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January 30, 2015

Real estate fortune tellers

San Francisco Business Times

Julia Cooper

What are your top predictions for the Bay Area commercial real estate market in 2015

"Office users will do more with less. As rents increase, companies will become more efficient to maintain rent to revenue ratios, and minimize burn rates. Companies will relocate back-office operations to lower rent locations within the Bay Area or out of state. Investment activity in San Francisco will continue at a pace driving rents in addition to high tenant demand." Jonathan Allen, principal, Avison Young

"A few interest rate bumps, and tech correction will cool the overheated market mid to late 2015. Rents will remain high in the city leading to a bump in vacancy rates." Peter McNally, partner, McNally Realty Co.

"Multifamily will continue to be the strongest segment in the investment market for Sonoma County. The wine industry will continue to be a primary driver for the absorption of office and industrial space in Sonoma County." Craig Delles, director of sales and leasing, Ham Delles Co. Inc.

"2015 should see more of the same. Strong office and retail market. Prices in secondary markets such as Oakland should see shrinking vacancy rates with double digit increases in rent." Hans Hansson, president, Starboard TCN Worldwide

"Interest rates will remain unchanged. Foreign money will continue to push demand." Andrew Peceimer, managing broker, Coldwell Banker Commercial

"The Bay Area real estate market will continue to prosper in 2015 with emphasis on the East Bay markets as tenants look for pricing relief. The Peninsula/Silicon Valley will continue to attract international and national investors. Property values in San Francisco will continue to escalate due to limited supply." Edward Del Beccaro, managing director, Transwestern

"Office demand and short-term supply imbalance signal increasing rents over the next year. Industrial inventory continues to shrink, driving up rates and keeping vacancy in single digits. Making hay while the sun shines." Tom Martindale, president, TRI Commercial Real Estate Services Inc.

"Higher office rental rates and reduced vacancies in the San Francisco office market. Office investment activity at higher square foot purchase prices and lower cap rates. More San Francisco office building construction starts." Kirk Usher jr., EVP, Dunhill Partners West

Where can companies find the best bargains in Bay Area commercial real estate in 2015

"San Francisco's Van Ness corridor, North Waterfront, 3rd Street corridor, Alameda, parts of Oakland with good transit access." Kirk Usher Jr., EVP, Dunhill Partners West

"The Tenderloin in San Francisco has numerous great buildings with lots of potential to add value." Urban Group Real Estate

"Richmond, due to UC Berkeley's Lawrence Berkeley Labs moving there." Gordon Commercial Real Estate Services

"In this cycle, North San Mateo County has become a 'tweener' location, and offers lower lease rates at a 30 to 40 percent discount to San Francisco with great quality buildings like Centennial Towers and 2001 DC Station, but generally suffers from a lack of good public transportation options." Jonathan Allen, principal, Avison Young

"The East Bay. The Oakland office market and the Hayward-Fremont industrial/R&D market." Kidder Mathews

"There are no bargains for quality product." Jonathan Blatteis, president, Blatteis Realty Co. Inc.

"Oakland is on the front end of an exciting boom. There is opportunity to grow into this dynamic, underserved market. Some fantastic projects are slated including The Shops on Broadway (anchored by Sprouts Farmers Market) at 30th and Broadway and Safeway's redevelopment project at 51st and Broadway." Steve Cutter, president, Lockehouse Retail Group Inc.

Which parts of the Bay Area will have the most activity and growth in commercial real estate in 2015

"Parts of downtown San Francisco with good transit access." Kirk Usher jr., EVP, Dunhill Partners West

"San Francisco and the East Bay will always have significant volume, however, investors will start to seek a more immediate return on their money and start to go to the outskirts of Contra Costa County (Pinole, Rodeo, etc.) and San Joaquin County (Stockton, Turlock, etc)." Steven Pinza, The Pinza Group

"Mission Bay, anchored by the Warriors and Uber. Others are sure to follow. City Center and Uptown Oakland will become even more attractive to tenants and investors as companies reject the suburbs and seek urban locations. South and Central San Mateo County: Still offers a discount to San Francisco and Palo Alto, and is seeing record levels of spec development in 2015. The 335,000-square-foot transaction was the first pre-leased development in over a decade in that location." Jonathan Allen, principal, Avison Young

"Lease rates will continue to escalate the most in San Francisco, but the East Bay will now have its turn in 2015." Edward Del Beccaro, managing director, Transwestern

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