Borelli Investment Company

Tight Market for Office Space in Silicon Valley: a win/win for landlords with professionally managed office space.

The Silicon valley office space market shows no signs of slowing down, despite minor setbacks for a few tech companies in the early parts of 2016. The idle gossip about tech going through another slowdown is both fallacious and premature, the remainder of 2016 has proven that. Tech is growing, and never really stopped. While some technology companies are holding off on egregious expenses, they are still investing aggressively on developing their product/service lines and hiring the quality needed to get them through the next ten years. That spells out the need for more office space in the area.

What does that mean for office space rentals in the Silicon valley?

The market remains very tight with lots of competition for office space. The Big Tech firms are the ones driving this massive expansion; Google,(Alphabet) Apple, Facebook and Uber are leasing and developing huge commercial spaces. This acts as a draw for smaller companies eager to get into the tech-saturated Silicon valley and environs, adding to the need for office space. Add to that the infusion of foreign tech companies stepping into the area and establishing themselves, specifically Chinese (Cambridge Industries Group) and Japanese (Toyota Research). This kind of push in the tech sector commercial space has driven the stock prices of the largest commercial real estate companies in the area to an all-time high.

How can you as a landlord take advantage of this office space need?

It is truly a landlords market, but that doesn’t mean it is easy to get your commercial spaces rented out to the right people at the best NOI for you. To have this tech boom be beneficial to your real estate portfolio requires the services of professional leasing consultants and property managers who know the ins and outs of the market and how to spin that to your advantage.

Five benefits of having a property management team in place.

1. Avoiding bad tenants. Even in an atmosphere as saturated with money and growth as the Silicon valley, bad tenants abound and must be weeded out. A commercial property management company will screen all prospective tenants with express attention paid to past rental and credit behaviors. When good tenants are found, the property management company will treat them with the respect they deserve in order to keep them as tenants.
2. Marketing geared toward the right tenants. Marketing of your commercial real estate helps avoid vacancies and drive the right kinds of tenants toward your property. With a tailored marketing program in place you can get your spaces rented and rest assured that the tenants are of the best quality.
3. Leave all leasing and legal details to your property manager. There can be a lot of hoops to jump through before renting out office space. Better to have a team on your side that has multiple years of experience in handling commercial leases, and is completely up to date on the pricing and demand in the area. Undervaluing an office space rental can be just as damaging to your portfolio as a bad tenant. With square foot pricing escalating almost daily in this super-heated market, trust leasing pros to get the very best money for your property and inking a lease that ensure you the top dollar in the future.
4. Administration and maintenance. Under the administrative wing, all the maintenance, upkeep and upgrades can be handled to meet both code and aesthetic requirements. Tenant issues can be solved promptly and to everyone’s advantage. Collecting rents and doing the banking are duties for the property management company, so you aren’t bothered.
5. Management tools and supplies in place. Along with the experience and financial savvy of a property management company come the supplies and softwares already in place to manage all properties in a streamlined and productive way. Property management has become a very technical and inclusive science, (safety, marketing, legal, maintenance, banking, leasing and security) with multiple softwares, tech tools and experience levels operating together to create a seamless whole.

If you have office space in the Silicon valley, you are sitting on a goldmine, literally. Make sure you keep that cash flow going for years to come by using a professional property management company to manage your commercial real estate. Contact Borelli Investment Company today for a free property management quote on your office, retail, or industrial building.

Passion investing — putting a percentage of your wealth into something you love — has become highly popular over the past decade or so. The concept is so well accepted that many investment advisors are suggesting that their clients allocate a fixed percentage — perhaps 15 to 20% of their wealth — in this investment category.

What’s a passion investment? Typically, it’s something you’d spend your money on even if you weren’t considering it as an investment, which then grows over time as you recognize the value that’s being created by your collection. Here are some of the leading types:

• Art
• Antiques
• Collector cars and motorcycles
• Coins, stamps and firearms
• Fine wines
• Historical collectibles
• Jewelry
• Sports memorabilia

For some, it could even mean buying a small winery and some vineyard acreage to indulge in a passion to produce their own wine. The point is: these are all investments in which you take a great deal of personal pleasure while you watch their value grow over time.

