2014 commercial real estate economic forum program

8/13/2019 2014 Commercial Real Estate Economic Forum program

1/10

2014 COMMERCIAL REAL ESTATE

ECONOMICFEBRUARY20SALEMCONFERENCECENTER

2NDFLOORWILLAMETTE RIVER ROOM201 LIBERTY STREET SESALEM, OREGON

7:00

NETWORKING

7:45

BREAKFAST SERVED8:00PROGRAM BEGINS

9:30CONCLUSION

presented by

THANKYOU FOR ATTENDING

We are proud to bring you todays event

pp y . A leading provider of commercial real estatev M-W Vy, pvg y pf- p f.W gy f -y p y v y g y f 2014.

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sponsored by

FORUM


2/10

SALEMAREACHAMBER OF COMMERCE

RYANALLBRITTONPRESIDENT

T S A C f C YOUR g. W 1,300 ,

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President, S A C f C

MAILING ADDRESS:1110 Commercial St. N.E., Salem, OR 97301LOCATION: Corner of Market and Commercial StreetPHONE: 503-581-1466FAX:503-581-0972

3

LINEUP

2

JENNIFER MARTIN, CCIMSPERRY VAN NESS

TONK FISCHER

FISCHER HAYES & ASSOCIATES, P.C.

CURT ARTHUR, SIORSPERRY VAN NESS

MARK SHIPMANSAALFELD GRIGGS PC

CHRIS FISCHER,CCIMSPERRY VAN NESS

DON COLEMANWELLS FARGO

CHAD FREEMANSEDCOR

LARRY DALKEDALKE CONSTRUCTION CO. INC.

RYAN ALLBRITTONMASTER OF CEREMONIES

TODAYS


3/10

CHRIS FISCHER, CCIMSENIORADVISOR

[email protected]

%CURRENT VACANCY In 2013, vacancy seledinto the low 3% range. However, as discussedlast year, with a healthy vacancy needing tobe closer to 5%, development was on the rise.The market currently has a substanalnumber of units in producon - over 600.Based on the rise i n construcon, andprojected absorpon, the 2014 vacancy ratewill likely be closer to 5.8% once thedevelopments nish construcon, but couldbe as high as 8% depending on how manyprojects are completed in the next 18 months.

20 10 2 01 1 2 01 2 2013

30

27

24

21

18

15

12

9

6

3

2013 y v y ppy, y y y.

M-fy pp, fqy p f g y.Hy, vp vy vp v pj. Ty vp g pp f g-v. Pp g y v v.

2013RECAP

2013 pg xp f p. T is stillg y g:. B fsellers entered , p multifamily and commercialv pp. H,y f. By v , 1031 y g g .Hv, favailablequality replacement property g f . I f, f gp, gg g.

S v y p v , g qy pp g g f p v.

T v f 2013 p gy v2012, f 2011 v. W py f y , py f v f vy f . Cp . O y , g , f g.

Lg p y f

f. Hv,

vy , p y vy

g p y. Ty

p 2013,

pp y. I xp v

f 2014, g

p p p, g

y. Hv, gy p p f

p v y.

2014PREDICTION

T y, y, v y ppy (

f). W g f v pp, p

v . Mfypj

B qy, f A. I ,

g pf ppp pg. If y y xp,

y ppy g f vy.

Pringle Square | Salem, ORProject: B C RvpDeveloper:M W Iv CpNotes: 168 p .

Rosewood Apartments | Salem, ORSold to: Pv ByPrice:$23 M Cap:6.2%Notes:C D 2013

2 006 20 07 20 08 200 92 00 4 2 00 5

MULTIFAMILYSALES

2014INVESTMENT&

MULTIFAMILYMARKET UPDATE

9%

8%

7%

6%

5%

4%

3%

2%

1%

2010 2011 2012 20132006 2007 2008 20092004 2005

REGIONAL CAP RATES & 10YRTREASURY

OReilly Auto Parts | Salem, ORSold to:Og By

Price:$1,780,000 Cap:6.22%Notes: List to contract in 7 businessy.

USDA Leased | Tangent, ORSold To:P By

Price:$2,125,000 Cap:11%Notes: S f j ppy.

Chandelle Apartments | Salem, ORSold To:L By

Price:$1,361,000 Cap:6.5%Notes: Pf p 8%. P f f .

