Bubble concerns for San Francisco office market, Andre Agassi's real estate fund flips for a profit in Philadelphia, San Antonio seeks to redevelop prime downtown parcels, and more...

National market report
By Marynia Kruk | May 01, 2016 01:00PM
Rendering of Salesforce Tower

Rendering of Salesforce Tower

San Francisco

One of the hottest office markets in the U.S. could be in store for a wake-up call should startups in the technology industry begin to fall short of expectations, the Wall Street Journal reported. The tech sector overall occupies 22 million square feet or 29 percent of the entire city’s office market, according to CBRE Group. That’s up from an estimated 15 percent in 2009. The spike in demand is being spurred by a strategy known as “space banking,” in which companies lease more space than they need because they are afraid of getting priced out of the market in coming years. Yet should the tech market turn, they could be stuck with overpriced real estate. Salesforce, which occupied 1.4 million square feet at the end of 2015, has plans to lease an additional 714,000 square feet at the under-construction Salesforce Tower, a 61-story building that is set to be the city’s tallest. And by 2019, Uber will control 1.4 million square feet of space, enough to accommodate 12,000 workers. Yet as of 2015, the company had only 2,000 Bay Area-based employees. San Francisco’s office market “continues to defy expectations and common sense in some ways,” said Jed Reagan, an analyst at Green Street Advisors. “There is a speculative growth component to a lot of the tech demand out there.

Philadelphia

Former tennis champion Andre Agassi’s charter school investment fund is carving out a niche in real estate. The fund was set to make $1 million in profit last month after flipping a building it owned in North Philadelphia to a school charter operator that had been a tenant there, the Philadelphia Inquirer reported. The $9.2 million sale of the KIPP Philadelphia Elementary Academy building in the city’s Tioga section is the third sold by the investment fund run by Agassi and California-based financier Bobby Turner, who together set out in 2011 to create a portfolio of charter-school properties that would deliver attractive returns. The KIPP deal is expected to give investors a 9.1 percent return. “If you want to treat a problem, then philanthropy is fine,” Turner said. “But if you want to cure, really cure, you’ve got to harness market forces to create sustainable solutions that are scalable. And that means making money.” Turner and Agassi, who will have opened 64 schools by September, have raised more than $500 million from investors such as Bank of America and Citigroup.

Downtown San Antonio

Downtown San Antonio

San Antonio

The city of San Antonio and county officials are seeking bids from real estate developers to convert five prime downtown properties totaling 8 acres into residential and commercial uses, the San Antonio Express-News reported. The move to redevelop comes amid an upswing in downtown San Antonio property prices and is also timed with a $175 million public overhaul of a neglected creek that runs through the area. “Now is a good time to move forward with a redevelopment plan for these,” said John Jacks, interim director of the city’s Center City Development and Operations Department. “The market is really good right now — there’s a lot of interest in downtown development.” Local government officials are looking to either sell or lease the structures and land or revamp them via a public-private partnership. In the past few months, developers have unveiled several plans for downtown hotels and housing, including a Canopy by Hilton hotel. Officials hope the redevelopment will be ready for the city’s planned Tricentennial Celebration in May 2018.

Louisville

Louisville, known for bluegrass, bourbon, basketball and the Kentucky Derby, would like to add pedestrian-friendly design to its list of attractions. The Kentucky city, which is in the throes of a downtown revival, plans to spend $1.4 billion over the next two decades on an overhaul of its roads, bike lanes, sidewalks and public transit offerings, Louisville Business First, a local magazine, reported. Louisville currently spends $14 million annually on transportation, according to National Public Radio affiliate WFPL. The initiative, dubbed “Move Louisville,” is intended to encourage people to drive less as well as live downtown, while easing travel across town. The proposed transportation projects would be paid for with a mix of federal, state and local funding, including a $16 million federal grant to make Dixie Highway, a major thoroughfare, safer for pedestrians and more accessible to buses. Also among the proposals are the construction of new bridges, narrowing roads in favor of sidewalks and the completion of a 100-mile bike loop. The plan “will influence the type of city we become in the future,” Louisville Mayor Greg Fischer said.

Louisville skyline

Louisville skyline

Malibu

John Cusack has listed his 4,660-square-foot, three-bedroom beach house in Malibu for $13.5 million. The “Say Anything” and “Serendipity” actor bought the Spanish-style house for $2.1 million in 1999. The walled and gated property includes 3.5 bathrooms, a double-height living room, a trellis-shaded courtyard, a deck that spans the width of the house and direct beach access. The property is also available for rent at $75,000 a month, according to Zillow.

Waco

The home-renovating couple Chip and Joanna Gaines, who star on HGTV’s “Fixer Upper,” bought an already-restored 110-year-old, six-bedroom house in Waco, Texas. The sales price has not been disclosed, although the most recent listing price was $498,000, following a 5 percent price chop from $525,000. The 2-acre estate, which once belonged to a local department store tycoon, boasts wood floors and paneling, a back porch and multiple outbuildings. The buyers’ company, Magnolia Homes, operates a retail space in town, and the couple already own a farmhouse nearby.

Austin

Astronaut James Lovell has put his 4,900-square-foot Texas lake house on the market for $3.5 million. He and his wife designed the four-bedroom vacation home, located 55 miles outside the city. The home features a living room with a fireplace and custom-made U.S. Navy and NASA space mission–themed stained-glass windows. Lovell was portrayed by Tom Hanks in the 1995 movie “Apollo 13.”