Rev Projects has just sold Old Mother's Cookies Lofts, a 35,000 square foot live/work loft community in Oakland, for $9.86 million. The building is the site of the original Mother's Cookies Factory.
Rev Projects completed several value-add capital projects under its ownership: over half the building units were renovated, major roof repairs were completed, the parking lot was secured with new gated security, the fire-life safety system was fully repaired and upgraded, and bike racks were installed in common areas.
A statement from Eric Wang, principal of Rev Projects:
"I committed to the revitalization of the Old Mother's Cookies Lofts with major value-add improvements, while respecting its historic character. Tenant demand recognized this work, and a new stream of vibrant and creative residents flocked to its community. The capital markets also recognized this work, resulting in a strong exit I am glad to share with investors."
Election Round Up: Rent Control
Varying versions of rent control in several Bay Area cities were, defeated, enacted or tightened due to election. For example, in Oakland, where rent control already exists, voters approved moving the effective date of rent controlled units from 1980 to 1995. Here are the results for the other cities:
San Francisco Apartment Supply
Apartment rents in San Francisco fell approximately 8% to 10% this year, which is significant in percentage terms; but if one-bedroom rents peaked at nearly $3,500, a 10% decrease to $3,150 still doesn't seem that cheap. Should a one-bedroom apartment ever cost more than $3,000, anywhere in the first place? The reason it did is because of the inflow of over 100,000 jobs in San Francisco over the past five years, with virtually no new housing supply. The recent fall in rents is a very welcome release of pressure, and mostly due to the over 3,500 units of new supply recently released to the market. And with another 3,600 units of new supply coming online to the market from now until the end of 2017, rents will continue to fall further. It's important to note that the recent fall in rents is not a dark foreboding of any impending implosion; it's simply the market working through the new supply of units. By no means has the SF apartment market entered hyper-supply or overexpansion. We need every unit of supply we can get.
Rev Projects Acquires East Lake Merritt Apartments
East Lake Merritt Apartments is a fully-occupied apartment community in Oakland that provides stable and consistent income. Rev Projects acted as adviser and manager and closed the acquisition at the end of August. The building was extensively renovated with newer kitchen and bathroom finishes, new roof, electrical, plumbing, siding and paint and windows, and leased to a new set of tenants. The location is a short walk to Lake Merritt, which provides a peaceful retreat for the residents. JP Morgan Chase provided the loan at a fixed rate of 3.3%.
In high-priced cities like San Francisco, where every costly square foot of housing is becoming more efficiently planned, developers are designing smaller but more affordable spaces. Co-living is one solution that arose out of this affordability problem. OpenDoor, a startup in the East Bay, defines co-living as: "a modern form of housing where residents share living space and a set of interests, values, and/or intentions. It’s a new take on an old idea, imagined by a millennial generation that values things like openness and collaboration, social networking, and the sharing economy." Coliving operators essentially build a number of bedrooms in an existing house or building, and leave room for shared amenity space like kitchens, living room, and any other flex space. Think of it as an upscale dormitory, but for urban working professionals.
The Coworking Model
Coworking space is quickly growing into a significant portion of tenant demand in commercial office real estate, providing entrepreneuers and independent contractors refuge from loud, crowded coffee shops. Over 3,700 coworking spaces are already operating in the US and Europe and it is projected that 37,000 will be in operation worldwide by 2018. Two trends are dramatically fueling the shift in the workforce toward self-employment: the growth of the Millennial generation as a share of the population, and new technology that continues to arm entrepreneurs with tools to work independently. Surprisingly though, a survey by CBRE reports that millennials only account for 25 percent of the coworking workforce and 63 percent are between 31 and 50 years old, suggesting that the coworking model sustainably supports a variety of industries and points in one's career.
WeWork is the standard bearer of the coworking model with their national and international expansion, but the market is large enough for niche competitors: Impact Hub caters to workers in social justice, non-profits, community-oriented businesses and they have 81 locations around the world, including in SF and Oakland. Covo SF is a coworking provider that seeks to truly combine work and play by blending the line of office space / coffee house / pub and adding special printing and libraries for architects and structural engineers. Capital 360 Cafes act as both bank branches and open office cafes. There are many more examples and new concepts being created all the time.