MULTI-FAMILY

MULTIFAMILY

CAP

RATES

INTEREST

RATES

# OF

TRANS.DEVELOPMENT

INVESTMENT

NOTEWORTHYPROJECTS

54

2013

2013

MULTIFAMILY

Source:PowellValuaonInc

Source: Powell Valuaon Inc and Sperry Van Ness Commercial Advisors, LLC

Source: Sperry Van Ness Commercial Advisors, LLC

MULTIFAMILY

INVESTMENTSNONMULTIFAMILY

10YEARUST

Reserve at Hawks Ridge | Salem, ORProject: 178 UDeveloper: Ken & Kevin HarrisonNotes: 10-1/1, 36-2/1, 102-2/2, 30-3/2


4/10

MARK SHIPMANS

Cy f S vp (UDC) p wrap up in 2014;

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Ip f g. T f gv CW A (CWA) gv gg q Og v xg pg py p. BM Cy Cy f S gg py g vp M Cy.

Cy f S gg E Oppy Ay v fv f g fy , fy, . Tp y gg p v p f Cy f S, DLCD. I vy g p, q Cy gg p f -fy . W q g f g f g g p, xp f U G By Cy f S.

T f g g. MG Bg - 8 p; B Rvp - 168 p p; T Rv C v g

; T S S Sq pj g p;

[ ]From concept to realizaton,

Saalfeld Griggs is equipped to helpyou through each step of your goal.

SAALFELDGRIGGSPC

7

SIGNIFICANT CHANGES AFFECTING DEVELOPMENT IN 2014


5/10

w

CHAD FREEMANPRESIDENT

[email protected]

2014INDUSTRIAL

MARKET UPDATE

8

T vy f f - p g S/K 2013 y vy f 9.4%. If yv g f vy, f

7.0%. T vg g f 2013 $.36/SF p , g, 10% v 2012. C pv vy v g v .

W SEDCOR j

gg, g

2013

j 12

S/K g

W Vy Mp Lg

Sv. Of 12,

temporary space requirements

and one was an expansion for

g y. F

, xp y fg

.

T f g- g vy,

g, p g

vp f x pf y. T g ,

cost of capital is so low it isxp -

2014.

S f pj y qfg f .

INDUSTRIALLEASING

24,000 SF

21,000 SF

18,000 SF

15,000 SF

12,000 SF

9,000 SF

6,000 SF

3,000 SF

20132 01 1 2 01 2

7

,505

SF

2

0,4

70S

F

14,6

03S

F

20132 01 1 2 01 2

400,000 SF

350,000 SF

300,000 SF

250,000 SF

200,000 SF

150,000 SF

100,000 SF

50,000 SF

142,5

91SF

3

88,9

38S

F

175,2

37SF

VOLUMEOFLEASING AVG. TRANSACTIONSIZE

So

urce:CoStarandWVMLS

FORMER BRAKA INDUSTRIES1947 CLAXTER RD NE, SALEM

Leased to:NX USize: 17,000 SFNotes: 5 Y

NOTEWORTHYPROJECTS

NORPAC & HENNINGSEN FREEZER 2210 MADRONA AVE SE

Project:260,000 SF g 30,000 SF g.Notes:C py pg 2014.

PRINGLE RD INDUSTRIAL COMPLEX25082558 PRINGLE RD SE, SALEM

Sold to:Pg P, LLCPrice: $1,380,000Notes:19,696 SF

VACANCY RENTS CONSTRUCTION ABSORBTION

2012

2013

2013

2014

VACANCY RENTS CONSTRUCTION ABSORPTIONVACANCY RENTS CONSTRUCTION ABSORPTION

2013

2014

9

Dg p 6 , SEDCOR v

26 q f pp p 30

pv y. T

f:


Exp pg 180 y.

Epy g f fg .

Ep 3-5 y ppy x f g g 1B 1C.

458 A f , vy , f $2.50/SF

W v pg p Pp f 1M pp

45-

T-y vp pp

2013RECAPF y g Jy 2013we saw a fourfold increase in vy f pv y g :

$64M v,being led by local expansion

858 new and retained jobsincluding 40 new recruitmentjobs

818 from expansionf xg .

T g xpf Np, G, GK M,w v 50% f v g f

f pg .

2014PREDICTION

Source: MillCreekSalem.com & Sperry Van Ness Commercial Advisors, LLC

%

MILL CREEK CORPORATE CENTER

F Pg

D

Av Mfg

O

29%

19%

29%

24%


6/10

Largest commercial real estate lender in the U.S. with a strong local presence in Salemand all of Oregon.

