography.The number of households has changed by 31.95% since 2000. It isestimated that the number of households in your area will be 35,331five years from now, which represents a change of 7.01% from thecurrent year. The average household size in your area is 2.35 persons.

EmploymentIn 2017, there are 106,664 employees in your selected area, this isalso known as the daytime population. The 2000 Census revealedthat 65.59% of employees are employed in white-collar occupationsin this geography, and 34.26% are employed in blue-collaroccupations. In 2017, unemployment in this area is 4.25%. In 2000,the average time traveled to work was 24.00 minutes.

Race and EthnicityThe current year racial makeup of your selected area is as follows:54.33% White, 4.05% Black, 0.43% Native American and 19.44%Asian/Pacific Islander. Compare these to US averages which are:70.42% White, 12.85% Black, 0.19% Native American and 5.53%Asian/Pacific Islander. People of Hispanic origin are countedindependently of race.

People of Hispanic origin make up 33.97% of the current yearpopulation in your selected area. Compare this to the US average of17.88%.

PROPERTY NAME

MARKETING TEAM

902 NEWHALL STREET

HousingThe median housing value in your area was $639,844 in 2017,compare this to the US average of $193,953. In 2000, there were9,430 owner occupied housing units in your area and there were15,591 renter occupied housing units in your area. The median rent atthe time was $897.


DEMOGRAPHICS

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902 NEWHALL STREET

DEMOGRAPHICS

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Offering Memorandum - LoopNet · 2018. 11. 14. · 902 NEWHALL STREET 902 Newhall St • San Jose,...

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