506 W. GRAHAM AVENUE LAKE ELSINORE, CA

Transcription

1 The Centre 506 W. GRAHAM AVENUE LAKE ELSINORE, CA INVESTMENT OFFERING PROFESSIONAL OFFICE BUILDING

2 MIKE HANNA Vice President License # SHERI SHOEMAKER Senior Vice President License # MARY PIPER Senior Vice President License # No warranty or representation has been made to the accuracy of the foregoing information. Terms of sale or lease and availability are subject to change or withdrawal without notice. Lee & Associates Commercial Real Estate Services, Inc. - Riverside Hancock Avenue, Suite Murrieta, CA Corporate ID#

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4 OUTLETS OF LAKE ELSINORE TO RIVERSIDE LAKE ELSINORE LAKESIDE DRIVE CENTRAL AVE COLLIER AVE HOME DEPOT COSTCO The Centre W. HEALD AVE W. POTTERY ST W. SUMNER AVE TO SAN DIEGO W. GRAHAM AVE W. LIMITED ST N. SPRING ST MAIN ST N LAKESIDE DRIVE THE CENTRE 4

5 LOCATION: 506 W. Graham Avenue Lake Elsinore, CA The Centre OFFERING SUMMARY: July 13, 2017 PROPERTY TYPE: Multi-Tenant Office Building PRICE: $1,750,000 NET OPERATING INCOME: $156, CAPITALIZATION RATE: 8.96% PRICE PER SQUARE FOOT (NRA): $ Per Total SF / $ NRA OCCUPANCY: 100% TOTAL SQUARE FEET: NET RENTABLE AREA (NRA): 16,080 SF 15,495 SF YEAR BUILT: 1984 CONSTRUCTION: NUMBER OF FLOORS: Wood Frame & Stucco Two NUMBER OF SUITES: 15 NUMBER OF TENANTS: 9 APN: LOT SIZE (ACRES): PARKING RATIO:.83 Acre 69 Stalls - 4.5/1,000 NRA THE CENTRE 5

6 Investment Highlights 1st Time on the Market; Owner Built, Occupied and Maintained Potential Owner User Opportunity with short term Leases: Landlord has purposely created short term leases allowing for an investor or owner user opportunity where buyer would like to occupy half or all of the existing square footage. Upside with lease renewal and renegotiation; Central location with more than105,000 people within a 5-Mile Radius. Average household income in excess of $70,000. 3rd fastest growing city in California: The population in Lake Elsinore has grown more than 83% between The City has projected population growth to exceed an additional 200% over the next ten years. 100% occupied with strong historical occupancy: Average tenant has occupied space within the building for 13 years demonstrating market stability and desirability of the property. Open to new financing; Delivered free and clear of debt. THE CENTRE 6

7 Tenant Information and Financial Analysis Static (Income/Expense) Analysis Lease Years Monthly Rent Annual Rent Suite Tenant RSF End in Building Total Per Sq Ft Total Per Sq Ft 101 Sabet 775 MTM 10 Years $1, $1.87 $17, $ Quality Business Management 1,175 5/31/2018 1st year $1, $1.35 $19, $ Simmons 1,140 MTM 10 Years $ $0.78 $10, $ Berger ABAM Inc. 1,085 MTM 5 Years $1, $0.96 $12, $ Oliveira 1,335 MTM 18 Years $1, $1.37 $21, $ , 106, 203, 204 Bulen 4,770 MTM 33 Years $5, $1.21 $69, $ , 201 Miller 1,885 MTM 9 Years $2, $1.50 $33, $ Thomas 1,275 MTM 30 Years $1, $1.37 $21, $ , 207 JR-Tech 1,315 MTM 4 Years $1, $1.22 $19, $ Power House 740 MTM 7 Years $ $0.68 $6, $8.11 Totals: 15,495 $19, $1.24 $230, $14.89 Vacancy Factor - 5% $(11,538.57) $0.00 Total Gross Income: $219, $14.14 OPERATING EXPENSES 2017 BUDGET Description Annual PSF Monthly PSF Total Cleaning $0.54 $0.05 $8, Management Fees (3%) $0.45 $0.04 $6, Pest Control $0.03 $0.00 $ Grounds, Maintenance and Repairs $0.41 $0.03 $6, Misc. Expenses $0.25 $0.02 $3, Landscaping (Included in Grounds & Maint.) $- $- $- Utilities - Electricity and Gas $0.16 $0.01 $2, Utilities - Water and Sewer $0.28 $0.02 $4, Utilities - Trash $0.29 $0.02 $4, Property Insurance $0.40 $0.03 $6, Property Taxes (1.10% based on asking price) $1.24 $0.10 $19, Total Operating Expenses: $4.05 $0.33 $62, NET OPERATING INCOME (NOI): $10.12 $156, PURCHASE PRICE: $1,750,000 CAP RATE: 8.96% PRICE PER SQUARE FOOT: $ THE CENTRE 7

