Southern California Industrial Real Estate Blog

COMMERCIAL INVESTORS WAITING WITH CHECKBOOKS IN HAND

by Jodi Summers

Although sales activity is stifled, investors’ interest in commercial property acquisitions remains strong.

According to the latest PricewaterhouseCoopers Korpacz Real Estate Investor Survey, equity funds in the market this year are slated to raise more than $318 billion - up 35% from the amount targeted by the funds in the market last year.

“It’s hard to see all of this capital because it is not moving,” concluded the survey of REITs, pension funds, mortgage bankers, developers, insurers and other institutional investors and property managers.

Sales since last year’s third quarter have been stagnant due to a lack of debt financing caused by the credit markets and by uncertainty over how far lower property prices will move. The survey said that investment capital remains on the sidelines “waiting for signs that the worst is over.”

Capital investors are said to be growing growing increasingly concerned about how much a stalled economy may impact property fundamentals.

The $46.5 billion of commercial property sales, including hotels, closed in Q1 was down about 66% from more than $135 billion in the same period a year ago, the report noted. Moreover, less than 50 investors have spent more than $100 million in Q1. That’s down from 150 that spent $100 million or more on commercial property in the year-ago period. Returns are still strong.

The average capitalization rate for the warehouse sector reportedly rose 9 basis points between the fourth and first quarters to 6.56%. Again, bravo to industrial, as warehouses led all property sectors with a 90 bp gain in March - followed by gains of 30 bp for retail, 10 bp for office, and no change for multifamily prices. In February, prices dropped 70 bp for warehouse, 1.9% for offices and 1.3% for multifamily, while they increased 80 bp for retail.

Much of the capital waiting on the sidelines is from foreign buyers. Foreign buyers have been showing increasing interest  in U.S. property since the dollar started weakening. In 2007, foreign money accounted for more than $50 billion in U.S. real estate investments, more than double the amount spent in 2006.

The Korpacz report also said that pension funds by and large over the past year have increased their allocation targets for real estate, but noted that many of those funds may divert a large portion of those increased allocations to foreign property markets.

More info @

http://www.loopnet.com/xnet/mainsite/news/news.aspx?DocID=3354

http://www.loopnet.com/xnet/mainsite/news/news.aspx?DocID=3356

Recycling Reaches Commerical Customers in Santa Monica

Recycling Reaches Commerical Customers in Santa Monica

by Matt Henigan

 http://www.sustainableworks.org/

INDUSTRIAL + OFFICE CONDO COMPLEX BREAKS GROUND IN MOORPARK

INDUSTRIAL + OFFICE CONDO COMPLEX BREAKS GROUND IN MOORPARK

We are a big fan of the business condo complex so kudos to the groundbreaking of the Patriot Commerce in Moorpark. The center will feature 306,000 sf of class A industrial and office space on a 20-acre site near the 23 and 118 freeways. The Patriot Commerce offers business park in n area where very few properties of this kind available for sale.

Experts note that the vacancy rate is 2% in the submarket, and land availability is limited.

Built by Ossola & Associates Inc. of Calabasas, the $60 million in construction and mezzanine financing is being provided by Pacific National Bank and Hillwood.
Ossola & Associates anticipates delivery of the new space beginning in the fourth quarter of this year and continuing through the second quarter of 2009.

Information courtesy of

http://www.cityfeet.com/News/NewsArticle.aspx?Id=29435

http://www.globest.com/news/1160_1160/losangeles/170870-1.html?sector=industrial

THE LOS ANGELES GREEN BUILDING ORDINANCE VS. CALIFORNIA’S OTHER GREEN CITIES

• THE LOS ANGELES GREEN BUILDING ORDINANCE VS. CALIFORNIA’S OTHER GREEN CITIES 

• Being green means different things in different parts of the country. In places like St. Louis or Seattle, eco-friendly construction standards apply only to city-owned or city-funded buildings. In Boston green construction codes also apply to major commercial or residential developments.  New York City has taken very bold steps, with 127 eco-friendly initiatives to green the city by 2030…to date, 14 cities and 1 state - Connecticut - require private developers to meet green building standards. 

