SAN FRANCISCO–The Bay Area boasts strong investor demand across all property types, with capital availability expected to support high deal activity throughout 2015. Deals are getting done with non-bank capital, and a panel at this week's RealShare Bay Area discussed how alternative financing impacts deal velocity.
The appeal of private lending is the speed with which it is usually delivered. Unregulated private capital offers quick turnarounds in order to be competitive.
The experts consisted of Scott Douglass, co-chief investment officer, Prime Finance; Michael Klein, cofounder, COO and managing director, Partners Capital Solutions Inc.; Lorene Randich, VP, loan production, Redwood Mortgage Corp.; Alexis Rouda, VP and principal, Security Financial Services and moderator Elliot Shirwo, EVP of Bolour Associates.
Overall, the experts agreed that the San Francisco market is very strong due to its quicker recovery time, especially in the hospitality and office sectors, says Randich. “Our fortunes rise and fall with the tech industry,” she said.
The East and South Bays are also favorites for Security Financial Services, according to Rouda. Douglass pointed to some interesting conversions of note in Oakland and discounted office costs in Sacramento, although the market hasn't fully turned around there yet. All told, there are submarkets in each market that are attractive based on exit strategies and demand, said Klein.
“Paying a higher price is only justified with clear exits, and private lending rates are down to 6%,” says Rouda.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