8 In-Place NOI vs. Market Rents Pro Froma NOI - Year 1 INCOME and EXPENSES IN-PLACE RENT - APRIL 2017 MARKET RENT INCOME Annual Annual PSF Monthly PSF Annual Annual PSF Monthly PSF Base Rental Revenue $230, $13.66 $1.14 $251, $16.20 $1.35 Expense Reimbursement Revenue Potential Gross Income $230, $13.66 $1.14 $251, $16.20 $1.35 General Vacancy $(11,538.57) $(0.74) $(0.06) $(12,550.95) $(0.81) $(0.07) TOTAL GROSS INCOME $219, $13.66 $1.14 $238, $15.39 $1.28 OPERATING EXPENSES Annual Annual PSF Monthly PSF Annual Annual PSF Monthly PSF Cleaning $8, $0.54 $0.05 $8, $0.54 $0.05 Mgmt Fees (3%) $6, $0.42 $0.04 $7, $0.46 $0.04 Pest Control $ $0.03 $0.00 $ $0.03 $0.00 Grounds, Maintenance and Repairs $6, $0.41 $0.03 $6, $0.41 $0.03 Misc. Expenses $3, $0.25 $0.02 $3, $0.25 $0.02 Landscaping (Included in Grounds & Maint.) $- $- $- $- $- $- Utilities - Electricity and Gas $2, $0.16 $0.01 $2, $0.16 $0.01 Utilities - Water and Sewer $4, $0.28 $0.02 $4, $0.28 $0.02 Utilities - Trash $4, $0.29 $0.02 $4, $0.29 $0.02 Property Insurance $6, $0.40 $0.03 $6, $0.40 $0.03 Property Taxes (1.10% based on asking price) $19, $1.24 $0.10 $19, $1.24 $0.10 TOTAL OPERATING EXPENSES $62, $4.03 $0.34 $62, $4.06 $0.34 NET OPERATING INCOME (NOI) $156, $9.63 $0.80 $175, $11.33 $0.94 IN PLACE RENTS vs. MARKET RENTS IN-PLACE RENTS PRO FORMA RENTS PURCHASE PRICE: $1,750, $1,750, CAP RATE: 8.46% 10.03% PRICE PER SQUARE FOOT: $ $ Notes: A In-Place NOI is calculated using contractual rents and expenses annualized but not subject to General Vacancy Loss. B C In-Place NOI is based on Occupancy as of July 2017 at 100%. All leases Modified Gross. Pro Forma Income Calculations are subject to a General Vacancy Allowance equal to 5% of Total Potential Gross Income. D Market Rental Rates estimated at $1.35 per square foot per month. All Leases Modified Gross. E Suite sizes based on the Building Usable Square Footage: 15,495 THE CENTRE 8

9 Site Plan Lindsay Street The Centre Graham Avenue THE CENTRE 9

10 Floorplates 506 W. Graham Avenue Lake Elsinore, CA 1st Floor 2nd Floor Electrical Room ±1,175 SF 101 ±775 SF 107 ±1,335 SF 202 ±1,885 SF 201 ±1,885 SF ±740 SF 207 ±1,315 SF 103 ±1,140 SF 106 ±1,192 SF 203 ±1,192 SF OPEN TO BELOW 206 ±1,275 SF 104 ±1,085 SF 105 ±1,192 SF 204 ±1,192 SF 205 ±1,192 SF COMMON AREAS COURTYARD/OPEN BELOW THE CENTRE 10

