Sonoma County office and retail real estate have been facing challenges throughout the coronavirus pandemic on when workers and consumers would return, but the local market for space to build, store and ship products continues to hum along.
Sonoma County’s office market during the pandemic has benefited from being farther away from the Bay Area’s densest urban areas, something that proved challenging for recruiters of younger, skilled talent beforehand.
Nineteen months into the dramatic shift in how a number of office-oriented businesses, particularly those deemed “nonessential,” approach remote work, Santa Rosa area offices anecdotally have more people actually working in the leased space than markets traveling south along the Highway 101 corridor, according to Dave Peterson, a partner of Santa Rosa-based brokerage Keegan & Coppin Co. Inc.
“Our agents in Petaluma are not seeing the activity level in office as we’ve seen in Santa Rosa,” he said.
But the Sonoma County market also has not seen the large blocks of office space coming back onto the market for sublease as in San Francisco, Peterson noted.
Office vacancy in Sonoma County moved from 12.2% in the first quarter of last year to 14.1% by the middle of that year, according to Keegan & Coppin. That reversed a slow decline in vacancy since the Great Recession of 2007–2009. Vacancy was 14.4% of 14.8 million square feet in mid-2021, but sublease space amounted to only 0.9%, with most of it in Petaluma.
Companies shopping for office space these days are looking for locations that can be flexible, even accommodating partial remote and in-person work, Peterson said. A hot size requirement is for 5,000–10,000 square feet, but mostly that’s a move to another site, rather than an expansion, he said.
Industrial real estate sizzles from scarcity
Like in Solano and Napa counties, industrial real estate remains one of the hottest commercial property types in Sonoma County. But the shortage of available modern space is a challenge, according to Peterson.
“There’s very little inventory available,” Peterson said. “There are only two or three buildings with over 20,000 square feet available, and we’re seeing prices increasing for sale and rent.”
Only 4.6% of 25.4 million square feet of Sonoma County industrial space was vacant at the end of the second quarter of this year, according to Santa Rosa-based brokerage Keegan & Coppin. That’s down from the pandemic peak of 5.7% at the end of last year but on par with where vacancy was at before the virus.
This tight inventory, together with escalating prices for construction, are pushing rents up 10%–20% in the past 12 months, Peterson said. Some triple-net rents for newer spaces that were around $1 a square foot 12 months ago are now $1.15.
“A lot of buildings on the market are obsolete, without the power needed for equipment or ceiling height for stacking purposes,” Peterson said.
Nowadays, tenants are looking for a clear height of at least 22 to 24 feet in buildings, he said.
Recent deals speak to local industrial real estate market activity. Dermody Properties leased 29,000 square feet at its newly built LogistiCenter project in Rohnert Park to heating, ventilation and air conditioning supplier Ferguson.
Billa Enterprises is in escrow to sell its most recently completed 70,000-square-foot warehouse at the Billa Landing development near Charles M. Schulz–Sonoma County Airport to an affiliate of the undisclosed company planning to occupy it, according to Peterson, part of the listing team. The first two buildings built, each with 45,000 square feet, are fully occupied. The site for the last two buildings, with 70,000 and 140,000 square feet, is being prepared for construction to start on one or both soon because of demand, Peterson said.
Just to the north, along Airport Boulevard leading to the airport, Airport Business Center is working on building a 161,000-square-foot warehouse for Amazon on 41 acres.
The e-commerce giant has said little about what it plans to do there, but it would be on the small side of its distribution facilities, which tend to have several hundred thousand to a few million square feet, like the 617,000-square-foot fulfillment center under construction in Vacaville.
The retailer opened a 201,000-square-foot “last-mile” delivery station in American Canyon this summer and has proposed to put one in the already completed 250,000-square-foot Victory Station project just south of the city of Sonoma. These hubs are where Amazon takes packages that it intends to deliver with its own fleet of trucks, which until the Napa Valley station opened had to travel to North Bay addresses from the East Bay.
An eight-inch start to real estate riches – The Globe and Mail
A most unusual parcel of land for sale on a busy Toronto avenue is putting to the test the question of whether land has intrinsic value, regardless of its utility.
For sale is 1060 Danforth Ave., an address sandwiched between a church and a medical office about a half-block away from the Donlands subway station. Listed for $49,999, the price is a relative bargain for the Danforth, given the rapid rise in land prices in Toronto. But there is a catch: It is105 feet deep – but less than a foot wide.