Construction loans Secured lines of credit Repositioning/rehab lending Mini-perm loansInterim/bridge loans Term loans Acquisition Interest rate swaps

Don Coleman 503-945-2366 [email protected]

Tara Stevenson 503-945-2376 [email protected]

Jennifer Tyler 503-945-2413 [email protected]

Consistent commercialreal estate leadership

Wells Fargo Bank, N.A. All rights reserved.Member FDIC. MC-

wellsfargo.com/realestate

Hampton Inn Salem

DON COLEMANS V P

W Fg C R E y v xpv vp g / g q,, xp p . W pv fp f g p. B gg, , f p ppy yp:

A f p pg 30 y LIBOR. Sp ppy yp py f p. Oyp g 3.0% 3.5%.

[ ]We want to sasfy all our customersnancial needs and help themsucceed nanciall y.

WELLS FARGO

11

Rich Hubbard 503-886-1104 [email protected]

Don Coleman 503-886-1134 [email protected]

Tara Stevenson 503-886-1408 [email protected]

Jennifer Tyler 503-886-4616 [email protected]

*Rao of Net Operang Income to Debt Service **Based on appraised value or purchase price, whichever is lower

NON-OWNER OCCUPIED REAL ESTATE FINANCING GUIDELINES

RETAILOFFICE

INDUSTRIALMULTIFAMILY HOSPITALITY

SPECIALPURPOSE

CONSTRUCTION/PERM

DebtCoverage

Ratio*1.25:1 1.25:1 1.40:1 1.45:1 1.25: 1

MaximumLoan ToValue**

75% 75% 70% 65% 75%


7/10

JENNIFER MARTIN, CCIMSENIORADVISOR

[email protected]

2014RETAIL

MARKET UPDATE

S S g p 2013, g vy y v

3% f v 30,000 SF fp. Pyq F, Cf Y, TUPS S, H Ry, GMv S S 2013. Fv vp pfg q pg.

2014 pv f S. T R-MG v

p, 100% p.

M. W pg pvp p f B M I Bg y y.Tx g q g, g vp.

CBD

T to lag in terms ofy g vg . T g vy y K g pp,xp K S, v y REI.Vy vyg f12.5%.

T vy W S y, pg f W

Tp, Ny Bg U GgC. T g f B, WWine and Westside Sports counteredpv p. Vy v 7%.

M F B B E v L D. C p fv 45,000 SF. Op Tg C f H Dg C fy f v y, p pv vy .

SOUTH

WEST

EAST

I 2013, pv vy xp W S. Sg

g E S S S

assisted in improving last years vacancy by

2.5%. Ov y,

75,000 SF p y

v 90,000 SF p y pv

x y. B

g , vy

pv y 8.5% f

y. S S E S

g 2013, 32,100 SF

59,635 SF pv p pvy.

W S gy, py g f B V.

2013RECAP

T p p I p y

. O y j

xp f g p

g

, f

g vy. A p,

pj v v f pg

, f , g 400,000 SF g pj:

v f S S, K

. W f.

N vy g, I

g

fy f .

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pj g p-g

f .

2014PREDICTION

&NORTHKEIZER

12

17%In 2013, we leased 17% of the totalvacant square footage in the Salem/Keizer market. Assistance from a lackof construcon forced new andrelocang retailers to choose fromexisng inventory. There is currently

just under 500,000 SF vacant in the

Salem/Keizer market; the largestsingle space is the former Roths inKeizer at just over 36,000 SF.

F g g

,

y f p

g 20,000 SF

v. T f

vy g

p v p , vy

f.