11 Parcel Map THE CENTRE 11

12 Site Aerial S. KELLOGG ST S. LINDSAY ST S. POE ST W. GRAHAM AVE THE CENTRE 12

13 SITE Lake Elsinore Wildomar Murrieta THE CENTRE 13

14 New Developments SITE Grand Ave Corydon St Mission Trail Bundy Canyon Rd Proposed THE CENTRE 14

15 Inland Empire Office Market The Inland Empire Office market ended the fourth quarter 2016 with a vacancy rate of 9.5%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 99,865 square feet in the fourth quarter. Vacant sublease space increased in the quarter, ending the quarter at 101,804 square feet. Rental rates ended the fourth quarter at $20.67, an increase over the previous quarter. A total of two buildings delivered to the market in the quarter totaling 35,638 square feet, with 434,924 square feet still under construction at the end of the quarter. Absorption Net absorption for the overall Inland Empire office market was positive 99,865 square feet in the fourth quarter That compares to positive 353,948 square feet in the third quarter 2016, positive 181,637 square feet in the second quarter 2016, and positive 14,732 square feet in the first quarter Tenants moving out of large blocks of space in 2016 include: CALTROP moving out of 47,720 square feet at 9337 Milliken Ave; Westwood College moving out of 37,247 square feet at 20 W 7th St; and Visterra Credit Union moving out of 23,394 square feet at Cactus Ave. Tenants moving into large blocks of space in 2016 include: Loma Linda University Health moving into 150,000 square feet at 250 S G St; State Farm Insurance moving into 29,644 square feet at Empire Lakes Corporate Center; and PrimeCare of Inland Valley moving into 25,000 square feet at Empire Towers V. The Class-A office market recorded net absorption of positive 46,206 square feet in the fourth quarter 2016, compared to positive 72,983 square feet in the third quarter 2016, negative (6,563) in the second quarter 2016, and positive 11,246 in the first quarter The Class-B office market recorded net absorption of positive 45,251 square feet in the fourth quarter 2016, compared to positive 216,703 square feet in the third quarter 2016, positive 82,265 in the second quarter 2016, and negative (41,617) in the first quarter The Class-C office market recorded net absorption of positive 8,408 square feet in the fourth quarter 2016 compared to positive 64,262 square feet in the third quarter 2016, positive 105,935 in the second quarter 2016, and positive 45,103 in the first quarter Vacancy The office vacancy rate in the Inland Empire market area decreased to 9.5% at the end of the fourth quarter The vacancy rate was 9.6% at the end of the third quarter 2016, 10.1% at the end of the second quarter 2016, and 10.1% at the end of the first quarter Class-A projects reported a vacancy rate of 11.1% at the end of the fourth quarter 2016, 11.6% at the end of the third quarter 2016, 12.5% at the end of the second quarter 2016, and 12.4% at the end of the first quarter Class-B projects reported a vacancy rate of 10.4% at the end of the fourth quarter 2016, 10.4% at the end of the third quarter 2016, 10.8% at the end of the second quarter 2016, and 10.6% at the end of the first quarter Class-C projects reported a vacancy rate of 7.0% at the end of the fourth quarter 2016, 7.1% at the end of third quarter The Inland Empire Office market ended the fourth quarter 2016 with a vacancy rate of 9.5%. The vacancy rate was down over the previous quarter, with net absorption totaling positive 99,865 square feet in the fourth quarter. Vacant sublease space increased in the quarter, ending the quarter at 101,804 square feet. Rental rates ended the fourth quarter at $20.67, an increase over the previous quarter. A total of two buildings delivered to the market in the quarter totaling 35,638 square feet, with 434,924 square feet still under construction at the end of the quarter. 2016, 7.4% at the end of the second quarter 2016, and 7.9% at the end of the first quarter Rental Rates The average quoted asking rental rate for available office space, all classes, was $20.67 per square foot per year at the end of the fourth quarter 2016 in the Inland Empire market area. This represented a 3.9% increase in quoted rental rates from the end of the third quarter 2016, when rents were reported at $19.90 per square foot. The average quoted rate within the Class-A sector was $25.98 at the end of the fourth quarter 2016, while Class-B rates stood at $20.73, and Class-C rates at $ At the end of the third quarter 2016, Class-A rates were $25.81 per square foot, Class-B rates were $20.04, and Class-C rates were $ Deliveries and Construction During the fourth quarter 2016, two buildings totaling 35,638 square feet were completed in the Inland Empire market area. This compares to six buildings totaling 70,047 square feet that were completed in the third quarter 2016, three buildings totaling 163,416 square feet completed in the second quarter 2016, and 11,780 square feet in one building completed in the first quarter There were 434,924 square feet of office space under construction at the end of the fourth quarter THE CENTRE 15