“We didn’t list it as a joke,” said Anthony De Cesare of Royal LePage Maximum Realty. “I thought someone would want it.”
Mr. De Cesare met his client, Carlo Scarcello, at the corner store and deli in Woodbridge that Mr. Scarcello runs (he recommends the prosciutto and provolone sandwich) and agreed to help sell his house. But Mr. Scarcello also asked Mr. De Cesare to look into selling this little chunk of Danforth that he also owned. “I put it on MLS and I got so many calls from people,” he said, at least until they found out how wide it was.
Property records help fill in some details about how the strip of land came to be: In 1975, Ruby Gilbert was executing the last will and testament of her late father, Charles Gilbert, who had transferred to his estate a strip of the parcel that is a little more than eight inches wide at the southern half of the property, and then widens a bit as it travels the 105 feet to its northern boundary to a princely 15½ inches. The land extends partway under the wall of the building at 1066 Danforth Ave. (a pharmacy and medical centre), and allows for the shared use of it, such as it is. In 1977, Ms. Gilbert granted the land to her friend Gordon Davidson for $2.00, with the following explanation: “The land has very little value, and as the grantor has no use for it and is a good friend of the grantee, she wishes to transfer the land to the grantee for nominal consideration.”
The records show that 30 years later, Mr. Davidson fell into property tax arrears (the annual property tax bill is about $69 now) and the property was auctioned off by the city and was purchased by Mr. Scarcello in 2013 for $5,065.
“You know what, at this price, I couldn’t afford to resist it,” Mr. Scarcello said. “I always had issues with money my whole life, but I wanted to build myself up to not be always struggling. To me, it was like my chance to buy a piece of land. I figured only land would help me build myself up.”
In a way, the fact of land ownership was more valuable to Mr. Scarcello than any practical use of that land. “Land is about the only thing that can’t fly away. … It gives position and influence and political power,” or at least that’s the view of the landed gentry in Victorian-era England as imagined by Anthony Trollope’s 1867 novel The Last Chronicle of Barset.
“My friends had a lot of laughs with it,” Mr. Scarcello said. “I tell them I own a piece of land; they joke you have to turn sideways to get on it!”
Mr. Scacello said he’s had many ideas of what to do with the sliver of land, everything from planting sunflowers (a passion of his) to maybe renting it out for a billboard. “I was thinking of putting a mailbox on there, maybe anybody overseas could want a Canadian address.” Other than waging a futile battle to keep it graffiti-free he has never managed to improve the land.
On the other hand, it’s possible he could earn a return just by virtue of the passage of time.
According to real estate data experts Altus Group, the cost of residential development land in Toronto has soared 567 per cent since the year 2000. According to Ray Wong, vice-pPresident of Data Operations at Altus Group, the year-to-year data are a little lumpy because the price per acre tends to ebb and flow based on what kind of land sells, but the trend is still way up. Consider that even just in 2010 the price per acre of development land in Toronto was $2.4-million and it is topping $6.9-million an acre in 2021. One factor driving prices recently is scarcity: There are fewer sites and smaller ones hitting the market in the past two years. Between the third quarter of 2020 and the third quarter of 2021, Mr. Wong said development land prices more than doubled. “I was a little bit taken aback by the increases,” he said. “I’m not surprised, but I was little taken aback. That’s better than the stock market!”
Mr. De Cesare hopes someone might purchase this slice of Toronto in order to do a new development. There’s a mid-rise condo project under way just a few addresses west, so it is not entirely impossible. But anyone hoping to squat on the land should be prepared to wait for a payoff, according to experts.
“If you look at land, everything’s been inflated, [Mr. Scarcello’s price is] not out of whack, but it could be sitting there for a long time,” said Ari Silverberg, president of Harbour Equity. Mr. Silverberg does land assembly acquisitions to create developable lands in the GTA, and he’s not sure Mr. Scarcello will get many multiples (let alone 10 times) on his original purchase of such a narrow strip of land. “I truthfully haven’t run into that before; $5,000-$10,000 sounds like the right number. I don’t know that someone bucks up and pays $50,000. If they really wanted to make money, get the two guys beside them together and package it. At that point, paying an extra $50,000 or $100,000 probably doesn’t matter.”