LANCASTER PLACE601 LANCASTER DR NE

Sold to:JMI IvPrice:$2.4 M - 7.5% pNotes:C Sp 2013

NOTEWORTHYPROJECTS

CANDALARIA CROSSING27152795 COMMERCIAL ST SE

Leased to:UPS S, Cf Y Og Cy C URetailOccupancy:30% 100% 2013

VACANCY RENTS CONSTRUCTION ABSORBTION

2012

2013

2014

VACANCY RENTS CONSTRUCTION ABSORPTION

VACANCY RECAP

centralbusinessdistrict

eastsalem

southsalem

northsalem/keizer

westsalem

totalw/o

malls

2011

2012

2013

2011

2012

2013

2011

2012

2013

2011

2012

2013

2011

2012

2013

2011

2012

2013

20%

15%

10%

5%

12.5%12.5% 12.7%12.7%11.4%11.4%

10.9%10.9%

6.9%6.9%

11.4%

VACANCY RENTS CONSTRUCTION ABSORPTION

11.4%

2014

2013

2013

NATURAL GROCERS4250 COMMERCIAL ST SE

Sold to:C Ppy TPrice:$5 MNotes:S Ag 2013

13

T y- vy pv y 2.5% 11.4% v, fg vy f 4.5Mq f. T v 100,000 SFf p f vy g vy S S g L Dv. Pyq F(f GI J), B B E ( f B), REI(f C Cy), L Jp Lumber Liquidators (combined in former Home andDg C) vy vy. T g vy 2011s 75,000 SF 2012 48,000 SF.


Source:SperryVanNessCommercialAdvisors,L

LC

ABSORBED


8/10

FISCHER HAYES& ASSOCIATES, P.C.

TONKFISCHERPresident

Fischer, Hayes, & Associates, P.C.

income tax minimization | retirement planning

business consulting | litigation support

QuickBooks |financial statement assurance

management consulting |business valuations

3295 Triangle Drive SE, Ste 200 Salem OR 97302-4580 | Phone: 503-378-0220 | www.fhapc.com

[ ]Specializing in helping

closely-held and family-owned

businesses achieve nancial goals

and objecves

15

NET SALES PRICE $1,000,000 $1,000,000

BASIS

GAIN $ 900,000 $ 900,000

TAX RATE(20+3.8+9.9=33.7%)

0% 33.7%

TAX $ 0 $ 303,000

CASH FLOW ANALYSIS

SALES PRICE $1,000,000 $1,000,000

TAX $ 0

DEBT

AVAILABLE CASH TO RE-INVEST $ 800,000 $ 497,000

PURCHASING POWER

WITH 25% DOWN $3,200,000 $1,988,000

WITH 33% DOWN $2,400,000 $1,491,000

DECIDING IF ANIRS CODE SECTION 1031 IS APPROPRIATE(Tax-Deferred Exchange)

COMPLETING

AN EXCHANGE

NOTCOMPLETING

AN EXCHANGE

SCENARIOA C v ppy v f $1,000,000, x f $100,000, $200,000 f . T

f 1031 Exg .

1) age and/or health of seller

2) long-term goals need for cash flow desire to gift property prior to sale desire to build real estate portfolio

CIRCUMSTANCES THAT MAY AFFECT THE DECISION TO COMPLETE A 1031 EXCHANGE

Everysituaonisuniqueandthereisnoonesizeftsallanswer.ItispossibletocompleteaSecon1031Exchange,notcompleteaSecon

1031Exchange,ortocompleteaparalSecon1031ExchangetoaccomplishtheClientsobjecveseveryresultisindividuallydriven.

TAX CALCULATION

3) tax consequences if the sale is a lump sum or installment sale

4) availab le tax benefits capital losses being carried forward tax credits being carried forward net operating loss being carried forward


9/10

CURT ARTHUR, SIORMANAGINGDIRECTOR

[email protected]

C Sq v p

g. M Cy S/ K T v 100,000 SF g Ap gg C B D.T gp v 75,000 SFy f pv .

A gg f

p, ppy -g , xp f. T p y pf S C S S K Gy; Sv H y I S; KP g K S pv B C g p 12 S. R f g f$1.80-$2.20/SF NNN.

2013RECAPT gfpv 2013 pvp f 145,000 SFf ff p. Sy pv -.Medical buildings are y vp y g f y .

S C A g ppf vy f 30.4% 2012 15.7% 2013 p y g S f Og, CvOg Sp P C, py fg py, fS Mg g.

Lease concessions are still a factor inmost completed leases we see in .

Lg vy 222% 2013 161,181 SFf g g p 45 .T vg 3,581 SF. Rvy y 2014 gy fg. Ap f y pv y 145,000SF.

MEDICAL

I D, g g g

S f Og gg 2014. A S f v.

T gg f S p f 110,000 SF Og F &Wf Bg Fv I Dv; Dp f H Sv g ODFW74,000 SF f g S Py; Cv Og g 19,006 SF Sp P.