16 Inland Empire Office Market cont. Some of the notable 2016 deliveries include: Loma Linda University Health - San Bernardino, a 150,000-square-foot facility that delivered in second quarter 2016 and is now 100% occupied, and Avenida de Missiones, a 29,602-squarefoot building that delivered in third quarter 2016 and is now 45% occupied. The largest projects underway at the end of fourth quarter 2016 were Dos Lagos Regional Center, a 213,900-squarefoot building with 100% of its space pre-leased, and Kaiser Keller Rd, an 80,000-square-foot facility that is 100% pre-leased. Inventory Total office inventory in the Inland Empire market area amounted to 73,285,184 square feet in 6,192 buildings as of the end of the fourth quarter The Class-A office sector consisted of 8,481,997 square feet in 97 projects. There were 3,045 Class-B buildings totaling 44,620,885 square feet, and the Class-C sector consisted of 20,182,302 square feet in 3,050 buildings. Sales Activity Tallying office building sales of 15,000 square feet or larger, Inland Empire (California) office sales figures rose during the third quarter 2016 in terms of dollar volume compared to the second quarter of In the third quarter 2016, 20 office transactions closed with a total volume of $162,122,009. The 20 buildings totaled 1,072,947 square feet and the average price per square foot equated to $ per square foot. That compares to 11 transactions totaling $56,755,000 in the second quarter The total square footage in the second quarter 2016 was 366,038 square feet for an average price per square foot of $ THE CENTRE 16

17 Inland Empire Overview The Inland Empire lies east of Orange, Los Angeles Counties and North of San Diego County and includes San Bernardino and Riverside, the two largest counties in the nation. Key submarkets within the Inland Empire include Ontario, Rancho Cucamonga, Chino, Fontana, Mira Loma (Eastvale & Jurupa Valley), Colton, Corona, Moreno Valley, Perris, Redlands/ Loma Linda, Rialto, Temecula/Murrieta, Riverside and San Bernardino. Over the last decade, the Inland Empire has been regarded as one of the most robust markets in the United States in several categories including population growth, job creation, construction and industrial space absorption. This dynamic market is a real estate leader. "Huge incentive for companies to leave Orange County and relocate to the Inland Empire" Large-scale population growth began in the Inland Empire in the 1970s, when the area was developed as a series of residential bedroom communities serving employment centers in Los Angeles and Orange Counties. Residents were originally drawn to the area by affordable housing and pro-growth local governments. Frustrated by the many hours spent on the congested commute to work, many Inland Empire residents became willing to give up part of their income in exchange for a local job to increase their quality of life. This contributed to a huge incentive for companies to leave Orange County and relocate to the Inland Empire. As a result, a new talent pool began to emerge and set the stage for a different business atmosphere, where high-end companies could thrive. Over the past two decades, economic activity in the Inland Empire grew as businesses flocked to the area to take advantage of its labor force, economic incentives, cost advantages, central geographic location and logistic advantages. Part of the region s success has always been attributed to the well-integrated freeway system. The primary freeway serving the region is the San Bernardino (I-10) Freeway, a transcontinental highway connecting Los Angeles to the rest of the nation. Additional freeways include, the "One of the most robust markets in the United States" "Well integrated freeway system and affordable housing draws tenants, businesses, families and universities" Devore (I-15) Freeway, connecting San Diego and Nevada, the Foothill (I-210) Freeway, Riverside (I-215) Freeway, Pomona (SR-60) Freeway, the Corona (SR-71) Expressway and the 241 Toll Road which connects to the SR-91 Freeway. This freeway system will continue to draw tenants to the Inland Empire as the economy recovers and users seek to expand and/or consolidate. Another catalyst for growth in the Inland Empire is the Ontario International Airport, which is owned and operated by the Los Angeles International Airport. Ranked among the 60 busiest airports in the world, the airport is currently served by 12 passenger Riverside County Top Employers Rank Employer # of Employers 1 County of Riverside 17,766 2 March Air Reserve Base 9,000 3 Stater Bros. Markets 6,900 4 Walmart 5,681 5 University of California, Riverside 5,497 6 Riverside Unified School District 5,000 7 Corona-Norco Unified School District 4,633 8 Kaiser-Permanente Riverside Medical Center 4,500 9 Moreno Valley Unified School District 3, Hemet Unified School District 3,270 airlines and 13 major airfreight carriers with 220 daily flights. Ontario International Airport is the center of a developing freight movement system that includes the airport, two railroads, four major freeways, and a network of freight forwarders. These freight carriers include Ameriflight, Federal Express, Kalitta Air, Miami Air International, Inc., UPS, Sierra 21 Pacific Airlines, Arrow Air, Inc., Empire Airlines, IFL Group, and USA Jet. One of the other driving factors influencing the overall market in the Inland Empire is the home values as compared to other areas in Los Angeles, Orange County and San Diego. Homes in the Inland Empire are affordable with a median home price of $317,600 in San Bernardino County and $201,300 in Riverside County as of January, The area is much less expensive than most other areas of Southern California, such as Los Angeles ($542,100), San Diego ($526,900), and Orange County ($614,500). New residents and companies in the Inland Empire have ready access to the area s highly regarded 16 colleges and universities. These institutions include California Polytechnic, Pomona, Cal State University at San Bernardino, the prestigious, the multicampus Claremont Colleges, the University of Redlands, Harvey Mudd College, Keck Graduate School of Applied Life Sciences, Loma Linda University Medical School and the University of California at Riverside. The area s development has also contributed to some of the more successful retail and recreational opportunities. THE CENTRE 17