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Canadian Real Estate Prices Expected to Rise 9.2% in 2022: RE/MAX – RE/MAX News
Confidence continues in Canadian real estate market, with the inter-provincial relocation trend likely to remain strong in 2022
- Migration between provinces expected to continue in 2022, potentially impacting local Canadian real estate conditions, according to 53 per cent of RE/MAX brokers (20 out of 38)
- 49 per cent of Canadians believe the housing market will remain steady in 2022 and view real estate as one of the best investment options over the next year
- Some of the highest outlooks are anticipated for Atlantic Canada, with Moncton and Halifax projecting average residential sales prices to increase by 20 per cent and 16 per cent respectively in 2022
- 95 per cent of regions (36 out of 38) surveyed are likely to remain seller’s markets in 2022
Toronto, ON and Kelowna, BC, December 1, 2021 – RE/MAX is anticipating steady price growth across the Canadian real estate market in 2022, with inter-provincial migration continuing to be a key driver of housing activity in many regions, based on surveys of RE/MAX brokers and agents, as reflected in the 2022 Canadian Housing Market Outlook Report. The ongoing housing supply shortage is likely to continue, putting upward pressure on prices. As a result of these factors, RE/MAX Canada estimates a 9.2-per-cent increase in average residential sales prices across the country*.
“Based on feedback from our brokers and agents, the inter-provincial relocation trend that we began to see in the summer of 2020 still remains very strong and is expected to continue into 2022,” says Christopher Alexander, President, RE/MAX Canada. “Less-dense cities and neighbourhoods offer buyers the prospect of greater affordability, along with liveability factors such as more space. In order for these regions to retain these appealing qualities and their relative market balance, housing supply needs to be added. Without more homes and in the face of rising demand, there’s potential for conditions in these regions to shift further.”
Despite the global pandemic, many Canadians still feel confident in the real estate market. According to a Leger survey conducted on behalf of RE/MAX Canada, 49 per cent of respondents believe Canadian real estate will remain one of their best investment options in 2022 (59 per cent of homeowners vs. 34 per cent non-homeowners which included renters, those not looking buy, and those currently looking to purchase). Additionally, 49 per cent of respondents are confident the Canadian real estate market will remain steady next year.
“Canadians recognize the value and investment potential in their homes. However, market challenges such as rising prices and limited supply have impacted local markets from coast-to-coast, causing angst this past year among those looking to get into the market and those hoping to move up in it,” says Elton Ash, Executive Vice President, RE/MAX Canada. “Despite this, it’s encouraging to see that many are feeling confident in the housing market in 2022 and view Canadian real estate as a solid investment.”
2022 Regional Canadian Real Estate Insights
RE/MAX brokers and agents in Canada were asked to provide an analysis of their local market in 2021 and share their estimated outlook for 2022. Based on their insights, 95 per cent of Canadian real estate markets are expected to favour sellers, impacted by limited housing supply and high demand.
The Calgary and Edmonton markets shifted from balanced conditions in 2020 to seller’s markets in 2021, which brokers and agents in the region expect to continue into 2022. This is attributed to heightened demand prompted by the inter-provincial migration trend that took place throughout 2021, which saw many homebuyers from Ontario and British Columbia driving demand high, while supply remained low.
In addition to an increase in out-of-province buyers flocking to Edmonton, the region has also welcomed investors who found themselves priced out of other markets. RBC’s provincial outlook for Alberta puts this province ahead of all others in terms of economic growth in 2022, which should bode well for homebuyers and investors alike 2022.
Regions such as Victoria, Nanaimo, Regina and Kelowna also experienced an influx of buyers in search of larger properties and greater affordability, which is likely to continue pushing demand and prices up in 2022. This trend has notably increased demand for single-family detached homes and in some regions, condos as well, which may continue in 2022.
Despite some buyers choosing to move away from urban centres such as Vancouver/Greater Vancouver in favour of suburban areas within British Columbia, or leaving the province entirely, Vancouver/Greater Vancouver has remained a quality place to live. The region continues to draw interest from Canadian and international buyers, a trend that is likely to grow next year, in tandem with rising immigration. Vancouver/Greater Vancouver is expected to remain a seller’s market in 2022, providing inventory stays tight and current demand continues, according to a RE/MAX broker in Greater Vancouver Area.