2 01 0 2 01 1 2 01 2 20132006 2007 2008 20092005

LEASINGVOLUME

2014OFFICE

MARKET UPDATE

STATEOF

OREGON

225,000 SF

200,000 SF

175,000 SF

150,000 SF

125,000 SF

100,000 SF

75,000 SF

50,000 SF

25,000 SF

Source:WVMLS

16

CBD

W pv p 2013 vy

f 2012. D f p

f 1,000 3,000 SF g g

5,000+ q f.

R g g

p p

. T vy ppy

pp- C A f p f

g . T v $2.00/SF f g

f 2014.

MARKETSTATISTICS

T g g f g y.T S f Og v q f 18,000 37,000SF y f. Pv p g f 60,000 80,000 SF p f S gCv. T g , g g g , vy g .

Ap pv 2014 v p 75,000SF g v C Sq v. C p y f gg

. T y . A ,xp g vp f 2014.

Avg g f y $1.59/SF,

f v, g f2012. Qy ,

g g $1.65 $1.85/SF g CB C g

lower rents as tenants g qy.

OR DEPT OF FISH & WILDLIFE4054 FAIRVIEW INDUSTRIAL DR SE

Size:110,000 SFNotes:R f I O

NOTEWORTHYPROJECTS

DEPT OF HUMAN SERVICES3406 CHERRY AVE NE

Size: 74,00SFNotes:F ODFW Bg

DEEPWOOD MEDICAL ARTS BLDGNW CORNER OF 12TH & MISSION ST

Timing:2015Anchor: M M Igg


2014PREDICTION

%The Salem/Keizer oce market nished2013 with a vacancy of 17.28%, basedon our analysis of 4,059,584 SF. Thatvacancy is down dramacally from the21.4% in 2012. Suburban Class A sawthe biggest improvement (see above)and medical oce buildings connue to

be the most stable market with an 8%vacancy and rising rents. Nine buildingsin the market currently have vacanciesof 20,000 SF or more.

$1.59

17

VACANCY

$1.80SUBURBANCLASSA

$1.86MEDICAL

$1.65CLASSA

$1.46CLASSB

$1.21CLASSC

2013 OFFICE RENTS BY CLASS


10/10

DALKECONSTRUCTIONCO. INC.

LARRYDALKEPresident

[ ]Innovave and PreciseDesign-build Contractor

19

CONSTRUCTION PUT IN PLACEMillions of Current Dollars

NUMBEROFBUILDINGPERMITSISSUED

VALUEOFPERMITSISSUED

CITYOFSALEMNEWCOMMERCIALPERMITACTIVITY

2010 2011 2012 20132008 2009

$250 M

$200 M

$150 M

$100 M

$50 M

75

60

45

30

15

RECENTPROJECTS

Hanard MachineSalem, OR

Van Well TimberDallas, OR

Marion C ounty Fire Dep t #1Salem, OR

Hope OrthopedicsSalem, OR

DaVita Dialysis Clinic TISalem, OR

Dutch Bros Co ffeeWoodbu rn , OR

Ca pitol City Business CenterSalem, OR

Chemeketa St Ofce ExpSalem, OR

Oxford Loading DockSalem, OR

Justice Building Site ImprovSalem, OR

Mixed Use BuildingMonmou th , OR

OR Dep t of Fish & WildlifeSalem, OR

Davita Dialysis CenterSalem, OR

Sumpter ElementarySalem, OR

Swegle ElementarySalem, OR

Morningside ElementarySalem, OR

Tac o BellWarrenton, OR

PGE Energy Storage FacilitySalem, OR

OR Dept of TransportationSalem, OR

Illahe Hills Country ClubSalem, OR

New Tilt-up | Retail | Wood Framed | Medical Ofce|Industrial & OfceMulti-tenant/Mixed Use | Manufacturing/Industrial Facility | Condominiums

Dalke Construction spec ializes in all facets of commercial construction and prides itself onbeing known as one of the markets top design-build contractors. While they are known for someof areas top construction projects such as Spirit Mountain Lodge, Park Place and Capitol City

Business Center, they are able to respond to all commercial construction requirements; from tenantimprovements, remodels, upgrading to full ground-up construction.

AFTERBEFOREOregon Dep ar tment o f Transpor t a t i on | Sa lem, OR

Orego n Depa rtment of Fish & Wildl ife | Salem, OR

Bro a dw a y M ixe d Use | Sa le m , O R Th e Pla za Co nd o min iu ms | B en d, O R

dalkeconstruction.com (503) 585-7403

Source: FMI Capital Advisors

2014 commercial real estate economic forum program

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