Collector Cars Racing Ahead with 500% Return

One of the fastest moving passion investments lately has been car collections. In a January 2016 report, CNBC’s Deborah Nason said, “Classic cars are gaining attention due to their nearly 500% returns over the past decade, outpacing art and wine by more than 100%, as reported by the Knight Frank Luxury Investment Index.”

The most valued nameplates include Aston Martins, Ferraris and Porsches, but lately a wider range of cars including American muscle cars and more recent models are showing solid gains for collectors as well.

The rapid appreciation in value has moved cars out of the realm of casual collectibles and into a serious asset class. Just as you wouldn’t tuck away a Picasso or Rembrandt in your closet or keep a wine rack full of $10,000 Bordeaux’s in your front room, it doesn’t make sense to store even a modest collection of classic cars in friends’ garages or a dusty warehouse or ministorage space.

Garage Unlimited of Monterey is a unique facility and car community that provides security-conscious, access-controlled storage and a fun car-driven community just off Hwy 68 near the Monterey Airport.

The stylish facility has a total of 46 car and storage condos ranging from 1,384 to 2,696 sq. ft. — with more than two-thirds of the units already sold months before it opens in early 2017.

The garage condos are ideal for car collectors with any size of collection, RV or boat owners, or anyone who needs additional storage space for personal items such as furniture from a vacation home, recreational equipment, or anything that’s been cluttering your home garage — to business storage. Desirable features include:

• Ceilings reaching up to 25 feet, with roll-up entrance doors that are 10-12 feet wide by 14 feet high, and a standard walk-in door as well
• Mezzanines that many owners are planning to customize into a personal retreat — with a large-screen TV, sofa, wet bar, and more to enjoy their favorite races or sporting events
• Cat 6 wiring for Internet and phone service, with optional cable access available
• A completely fenced complex with access-controlled entrance gates, abundant lighting, and video cameras covering common areas

• All units will have available individually monitored alarms in place
• 24×7 access with large exterior drive lanes and loading zones
• Significant appreciation potential and tax benefits of ownership — so your storage may rise in value along with your car collection!
• A very few limited rental storage options available, with three- to five-year terms
• Low down payments with up to 90% SBA financing available at very attractive interest rates (on business purchases)

“What makes Garage Unlimited of Monterey such a one-of-a-kind storage option is the fact that owners will be joining a true car community. If cars are a passion investment for you — then this is an opportunity to meet and mingle with others who share a similar passion. Your fellow owners will be people who enjoy owning, working on and admiring incredible cars.

Borelli Investment Company is a developer and is involved with the marketing of Garage Unlimited Monterey.

CUPERTINO, Calif., Sept. 12, 2016 – Marcus & Millichap (NYSE: MMI), a leading commercial real estate investment services firm with offices throughout the United States and Canada, is pleased to announce the sale of Saich Way Station, a 15,525-square-foot multi-tenant retail center located less than one mile from Apple Inc.’s headquarters in Cupertino, California. The $16.5 million sales price equates to $1,063 per square foot.

Kirk Trammell, senior vice president investments in Marcus & Millichap’s Palo Alto office, along with Vincent Schwab, senior vice president investments in the firm’s San Francisco office, and David Cutler and Joshua Johnson, associates in Palo Alto, represented the seller, Borelli Investment Co. Tenny Tsai of Cushman & Wakefield in San Jose represented the buyer, a family exchanging out of a redevelopment site in San Francisco.

The sale marks the successful fulfillment of a joint venture between Borelli Investment Co. and a local property owner. The partnership transformed the property from a burned-out shell in 2008 into a multi-tenant retail center that is perfect fit for its upscale location.