Winnipeg is a slight outlier in Western Canada, with a buyers’ market that is anticipated to continue in 2022. Young couples enjoying the freedom to work from home have been driving much of the demand in the region, especially for one- and two-story detached homes. The appeal of Winnipeg has had less to do with affordability, and more with lifestyle shifts such as hybrid working environments.
According to the RE/MAX broker network in Ontario, market activity across the province is anticipated to remain steady in 2022, with continued average price growth, although at widely varying degrees. RE/MAX brokers anticipate average sale price increases in smaller markets such as North Bay (four per cent); Sudbury (five per cent); Thunder Bay (10 per cent); Collingwood/Georgian Bay (10 per cent); and Muskoka (20 per cent), where the move-over trend has remained strong. Meanwhile, in larger markets within the province, there’s a possibility that more immigration could weigh on supply levels and prices, including Ottawa (five per cent); Durham (seven per cent); Brampton (eight per cent); Toronto (10 per cent); Mississauga (14 per cent).
When it comes to price appreciation year-over-year, there are a few regions that stood out in 2021 for their exponential increases across all property types, including Brampton, which rose from $869,107 in 2020 to $1,085,417 in 2021 (25 per cent); Durham from $706,818 in 2020 to $914,48 in 2021 (29 per cent); and London from $487,500 in 2020 to $633,700 in 2021 (30 per cent). In comparison, Toronto experienced a modest seven-per-cent increase year-over-year ($986,085 in 2020 to $1,054,922 in 2021).
All of Atlantic Canada’s regions analyzed are currently seller’s markets, with potential for average sale prices to increase between five to 20 per cent in 2022, according to RE/MAX brokers and agents. Larger urban centres including Moncton, Fredericton, Saint John, Halifax, Charlottetown and St. John’s have all experienced an influx of out-of-province buyers, especially from Ontario, moving to the region in search of greater affordability and liveability.
Due to this spike in demand, much of the region has experienced increasing competition, especially among single-family detached homes and condos in some cities. There’s a possibility that this may further be amplified as immigration continues to grow in the region.
According to RE/MAX brokers and agents in the region, new construction is anticipated to remain strong into 2022, although construction activity may be dampened by ongoing supply shortages and delays in permits related to the pandemic backlog.
Seller’s market conditions are expected to prevail across the region in 2022, with the exception of Charlottetown and Southern Nova Scotia, which may return more to a balanced state as activity gradually begins to decrease.
These factors have led to some of the highest price outlooks in the country, with Halifax and Moncton projecting estimated average residential sales price to increase by 16, and 20 per cent respectively.
Additional findings from the 2022 Canadian Housing Market Outlook Report
- Two-in-five Canadians trust their agent to advise them during the current real estate landscape (43 per cent)
- 23 per cent of Canadians now have a greater desire to build their own home or buy pre-construction
- 26 per cent of Canadians have the desire to purchase a home while mortgage rates remain low
- 62 per cent of Canadians currently own a home. This is higher among those ages 35+ (70 per cent) compared with Millennials, ages 18-34 (42 per cent)
- The majority of Canadians (72 per cent) said rising home prices did not impact their purchasing decisions in 2021.
About the 2022 Housing Market Outlook Report
The 2022 RE/MAX Housing Market Outlook Report includes data and insights from RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments. Regional summaries with additional broker insights can be found at REMAX.ca. The overall outlook is based on the average of all regions surveyed, weighted by the number of transaction in each region.
*2020 average residential sale price numbers were full-year, 2021 were from January 2021 – October 31, 2022.
Leger is the largest Canadian-owned full-service market research firm. An online survey of 1,554 Canadians was completed between October 29-31, 2021 using Leger’s online panel. Leger’s online panel has approximately 400,000 members nationally and has a retention rate of 90 per cent. A probability sample of the same size would yield a margin of error of +/- 2.5 per cent, 19 times out of 20.
About the RE/MAX Network
As one of the leading global real estate franchisors, RE/MAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 140,000 agents in over 8,600 offices across more than 110 countries and territories. Nobody in the world sells more real estate than RE/MAX, as measured by residential transaction sides. RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. RE/MAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children’s Miracle Network Hospitals® and other charities. To learn more about RE/MAX, to search home listings or find an agent in your community, please visit remax.ca. For the latest news from RE/MAX Canada, please visit blog.remax.ca.