18 Riverside County Facts As of 2015, Riverside County s population was 2,361,026 people. Since 2000, it has experienced a population growth of nearly 50%. Riverside is the 4th-most populous county in California and the 11th-most populous in the United States. Riverside County Demographics 2015 Estimated Population 2,361, Projected Population 2,449, Census Population 2,189, Census Population 1,545,387 Growth % Growth % 2015 Estimated Median Age Estimated Average Age Estimated Households 715, Projected Households 756, Census Households 686, Census Households 506,220 Growth % Growth % 2014 Est. Median Household Income $78,356 Victorian Home - Riverside, CA March Air Field - Riverside, CA Mission Inn- Riverside, CA THE CENTRE 18

19 Lake Elsinore Demographics 2016 Estimated Population 105, Projected Population 113, Census Population 93, Census Population 65,481 Growth % Growth % 2016 Estimated Median Age Estimated Average Age Estimated Households 32, Projected Households 34, Census Households 28, Census Households 21,067 Growth % Growth % 2016 Est. Median Household Income $64,405 The Average Housing Value $289,401 Watersports at Lake Elsinore Skydivers in Lake Elsinore Lake Elsinore Storm Stadium THE CENTRE 19

20 City of Lake Elsinore Lake Elsinore Valley is currently the second fastest growing area in all of California - a virtual "hot spot" for retail, residential, light industrial and commercial growth. Many developers are taking root and building quality projects in our valley. During the last decade, there have been many new retail and commercial establishments built, some of which have boasted the highest opening-day sales ever in their chain. Lake Elsinore Valley provides businesses the perfect climate for growth and development in over 100 square miles of planned commercial, light industrial, residential and resort-oriented communities within the valley. With more than 1,100 acres of freeway frontage available for new commercial and industrial park development, lower housing and land costs, close proximity to skilled labor and universities, and a strategic location within the Southern California market, Lake Elsinore Valley is indeed a rare find! Excellent public service programs exist for continued infrastructure improvements, street improvement, landscape and park maintenance, ample water supplies and sewer requirements. Fire and police protection are provided by professional, fully trained staff and equipment. Commercial transportation needs are met by four major airports and easy central freeway access to Southern California s Pacific Rim ports and railroad distribution hubs, as well as the RTA for local public transportation. Job creation is encouraged by expanding local industries such as tourism, electronics, computer animation, machining, telecommunications, aero sports, wood and building products. New industries will diversify the job base as relocating companies take advantage of brine line infrastructure now under construction. The Lake Elsinore Valley is continuing its tradition of providing a quality lifestyle, leisure living, and a multitude of economic growth opportunities within our business communities. THE CENTRE 20

21 MIKE HANNA Vice President License # SHERI SHOEMAKER Senior Vice President License # MARY PIPER Senior Vice President License # No warranty or representation has been made to the accuracy of the foregoing information. Terms of sale or lease and availability are subject to change or withdrawal without notice. Lee & Associates Commercial Real Estate Services, Inc. - Riverside Hancock Avenue, Suite Murrieta, CA Corporate ID#