Archives for October 2007

Borelli’s Exclusive Lease vs. Buy Calculator Right on the Money with Buyers

Borelli’s Exclusive Lease vs. Buy Calculator

Borelli’s Exclusive Lease vs. Buy Calculator Right on the Money with Buyers

Perhaps you’ve heard about one of the hottest trends in commercial real estate: office condominiums. And perhaps you’ve wondered whether buying an office condominium might be the right move for you and your business. But how can you know for sure? How can you really “run the numbers” and compare buying versus continuing to lease your office space?Now there’s a fast, easy way to make a “real-world” comparison for your specific situation with Borelli Investment Company’s exclusive online Lease vs. Buy Calculator. Borelli’s Exclusive Lease vs. Buy Calculator

Introduced in May, the Lease vs. Buy Calculator is available to anyone considering the purchase of an office condominium. You can easily do it yourself from the comfort of your home or office, or one of our professional sales representatives will be happy to walk through it with you.

“Deciding to buy rather than lease office space is a major financial decision,” said Tom Purtell, chief operating officer of Borelli Investment Company. “We wanted to ensure that our clients had all the tools they needed to make a well-informed choice. The Lease vs. Buy Calculator has been very wellreceived since we introduced it last spring.”To use the Lease vs. Buy Calculator, all you have to do is:

  • Go to www.borelli-inv.com
  • Click on the icon for “Lease vs. Buy? — Run the numbers”
  • Select the Borelli office condominium property you’re interested in
  • Select a specific unit for sale
  • Enter the required information. This can include information about your current lease including size of your space, current rent, operating expenses, and scheduled rent increases; the purchase price, closing costs, and mortgage information for your proposed purchase; association dues and any other costs; your state and federal tax rates; and estimated annual appreciation.
  • Then, click “Calculate”.

In seconds, you’ll have a real set of numbers based on your specific situation that will help you make a more intelligent decision about whether to lease or buy your office space.

“With summer coming to an end, now is the time to start doing your year-end tax planning,” Purtell noted. “If you want to be able to make any substantial moves to reduce your tax liability for 2007, there’s no time to waste. Purchasing property is one of the best ways to reduce taxes, while acquiring an asset that historically has appreciated over time—in good markets and bad.

” For more information about the Borelli Lease vs. Buy Calculator, contact your Borelli sales representative or Tom Purtell by calling (408) 453-4700, or you can e-mail tom@borelli.com.

Borelli’s Property Management Services Reach Beyond Silicon Valley

Borelli Property Management Services Extend Beyond Silicon Valley

Borelli Investment Company is well-known for its high-quality property management services. Borelli’s professional property managers work closely with owners to set rents and efficiently lease space, maintain and improve properties, respond to tenant requests, and keep the books in good order. Clients know they can count on high occupancy rates and proper positioning to maintain value over time in up markets and downWhat you may not be aware of is that Borelli Investment Company provides its property management services not only here in Silicon Valley, but also in other markets throughout Northern California.

A Growing Central Valley Portfolio

One of Borelli’s hottest growth areas in recent times has been the Central Valley. Borelli now manages multiple properties in Tracy, Turlock, Stockton, Elk Grove, and West Sacramento—among other Central Valley towns and cities. The holdings include retail centers, a variety of office buildings, and industrial properties.

California’s Central Valley is experiencing rapid growth,” said Buddy R. Parsons, president of Borelli Investment Company. “Many of our clients are interested in taking advantage of the attractive ownership opportunities there. Once they have purchased a property, they need to work with someone they trust to manage it. We have the ability to minimize risk, reduce operating expenses, and increase the long-term asset value of properties located up and down the Central Valley.”A good example of the benefits Borelli provides can be found at the 250,000 square foot Countryside Plaza retail center in Turlock. When Borelli was selected as property manager in 2004, Countryside Plaza had not increased its lease rates in years. The prior owner had been hesitant to do so, because he was skeptical that rates could be raised without causing long-time tenants to move out. Borelli managed an increase in rents to market levels and maintained virtually 100 percent occupancy during the adjustment period.

“It simply didn’t make sense to leave rental rates unchanged,” Parsons explained. “By acting on the owner’s behalf, we were able to negotiate appropriate increases for tenants without hurting the owner’s established relationships or negatively impacting occupancy. We have also begun a program of planned improvements to ensure that the center is always well-maintained and modernized.”

