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May 5, 2014
The One Word That's Exciting Lenders
In land-starved Orange County, the thing to do is redevelop—and lenders, who've been reluctant to loosen their purse strings, are keen on the idea, George Smith SVP David Pascale tells us. (He who controls the purse, controls the land... or is just waiting for his wife to get out of the restroom.)
David and colleague Steve Bram recently arranged $51M in bridge financing for DJM Capital Partners' top-to-bottom renovation of the 123k SF Lido Marina Village, a mixed-use property on Lido Isle in Newport Beach. Demand for redevelopment financing in OC will continue to be strong, especially in coastal markets such as Newport Beach and Huntington Beach, David tells us. They have strong demographics with very little land for anything brand new.
The DJM property will consist of retail, restaurant, and office space in 14 separate structures, along with 47 boat docks and common areas for strolling, shopping, and outdoor entertainment. (And based on the rendering, birds of all sizes will live in harmony on its docks.) The age and condition of the property provides significant room for value-add improvements. DJM purchased the property in an off-market deal last year from Vornado Realty Trust. (If people weren't calling the deal the Lido Shuffle, an opportunity was lost.)
Renovation of competitive OC properties is an important ingredient in keeping them that way, Morningside managing partner Justin Wilson tells us, especially in the uber-competitive seniors housing space. Recently Morningside of Fullerton, a continuing care retirement community in Fullerton (makes sense), began work on a top-to-bottom renovation of its 13k SF dining and kitchen area. It's being totally re-imagined as a cozier, more casual space.
Expectations are high among seniors, Justin says. The Morningstar renovation reflects the fact that Americans are moving away from the formalities of dining and toward a more casual lifestyle. But it'll be no cookie-cutter meal service area: look for pizza ovens, a wine room, and a casual bar and lounge. (There may literally be cookie-cutters; we're actually not sure.) KTGY is the architect, while Cole Martinez Curtis and Associates of Marina del Rey is the interior design firm.
You Can Green Anything
You can green an office. You can even green eggs (and ham). So why not self-storage? It can be just as sustainable as office, industrial, or retail projects, William Warren Group CEO Bill Hobin tells us. The company, which operates under StorQuest brand of self-storage properties, has been updating its facilities to include exterior lighting operated by photoelectric sensors, LED-lit signage, and updating landscaping with low-water plants. Old roofs are being retrofitted with “white” low-energy, low-heat roof applications and coatings. Recently the SoCal-based self-storage specialist bought six Colorado self-storage properties, nearly 2,700 units, for $33M; these will be rebranded as StorQuest and upgraded with green features.
Millennials Are Taking Over
Recently the OC chapter of the IREM hosted its inaugural Icon event, during which Kilroy Realty Corp's John Kilroy Jr received the Icon Award. Kilroy talked about office demand in the West Coast tech hubs, specifically SoCal, highlighting the fact that business want locations that help attract and retain the best talent. That's critical: Kilroy stressed that Millennials are key to businesses, representing 30% of the workforce now—but it'll be 75% by 2025. What they want, goes. Such as a preference for environmentally sustainable office space.
OC Office Chart of the Week
Buy a Building With Bitcoin?
Why do sellers like buyers that can close quickly and all cash? The closing process is brutally long, mortgage contingencies are nerve-wracking, and there's too much money going to too many third parties. Know what would make the process even quicker? A digital currency like Bitcoin, according to the Harvard Business Review. Bitcoin's advantages as a smooth peer-to-peer payment system are well known, and it's not a huge leap to envision the currency simplifying the sale of commercial property. Its public ledger system (the blockchain) would streamline due diligence with verification and record of the building's past ownership, inspections, certifications, leases, etc., and both parties could transfer title with a tap on an iPad. (Plus, cash is rife with bacteria.)
Bitcoin could also improve transparency of contracts (like leases) and its cryptography could lead to virtual identity management (goodbye ugly passport photos), the article says. We're not sure what the currency might mean for brokers and lawyers, but it's definitely technology to watch and harness, no matter where you operate in the commercial real estate industry. (Though it might change negotiation tactics, which often rely on shrouds of mystery, and passing a piece of paper across the table.) It would take years and a good rebranding campaign for Bitcoin to reach these proposed heights, along with a trustworthy track record and improved operability. Do you think it could work? We want to know. Tell dees.stribling@bisnow.com
The indecisive rower couldn't choose either oar. Send ideas and suggestions to dees.stribling@bisnow.com