Forward looking statements
This report includes “forward-looking statements” within the meaning of the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “believe,” “intend,” “expect,” “estimate,” “plan,” “outlook,” “project,” and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company’s results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include (1) the global COVID-19 pandemic, which has impacted the Company and continues to pose significant and widespread risks to the Company’s business, the Company’s ability to successfully close the anticipated reacquisition and to integrate the reacquired regions into its business, (3) changes in the real estate market or interest rates and availability of financing, (4) changes in business and economic activity in general, (5) the Company’s ability to attract and retain quality franchisees, (6) the Company’s franchisees’ ability to recruit and retain real estate agents and mortgage loan originators, (7) changes in laws and regulations, (8) the Company’s ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (9) the Company’s ability to implement its technology initiatives, and (10) fluctuations in foreign currency exchange rates, and those risks and uncertainties described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company’s website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
Grand real estate sales on pace to set record in 2021 – Sky-Hi News
This year is on track to see record real estate sales in Grand County, driven by a high demand for mountain properties and limited availability.
Data from the Grand County Board of Realtors shows that October was the 115th month of gains in median sales prices compared to the same month of the previous year, while the available inventory has dropped consistently during that same period.
In October, the one-year change in the median sales price for all properties was up 11.8% while the number of active listings was down 14.4%, according to the board of Realtors.
“Due to the lack of inventory and the need for housing up here, when properties do get put on the market, they’re just going so fast,” said Lindsey Morrow, an agent with Keller Williams Top of the Rockies. “This has been a really strong year for real estate in general.”
The September report from the Land Title Guarantee Company shows the average sales prices for single family and multi-family properties are at their highest reported rates with single family homes reaching an average of $876,425 and multi-family properties going for $510,367 on average.
So far this year, real estate sales have totaled more than $861 million, which is a 41.7% increase over the same time frame last year, according to the Land Title Guarantee Company.
Last year saw record sales with more than $994 million in transactions.
The high demand for property in Grand County can be credited to a number of factors, including more people working from home, low interest rates, rising sales prices in surrounding mountain communities and recreational opportunities.
“Grand County is only an hour and a half from Denver … we have the infrastructure and internet for people to (work at home), and I think people are realizing that Grand County has a great work-life balance,” Morrow said.
A majority of the buyers are from the Front Range, which has accounted for 61% of sales so far this year, per data compiled by Land Title Guarantee Company.
All the demand means that active listings go quick.
Properties sold in October saw a 52% decrease in the number of days on market compared to October 2020. The average townhouse or condo sold after only 48 days and single-family homes sold at 72 days, according to the Grand County Board of Realtors.
Morrow said the demand has slowed toward the end of the year, though it remains comparatively high when held up to previous years. Demand is the highest for properties priced below $600,000.
“It’s definitely calmed a little bit compared to the summer where there were multiple offers and properties spent two or three days on market,” she said. “Though as soon as you get into those properties in the $400,000 or $500,000, which are desirable, those are going off within five or six days.”
According to the Grand County Board of Realtors’ data, a majority of properties sold so far this year range from $600,000 to $999,999.
Inventory below $600,000 in Grand County is increasingly rare with only 13 single-family homes currently on the market.
On top of the incredible demand and low inventory, external factors such as rising building costs, labor shortages and problems in the supply chain have also contributed to the extreme sale prices.
Single-family properties going for $1 million to $1,999,999 in 2021 have increased by 52-55% increase compared to last year, GCBOR data shows.
However, there are still opportunities out there for buyers.
With rental rates increasing, Morrow urged interested buyers to reach out to a lender while interest rates remain favorable
“If people are willing to spend $3,000 per month on rent, that could potentially get them a $600,000 or $700,000 house, which there is inventory for,” she said.
Morrow said the market is sustaining itself so, unlike the 2008 market, it’s unlikely there would be a crash and current trends will likely continue until more inventory is available.
“Appraisal values of properties are still coming in at or above contract price,” she added. “The biggest thing is we don’t have the inventory for people moving into the community.”
Building permit numbers indicate that Grand County is picking up the pace on construction with 2021 seeing a record number of permits for single family homes, according to Steve Jensen of the Grand County Builders Association.
Not including construction in Fraser, Granby or Winter Park, Grand County has issued 237 permits for single family homes so far this year compared to the same period in 95 in 2020 and 108 in 2019. Of the permits issued this year, 89 are fire rebuilds.
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