Property Management Everywhere

Wherever you decide to buy, contact Borelli if you need professional property management. For more information about Borelli’s professional property management services and pricing that pays for itself, contact Buddy Parsons at (408) 453-4700, or e-mail buddy@borelli.com.

 

Do Your Cars Reserve Their Own Condo?

Borelli Investment Company Begins Presales At Club Auto Sport in North San Jose

Innovative Concept Offers Commercial Condominiums with Concierge Services and an Exclusive Club for Car Enthusiasts

Some people who possess a true passion for auto racing or a love of vintage automobiles become serious car collectors. In the past, these growing collections have in turn created growing problems for their owners. Where does one store all these cars? Stashing autos at friends’ homes or in parking garages typically proves to be an impractical and expensive proposition.

Now, there is Club Auto Sport—Silicon Valley’s first purpose-built commercial condominium facility designed for racing and car enthusiasts—with a full line of timesaving concierge services and an exclusive club for owners.

The two-building, 120,000 square foot complex at 521 Charcot Avenue in North San Jose—which is being developed by a partnership led by avid car collectors and vintage racecar owners John Davis, Ralph Borelli and long-time local racecar driver, IRL and CART team owner, John Della Penna— will be undergoing $15 million in renovations. When completed, it will feature a clean high-tech design, 10,000 square foot state-of- the-art showroom and lounge area for watching televised motor sports events, a large conference room with audio and video conferencing, banquet and hospitality facilities, sophisticated electronic security with CCTV inside and out, and automated roll-up truck doors hidden from the street.

The Place for Auto Enthusiasts

Club Auto Sport promises to be a gathering place for fans of racing’s top Formula One, IRL, Champ Car, NASCAR, and other events—as well as dedicated car collectors. Condo owners will be able to store and care for their cars in the purpose-built units, getting together in the showroom or lounge to view some of the club members’ most notable cars on display or to cheer on their favorite drivers and race teams.

One of the biggest benefits of Club Auto Sport is the wide variety of services available to save time. Need to have one of your cars detailed, taken in for service, or filled up before you come to pick it up? Want your RV cleaned out, the tanks serviced, the refrigerator turned on, and the fuel and oil checked so it’s ready to go? Our “arrive-anddrive” services are for you. Plus, owners can have their cars delivered to their homes whenever they wish. All they have to do is call the Club Auto Sport concierge to arrange it.

Club Auto Sport’s banquet and hospitality facilities will be some of the best in the area, making the club ideal for charitable, political, corporate, or social gatherings of all kinds. Ample onsite parking will accommodate up to 100 cars outside the security gates for visitors. The complex’s central location in the Golden Triangle makes it easily accessible for owners and invited guests via I-880 or Hwy 101 or 237, or even flying in to Mineta San Jose International Airport—five minutes away.

“Club members will be able to participate in organized automobile and racing-related activities,” noted John Davis, founder of Air Systems, Inc. and president of Davis Motorsports. “These could include instructional track driving days, touring events, celebrity guest appearances, dinners, or high-profile charity events.”

Benefits of Condominium Ownership

Buyers at the Club Auto Sport condominium complex can purchase as much or as little space as needed, with units from 800 to 10,000 square feet. The smallest units will accommodate up to 4 cars, and more if stacking systems are used. All units have full-height demising walls, with built-in ventilation systems. The complex meets the strictest building codes, including the latest fire protection systems. Owner amenities can include private bathrooms (in addition to the building’s common restrooms with showers), kitchens, offices, and more. Utilities are Borelli Investment Company Begins Presales At Club Auto Sport in North San Jose Innovative Concept Offers Commercial Condominiums with Concierge Services and an Exclusive Club for Car Enthusiasts A members-only club for your car. And you. separately metered, and individually climatecontrolled condos are available. Borelli Investment Company, the developer of the project, is also offering turnkey units with standard or customized interiors.

Because owners are purchasing space—not leasing it—they receive a number of benefits: • Quick, but secure 24×7 access to vehicles • Control over occupancy costs • Ability to customize the space in any way desired, subject to Club Auto Sport bylaws • Potential long-term appreciation

“Plus, if the space is being purchased as part of a business, owners enjoy significant tax write-offs,” Borelli commented. “These benefits include cost segregation, the $112,000 Section 179 tax incentive, interest deductions, and other write-offs.”