• Locally, in Los Angeles Mayor Antonio Villaraigosa recently signed into law the Los Angeles Green Building ordinance – and it is being heralded as “the most far reaching plan of any big city in America to promote green building practices in the private sector.”  The ordinance would reduce the City’s carbon emissions by more than 80,000 tons by 2012, the equivalent of taking 15,000 cars off the road – this objective surpasses any other major city in the country. (Now if they’d only find a way get 15,000 cars off the road.) 

• “Given that greenhouse gas emissions from buildings account for more than 40% of global warming pollution, the Los Angeles Green Building ordinance is a good first step towards building an energy-efficient, climate friendly, sustainable city,” observes Global Green USA President Matt Petersen. “While certainly not an end destination, it is important that Los Angeles has become the first big city to codify a private sector green building program.”

•  Above and beyond, Mayor Villaraigosa has pledged to reduce the city’s carbon emissions 35% below 1990 levels by 2030 (Will he stay in office that long – which is longer than Tom Bradley’s mayorial rein - or will this pledge be adopted by forthcoming mayors?). The goal goes beyond the targets set in the Kyoto Protocol and is the greatest reduction target of any large US city. Logistically, a move such as this what necessitate curtailing L.A.’s  coal-dependent municipal utility and a move toward electricity from renewable sources.

•  The new standards go into effect Nov. 1^st, for commercial projects and for high-rise residential development, and on May 1, 2009 for low-rise residential projects. It applies to existing buildings under certain conditions in redevelopment projects, and it outlines a host of other requirements for builders. 

• The L.A. Green Building ordinance requires all projects at or above 50,000 square feet – or 50 units – comply with the general LEED-certified standard. The US Green Building Council awards LEED silver, gold and platinum certifications based on the level of environmental sustainability met by a developer.  

• The City has agreed to work with builders to speed up approvals and to remove obstacles in the municipal code for elements of sustainable building design, such as green rooftops, cisterns and permeable pavement. City officials said about 150 new and renovated buildings, or about 7.5 million square feet, would be covered by the ordinance each year. 

• “The world,” Villaraigosa said, “is following in our footsteps.” 

• (See the previous posting Key Points of the Los Angeles Private Sector Green Building Ordinance for details.)

•  In six months, the Los Angeles City Council will review and decide whether a stricter standard should be adopted. “We will continue to push the envelope,” said Council President Eric Garcetti. He said he expects that “in a couple of years, every single building over 25,000 square feet will be covered” by the new law. By this summer, he said, the city expects to raise the bar for its municipal construction to Leadership in Energy and Environmental Design “silver” — a higher standard that would match San Francisco’s threshold.

• L.A.’s Green Building ordinance raises the number of US municipalities that have enacted green building rules to somewhere around 120 and growing. California cities are enacting a variety of green building rules, as we will now share… 

• SAN FRANCISCO 

• Not considered part of Southern California, but worth mentioning for obvious reasons…

• San Francisco mayor, Gavin Newsom, has proposed an ordinance that some consider to be the most stringent green building requirements in the nation.

• The ordinance would require commercial and residential projects over 25,000 sf or 75 feet in height to meet the base level of LEED certification starting in 2008. Large commercial projects would have to achieve LEED Silver certification starting in 2009 and LEED Gold staring in 2010. Large residential projects would have to achieve LEED Silver starting in 2010. Mid-sized buildings would have to complete a LEED checklist but would not be required to achieve any LEED credits or points (the basis for the rating system) until 2009. Starting then, mid-size commercial buildings would have to achieve three LEED credits. The bar would be raised to four points in 2010, six points in 2011 and seven points in 2012. 

• Small and mid-size residential projects, starting in 2009, would be required to achieve 25 points from GreenPointRated, a rating system of BuildItGreen, a professional nonprofit membership organization that promotes energy- and resource-efficient buildings in California. The hurdle would increase to 50 points in 2010 and then 75 points in 2011 or 2012. The earlier increase would occur for multifamily residential buildings with more than five units. 

