Apartment values should double within the next five years, according to Fred Schnaubelt, former San Diego City Councilman and president of Fredrick Schnaubelt & Sons, an apartment investor.
Schnaubelt addressed the Deal Makers Awards ceremony of the Commercial Real Estate Alliance of San Diego (CRASD) at the San Diego Yacht Club this past week.
Schnaubelt, who called the last five years "a disaster," said he has seen four major downturns in the past 40 years, and while no one can tell exactly when a market is going to bottom out, the turnaround is already happening.
In the coastal areas, Schnaubelt said he has seen the average per-unit price of an apartment climb from $182,000 to $212,000 from April to December.
"Within every decade we've seen a doubling of the per-unit price," Schnaubelt said.
Stuart Tanz, president and CEO of Retail Opportunity Investments Corp., a real estate investment trust (REIT), said retail has rebounded so well that he is concerned the market could overheat once more.
"We are heading right into what we saw in '05 and '06. In my opinion, there's a lot of risk right now," Tanz said. "The opportunity may be to sell rather than to buy."
Tanz, whose REIT has acquired about $1 billion worth of shopping centers within an apprxoimately three-year period, said the retail market has rebounded so quickly because almost no new supply is being added due in part to limited land and a slow entitlement process.
As slow as it is here, Tanz said it could be much worse -- such as it is in Portland, Ore. for example.
"It took us 19 years to get through the (entitlement) process up there," Tanz said.
Dennis Cruzan of CruzanMonroe said the recovery will continue to be U-shaped rather than in the shape of a "V" for quite some time.
CruzanMonroe, along with Cigna Investments, paid $121 million last year for the 305,255-square-foot DiamondView Tower overlooking Petco Park.
Russell Ingram, Kevin Shannon, Louay Alsadek, Evan August, Kraig Kristofferson, Stacy Meronoff, and Andrew Taylor of CBRE (NYSE: CBG) were given the CRASD award for the DiamondView Tower transaction, deemed the largest office building sale of 2012.
With interest rates continuing to "bump along the bottom," Cruzan said we are in a period of "low return for relatively high risk."
Cruzan said office rents will need to return to levels that are high enough to justify new construction.
Exactly what that is depends on the location, but a $4-per-square-foot level is often given as a benchmark.
The Daily Transcript's CRASD Editor's Choice 2012 was awarded to the $39 million land sale in March of 13.5 acres in Torrey Hills at Calle Mar De Mariposa and Ocean Air Drive in Torrey Hills, near the junction of Interstate 5 and state Route 56 between Torrey Pines and Rancho Penasquitos.
Gunder Creager and David Santistevan, of Colliers International, represented both sides of the transaction.
Other Deal Maker awards are as follows:
Industrial: The CRASD award for top industrial transaction went to CBRE tenant brokers Tom Martinez, Evan Knudson and Brian Klepacki; and CBRE landlord brokers Rich Kwasny, and Shane Harmon for the lease of the 257,972-square-foot building at 9043 Siempre Viva Road on Otay Mesa. The industrial building in the Siempre Viva Business Park deal was worth $4.5 million last September.
Retail: Chuck Klein and Kevin Held, of Cassidy Turley San Diego, won the CRASD award for the $9.25 million sale of the $25,810-square-foot Encinitas Village Square I shopping center on a 112,385-square-foot property at 1446-1486 Encinitas Blvd. that sold in December.
Multifamily: This award was won by Craig Stewart and Bill Anderson, of ACRE Investment Real Estate for the $16.85 million sale of the Royal Oaks apartment complex at 650 Woodward, in San Marcos in March of last year.
Land: Victor Krebs and Rob Morgan, of Colliers International, were recognized for their handling of the $14 million sale last February of a 8.93-acre parcel zoned for 312 apartments and 4,000 square feet of ground floor retail space at 6303 El Cajon Blvd. in San Diego.