“Saich Way Station’s evolution is the result of an enormous effort by the Borelli Investment Co. and we are very pleased to have been able to maximize the value received,” says Kirk Trammell, senior vice president investments in Marcus & Millichap’s Palo Alto office. “The center’s excellent construction quality, strong tenant line-up, and close proximity to the new Apple campus made it an ideal trade property. We created a competitive bidding environment that produced multiple offers, secured an all-cash buyer and closed in a little over a month.”

Built by SiliconX Construction to exceed Cupertino’s high standards for a pedestrian-oriented, environmentally conscious retail center, Saich Way Station features a low roofline, bold storefronts, stylish awnings, modern colors, and ample glass. The center’s paved-stone walkways, benches, outdoor seating areas, bicycle racks, and ample parking welcome shoppers. One of the California Green features SiliconX incorporated into the center is a sophisticated drainage system that contains runoff on-site.

Saich Way Station’s tenants are Vitamin Shoppe, T-Mobile, The Melt, H&R Block, Blast 825 Pizza, Site for Sore Eyes, uBreakiFix and The Coder School Cupertino.

The center is located between a Target and a Whole Foods Market at the northwest corner of Stevens Creek Boulevard and Saich Way at 20803 Stevens Creek Blvd.

About Marcus & Millichap (NYSE: MMI)

With over 1,600 investment sales and financing professionals located throughout the United States and Canada, Marcus & Millichap is a leading specialist in commercial real estate investment sales, financing, research and advisory services. Founded in 1971, the firm closed over 8,700 transactions in 2015 with a value of approximately $37.8 billion. The company has perfected a powerful system for marketing properties that combines investment specialization, local market expertise, the industry’s most comprehensive research, state-of-the-art technology, and relationships with the largest pool of qualified investors. To learn more, please visit: www.MarcusMillichap.com

 About Borelli Investment Company

Now in its 61st year in business, Borelli Investment Company is one of the oldest commercial real estate firms serving the Santa Clara Valley, Central Valley and Sacramento areas. The company provides a full range of commercial real estate services — from development and asset management to land sales and property management services.  More information about Borelli Investment Company’s services may be obtained by calling (408) 453-4700 or visiting www.borelli.com

  About SiliconX Construction

SiliconX Construction is a full-service general contractor that provides a wide array of value-focused construction services to clients throughout Northern California. Specialties include ground-up construction, major renovations, tenant improvements, and facilities maintenance. For more information, call (408) 418-0099 or visit www.siliconxconstruction.com

There’s nothing else like it on the Monterey Peninsula. Garage Unlimited of Monterey offers 46 car and storage condos ranging from 1,384 sq. ft. to almost 2,700 sq. ft. of space in a private, access-controlled facility at Ryan Ranch near the airport.

In an area that loves its cars — yet has a serious shortage of attached garage space in many residential areas and new developments — it’s no surprise that Garage Unlimited of Monterey has been embraced by collectors and track-driving enthusiasts with an affinity for a world-class circuit such as Mazda Raceway Laguna Seca.

But what really sets these garage condos apart is that every unit comes with a mezzanine 15 feet above the main floor—providing plenty of room for owners to store their vehicles (with or without stacking systems) and work on their cars as well. In addition, many owners are planning to furnish their mezzanines to create den-style retreats — with a big-screen TV, couch, wet bar, refrigerator, and maybe a pool table or arcade games.

A Place to Hang Out with Friends

In years past, it was common for guys to gather in a friend’s garage on the weekends, maybe catch a televised race or a game, and wrench on their cars. That’s the idea behind the creation of this special car-oriented community — and it seems like numerous owners have bought into that concept.

“Already many people are planning to include large-screen TVs and sofas for sporting events — a place to watch the races — audio systems and other amenities,” said Jon Lee, a soon-to-be owner of a Garage Unlimited of Monterey unit. “I think it’s going to be a lot of fun — not just a place for a nice car collection or to store things, but also somewhere people simply like to be.”

