The Shifting Investment Tide Hitting San Francisco

Even though investment markets are taking a breather right now, investors still find the San Francisco Bay Area a worthwhile place to be.

“The high quality of life, the barriers to new development and the continued expansion of the region’s business economy make it a fabulous place to invest,” PCCP partner Bryan Thornton said.

Even though rent growth for some product types, such as multifamily, have slowed, Thornton said the overall qualities of San Francisco still make it an ideal market.

Thornton said domestic and institutional capital all want to be in San Francisco because it is a major gateway city in the U.S., and the high recognition factor makes it easy to bring in foreign capital.

PCCP has been a longtime investor in Silicon Valley and San Francisco, but Thornton said the firm also invests in the East Bay.

“The low-volatility economy with superior transportation access and a lack of new development supply has made [the East Bay] very interesting,” Thornton said.

PCCP invests in real estate through both joint venture equity and senior loan investments. It started in 1998 as a California-based investment firm targeting operating partners with market and product expertise, but has since expanded its platform to invest everywhere in the U.S., targeting top metro areas.

It most recently supplied a construction loan for an industrial site (above) in Richmond. PCCP has been finding good opportunities across all product types to provide construction financing, especially since traditional banking markets have significantly slowed their construction loan origination.

Since PCCP is a situational investor that looks for market product types or asset-specific dislocation, it finds investments in both up and down cycles.

“At this point in the economic cycle, we’re looking for markets that continue to have demand from the consumption side and a lack of new entry from the supply side,” Thornton said.

Find out more at our San Francisco Capital Markets Forum on March 23 at The Fairmont Hotel San Francisco.