Construction won’t start until early fall, with the first units available in late spring of 2008. However, presales are already underway, with Phase I approximately 30 percent sold out.

Club Auto Sport is truly a new concept in commercial condominiums, with Borelli Investment Company, a trendsetter in business condominiums, guiding the development.

“People who are passionate about auto racing and car collecting have had few options in the past,” remarked John Della Penna, of Della Penna Motor Sports. “Club Auto Sport is a unique place for cars—and their owners.”

For more information about Club Auto Sport, contact Ralph Borelli at (408) 453-4700, or e-mail ralph@borelli.com.

Local Commercial Real Estate Feeling Few Effects from Subprime Loan Fallout

Local Commercial Real Estate Market Largely Unaffected by Residential Difficulties

Vacancy Rates and Late Loan Payments Among Lowest in 5 Years

Tighter Money Creating Some Challenges

Unless you have been stranded on a desert island lately, you are no doubt aware of theturmoil that has been created in the residential real estate market by the relatively large numbers of nonprime mortgages that have defaulted over the past              year. The difficulties have impacted home loan borrowers, lending institutions, investors in subprime mortgage securities, and the various financial markets themselves. But what has remained largely untouched todate has been commercial real estate. Even with the recent announcement that the deal to buy Carl Berg’s $1.8 billion Mission West Properties’ portfolio of commercial real estate had fallen through due to the inability of the prospective buyer  to secure financing, the commercial real estate market remains strong and largely untroubled.

“Thus far, the fallout from the subprime residential loan crisis appears to have had a limited effect on the local commercial real estate market,” said Edwin K.S. Ryu, principal and co-founder of Legacy Wealth Advisors, LLC, a San Jose-based investment advisory and wealth management firm.

Underpinnings Still Strong

In examining the commercial real estate market, virtually every pillar supporting the industry in Silicon Valley remains solid.

  • Recent earnings reports by Silicon Valley leaders such as Cisco Systems and Apple have been almost uniformly positive.
  • Unemployment rates in the Valley have been trending steadily downward, even as job creation rates have been rising.
  • The conversion of older R&D and industrial space into residential space in large areas of the Valley coupled with comparatively little new construction the past few years has resulted in a shrinking supply of commercial space.

Increasing demand in the face of a decreasing supply has led to significant declines in commercial real estate vacancy rates in Silicon Valley, according to a Grubb & Ellis report. Vacancy rates for the Valley as a whole have broken through the 10 percent threshold for the first time in several years, spurring the construction of new office space. In the meantime, according to the same Grubb & Ellis report, lease rates for premium Class A commercial space rose nearly 6 percent in the most recent quarter, while lease rates for Class B space have increased approximately 3 percent.

Clearly, this is not the case for residential property, where recent defaults have driven home prices considerably lower, and reduced loan availability as lenders try to increase liquidity as quickly as possible.

What It All Means

While taking a wait-and-see approach or making low offers on desired properties may be a viable approach in the current residential real estate market, it is not likely to be a successful strategy in commercial real estate in Silicon Valley, according to Ryu—who was recently selected as one of the top 150 financial advisors to doctors in the nation by Medical Economics magazine.

“Value comes from scarcity, and there is only so much commercial real estate available here in Silicon Valley, perhaps the choicest place in the world to do business,” Ryu remarked. “There will continue to be cycles, which we need to understand and respect. But in the long run, I view the overall market as a bullish one.”

For further details or to review the latest commercial real estate information, contact Borelli Investment Company at (408) 453-4700, or e-mail info@borelli.com.

Silicon Valley Commercial Real Estate Market              at a Glance

  • 5.67 – 6.76 million sq. ft.: range of 2006 qrtly. gross absorption 1
  • 5.71 million sq. ft.: 1st qtr. 2007 gross absorption 1
  • $2.2 billion of venture capital invested in 1st qtr. 2007 2
  • 21,500 new jobs added in 12 mos. ended 3/30/07 1
  • 4.4% unemployment rate in 3/07, down from 4.6% in 2/07 1
  • .03% delinquency on comml. real estate loans, lowest in 5 yrs.3
  • Less than 10% vacancy rate on comml. real estate4
  • 6% increase in rental rates on Class A office space4
  • 3% increase in rental rates on Class B office space4

Sources               1 Colliers International 2007 1st Quarter Report               2 Dow Jones Venture Capital               3 California Mortgage Banker Association               4 Grubb & Ellis