“There are going to be owners with everything from muscle cars to exotics such as Ferraris, as well as RVs, boats and motorcycles,” Lee continued. “You’ll have some million-dollar cars and other collector cars that have special meaning for the people who have chosen to be part of this car community.”

Versatile Storage Units

In addition to the cars, many of the garage condos may also be used to store furniture from a vacation home or college apartment, or other personal or business items. Ceilings are up to 25-feet high with roll-up doors that are 10-12 feet wide by 14 feet high.

The property will be completely fenced — with access-controlled entry gates, abundant lighting and video cameras covering common areas. Owners will always have access 24×7.

High Resale Values and Lease Options

While certainly no one can predict what resale values will be on the car and storage condos in the future, past experience indicates a potential for serious appreciation.

“There’s been a sign posted at (a similar facility in Santa Cruz) over the past few days that says, ‘I want to buy your garage,’ so these units are highly in demand, and I’m confident the same thing will happen in Monterey,” said Russ Foster, who owns units in both facilities. “I think the Monterey area is an even more car-oriented environment than Santa Cruz, and the people living in Monterey and Carmel typically have even less space than we do in Santa Cruz.”

The latest opportunity for those interested is that Garage Unlimited of Monterey plans to allocate a couple of the units for people who’d rather lease than buy. These units for lease will then be made available to prospective owners who are looking for an income-driven real estate investment.

Commercial real estate has always been an attractive and lucrative investment business. Its value has further increased with the increasing density of small businesses. The cash flow in commercial real estate business primarily depends on your strategy before investment and the potential of property to increase the value.

The following tips will help you add value to your commercial property in order to make the most out of it.

1.     Make the Right Type of Improvements

There are two types of property improvements.

• Cosmetic improvements
• Substantial improvements

New carpeting, wooden floor replacement, new paint, new landscape, new décor, wallpaper, and other such changes contribute to cosmetic improvements. Cosmetic improvements are beneficial when you rent out your commercial property. However, if you want to sell it out then remember that the buyers may want to change the look and personality of the property. In such a case, avoid making substantial or functional improvements like renovating the lobby of office or multi-home building, and structural changes to the façade of a shopping center.

2.     Monetize the Property with Rentable Square Footage

In commercial property, the usable square footage is the door-to-door and wall-to-wall space that is actually used by the tenants. Lobbies, storage rooms, hallways, rest rooms, stairwells, and other shared areas are not included in the usable square footage.

In contrast, the rentable square footage is the sum of usable square footage and the shared spaces. Rentable square footage rule applies when a tenant takes a complete portion or unit on rent. The landlords mostly bear the loss when they rent out a commercial property based on usable square footage. However, you can monetize the property and earn from its every square foot by transforming a multi-unit property into a set of individual properties. This way, the renters will not share spaces like hallways and stairwells and pay full cost for the unit.

3.     Add Personality

The landlords can add personality to the commercial property by merging documental and physical personalities. Brainstorm about a nice name for the property. Define the characteristics of the name to renovate the exterior including paint, external landscaping, and introducing charming attractions or amenities to the property.

Some of the cost-effective amenities include free wireless internet, daycare and swimming pool for kids in commercial residential properties, and glass-walled meeting room in the office building.

4.     Invest to Decrease Expenses

The modern offices comprise of green buildings. Similarly, the families prefer energy-efficient homes. In either case, you can make lucrative investments in the office or residential commercial real estate to decrease the utility expenses and make it an attractive property for renters and buyers. Some of these investments include large glass windows for sunlight free flow, energy-efficient light bulbs, and energy-efficient kitchen.

Security, a primary concern of the buyers and renters, can add great value to the property. For lucrative investments, install CCTV cameras in the building. If you want to go an extra mile for security then installing walkthrough gates and digital entrance and detection devices could be a good investment to add value to your property.

For information on Borelli Investment Company’s commercial property management services, contact us today.