• Cumulative benefits this ordinance is expected to achieve through 2012 include: reducing CO2 emissions by 60,000 tons; saving 220,000 megawatt hours of power; saving 100 million gallons of drinking water; reducing waste and storm water by 90 million gallons of water; reducing construction and demolition waste by 700 million pounds; increasing the valuations of recycled materials by $200 million; reducing automobile trips by 540,000; and increasing green power generation by 37,000 megawatt hours.

• In addition, the San Francisco Public Utilities Commission has approved a new local subsidy for residents and businesses who install solar power.  The solar incentive plan provides between $3,000 and $5,000 for a home installation and up to $10,000 for businesses. With existing state and federal incentives, the city subsidy could eliminate more than half the cost of a solar installation.

• “It’s groundbreaking,” notes San Francisco Assessor-Recorder Phil Ting, who assisted in the development the plan. “I think it will help ensure that San Francisco is going to be the solar capital of the world.”

• WEST HOLLYWOOD 

• Last year, Newsweek magazine proclaimed that West Hollywood is the American city that can lay claim to the most comprehensive green building standards. This tiny city occupies 1.9-square-milea Los Angeles and boasts 37,000 people, making it the city with the highest population density west of the Mississippi. The West Hollywood ordinance, adopted in October 2007, grants special consideration to LEED-certified projects, establishes development standards for all new residential and commercial projects, in addition to remodels and tenant improvements. The only exemptions: duplexes and single-family homes.  

• Requiring so many of the city’s real estate projects to meet green building standards puts West Hollywood in the forefront of the move to thrust eco-friendly design closer to the mainstream of architecture and planning.

 

• City officials reveal that thinking about smaller projects was the only way to make a big dent in West Hollywood’s carbon footprint. “We thought it was important to involve everybody [to be part of the solution],” noted councilmember Abbe Land, coauthor of the new ordinance.

 

• A set of rules, developed with the help of Global Green USA, insists that a project has earned at least 60 points (from a menu of 160 possible points) before developers are granted a city construction permit. Points are granted for planting canopy trees (5 points), using exposed concrete floors (5 points),  bamboo or other rapidly renewable floors (up to 3 points), Cellulose wall insulation (2 points), Energy Star-certified lighting (3 points), energy-efficient windows and insulation (up to 15 points), tankless water heaters (2 points) and a green roof (8 points). Projects can earn up to 10 points (1 point per kilowatt) for using solar panels. In addition, all developers must meet mandatory requirements, such as reducing to 20 percent the construction waste they haul to the dump, making all roofs solar panel-ready, and using low-volatility paints and Energy Star appliances.

 

• Once they get to 90 points, developers can choose between eight incentives, including expedited permitting and variances, like approval of an extra housing unit.

 

• The new ordinance is tied to existing green building certification standards. Projects receiving “a minimum rating of ‘Certified’ with the United States Green Building Council’s Leadership in Energy and Environmental Design (LEED) shall be exempt from the point requirements of the West Hollywood Green Building Program.”

 

• All projects scheduled for completion after October 1, 2007, must adhere to the provisions of Ordinance 07-762.

 

• It’s been calculated that West Hollywood’s green initiatives will add “roughly 10 percent” to the cost of construction.

 

• The city’s homegrown green plan is already drawing enquiries from other municipalities around the country. Global Green USA, which helped develop West Hollywood’s system, has already received calls from Henderson, Nev., Claremont, Calif., and McKinney, Texas.

 

       

 

• SANTA MONICA

 

The City of Santa Monica has a commitment to “…Protecting the environment, improving quality of life, and promoting sustainability.”

·         Historically, Santa Monica has had green building requirements for commercial, industrial, and residential project of four or more stories.  In May, the City enacted new green building requirements to apply to all new construction in the city, including single-family and duplex residential projects. 
 

 

·         Some specific requirements include using solar heating to heat pools, limiting turfgrass (traditional sod) planting to 20% of the landscaping, diverting 65% of C&D waste from the landfill, and installing high efficiency irrigation systems.  More detailed info can be found at www.smgreen.org. 
 

 

· The City says, “The approved measures will lower the cost of home ownership, reduce the burden on the utility infrastructure, curtail the production of greenhouse gas emissions, and decrease the city’s overall water demand.”

 
  

 

• Above + beyond, Santa Monica wants to be the nation’s first “Net Zero” city. Through energy efficiency, solar and other renewable energy, the city envisions generating clean Santa Monica wants to be the nation’s first “Net Zero” city. Through energy efficiency, solar and other renewable energy, the city envisions generating clean energy that matches its total energy consumption.

 

 

• Energy and Green Building Program Administrator Susan Munves estimated that over 20 years, $1.4 billion is the probable investment required to achieve being a “Net Zero” city. This is likely to offset utility electric charges which would be higher than the $1.4 billion. The city will only invest a small part of that investment. The city’s primary role is facilitating and project management. The city offers a number of “carrots and sticks” to encourage broad participation.

 

 

• Santa Monica’s 20 year plan would eliminate electricity produced by coal and natural gas power plants, and all the resulting greenhouse gas emissions.

  

•  
• Santa Monica goes beyond clean electricity to be a city that models clean transportation. Over 80% of the city’s 519 vehicles are either alt-fuel or electric. 100 of Santa Monica’s Big Bus fleet is LNG, which they state is 77% cleaner than diesel. Liquid NG provides a 300 mile range. 88 buses run on B20 biodiesel. Only about 20 older buses run on standard diesel.

  

• OTHER CITIES

  

• Culver City, Beverly Hills, Inglewood, Long Beach, and Redondo Beach municipalities one and all – please enlighten the world to what your city is doing to help the environment.

 

 

• **

 Sources of information for this article include: 

• http://www.cityfeet.com/News/NewsArticle.aspx?Id=29079

• http://www.globest.com/news/1144_1144/losangeles/170228-1.html?type=pf

• http://www.newrules.org/

• http://www.newsweek.com/id/56565/page/2

• http://www.newsweek.com/id/56565

•  http://www.globalgreen.org/press/releases/2008_04_23_la_earthday.htm

• http://www.latimes.com/news/local/la-me-green23apr23,0,4351806.story

• http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/01/09/BAG3UUBSL9.DTL

• http://www.socalgreenrealestateblog.com/index.php?s=san+francisco

• http://www.socalgreenrealestateblog.com/?p=25

 

 

 

 

 

 

 

 

Key Points of the Los Angeles Private Sector Green Building Ordinance

Key Points of the Los Angeles Private Sector Green Building Ordinance:

The Los Angeles Green Building ordinance was devised by the Mayor Antonio Villarigosa’s Office in partnership with City Council, the ordinance will create a series of requirements and incentives for developers to meet the US Green Building Council’s Energy and Design (LEED) standards – the country’s strictest environmental building standards.

“Our City is growing fast and growing up, and we’re holding the private sector accountable to their commitment to be friends to our environment,” Mayor Villarigosa declared. “Already the City of Los Angeles has the largest, most aggressive municipal green building plan of any large city in America. Now it’s time for green building to go private.”

* Require that all new projects greater than 50 units or 50,000 square feet show compliance with the LEED Certified level. Expedite processing through all departments, if LEED Silver designation is met.

* Initiate an ongoing review of city codes to ease use of environmentally sound and superior materials and processes.

* Create a cross-departmental Sustainability Team to review and revise green building policies and specific projects. They will meet weekly so that the development community can enjoy ongoing interaction with City staff.

* Direct City General Managers and department and agency heads (namely Planning, Building and Safety, Public Works, Water and Power, Transportation, and CRA) to train and certify their staff in green building methods and policies and/or as LEED Accredited Professionals. This training should be ongoing and appear in each departmental annual budget.

* Work with the Board of DWP Commissioners to continue to add DWP financial incentives for projects that meet green building standards.

* Create and confer the Mayor’s Annual Award of Excellence in Sustainable Design & Construction to recognize exemplary efforts by individuals and companies in the private sector.

http://www.globalgreen.org/press/releases/2008_04_23_la_earthday.htm