Financial

Why aren’t more people worried about commercial real estate?

Andy Zighelboim with Colleen Edwards

Andy Zighelboim is a Senior Vice President of the Investor Services Group with Colliers International, Silicon Valley. This week, he talks to The Real Story about the commercial real estate market, where it’s been, and where it’s heading.

But first, a quick tutorial on commercial real estate by the numbers:  according to Andy, there is $1.4 trillion in debt coming due and with credit markets still frozen, no liquidity to refinance the loans. With loans that originated in 2006 – 2007, at the height of the market, coming due in three, five, seven or ten years, we will be seeing a rise in notes coming due from now until 2013, then another wave starting in 2015. The financial uncertainties created by these loans will continue to impact the economy until 2017.

According to Andy, in the Bay Area alone, approximately 1,992 commercial properties, representing 9.5 million square feet of space, with loans of $3.6 billion dollars are coming due—numbers that he considers “cataclysmic”. Yet the Bay Area remains focused on residential numbers—foreclosures and sales—instead of looking at how similar loan practices were in place for commercial properties and what that might portend for the commercial properties in the market.

Here comes the sun

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This week’s guest, Panama Bartholomy gave The Real Story some ideas about how soon Californians are going to be seeing big changes in building around the state. As soon as 2011, homebuilders will be required to offer solar panels as a standard feature or as an upgrade—and the state is starting to work on programs to make that change attractive to the homebuilding community.

When you think about it, compliance is going to change not just the way homes are built but quite literally, the way they are planned and sited—solar roofs aren’t efficient on the north side of homes.  So how are land planners going to respond? How practical is it going to be, to orient entire neighborhoods for maximum sun exposure?  Are land developers going to offset the need for their builder/clients to install solar roofs by developing solar parks or fields within the master plan for their new communities?

Also in the making—by 2020, all new homes in California will be required to meet a Zero Net Energy Standard. That means zero net energy consumption and zero carbon emissions for all new residences—quite a leap from installing solar panels by 2011.  And by 2030, all commercial buildings will be held to the same  Zero Net Energy Standard.

The exciting part of the process is that the Energy Commission is open to the public’s input.  Public meetings and webinars add to the transparency of their process.  For a list of upcoming meetings, go to: http://www.energy.ca.gov.

Photo:  Photovoltaic panels on 32 flat-roof residences in Amsterdam, courtesy of BP Solarex.

More energy technology or more energy efficiency?

More energy technology or more energy efficiency?

Here’s an interesting thought, courtesy of Panama Bartholomy of the California Energy Commission. California is now at a crossroads, and will soon be deciding whether it turns into a state committed to creating more energy through the building of more power plants or to become much more efficient at using its energy—very different directions, both politically and economically. Think of it this way: The cost of building more plants will increase the cost of energy. The opposite is also true: use less energy, and pay less. Yet, according to Panama, this is not a no-brainer, and we will be seeing some discussion about California’s energy future in our very near future.

On the personal energy front, he also talks today about the rebate structure for wind energy being revisited, to allow more people to take advantage of this alternative source for power. He also says that the state is making great strides in energy efficiency for homes and businesses, with financing mechanisms to make innovation in efficiency happen.

Beach on the bay

beach on the bay on the real story

Zinging down 880 through Oakland, you’re surrounded by traffic, concrete and skyscrapers in every direction. But, should you exit through the Webster Street Tube and motor about 5 minutes over to the west side of Alameda, you’ll find yourself in a landscape of sand, sun and palms at Robert Crown Memorial State Beach. A REAL beach!

The City of Alameda has worked hard to keep it a real beach. This 2.5-mile expansive of sandy beach (the longest on San Francisco Bay), is a favorite spot for hikers, windsurfers and kayakers. Extensive restoration since the 1980’s repaired a century of damage by development and erosion.

Once called Neptune Beach, “The Coney Island of the West”, the area was a nationally known resort with a roller coaster and swimming pools from 1879 until the park went bankrupt in 1939. Dances, swimming marathons, beauty contests, ball games and prize fights made Alameda a popular vacation destination. The sno-cone was introduced here and California’s first professional baseball game was played in its sports arena.

Today, the Whoopee roller coaster is gone and the beauty of nature again takes center stage. Sand brought in from bay dredging projects has revived the beach and dunes to the point where Alameda hosts a Sand Castle and Sculpture Contest here every summer.

A nature center at Crab Cove, a neighboring bird sanctuary and, of course, the miles of sand with views to San Francisco are well worth the visit. Some visitors have commented on the fog and intermittent eau de low tide, but—hey—this isn’t Malibu. It’s our very own beach with its distinctive appeal waiting to be explored.

Full steam ahead for energy efficiency

energy efficiency on The Real Story Blog

Under the leadership of Governor Schwarzenegger, there has been new emphasis on residential energy efficiency in our Golden State. In fact, the California Energy Commission has developed a Home Energy Rating System (HERS) for resale homes—much like an MPG sticker on a car—that educates the homebuyer on the energy costs associated with that particular home. We spoke with Panama Bartholomy of the California Energy Commission at the recent West Coast Green Conference about new legislation that will impact the energy efficiency of existing homes in the very near future.

In today’s podcast, Panama refers to AB 758 that will “either be passed or vetoed” in the next few weeks and will, for the first time in the nation, give a regulatory agency authority over the energy efficiency of existing buildings. Well . . . it passed! The governor signed it into law on October 11th. The bill paves the way for achieving greater energy savings in the state’s existing residential and nonresidential building stock.

The state’s first energy efficiency retrofit program is the Berkeley First Program, which established a model that is about to be adopted in major municipalities and counties throughout California. The unique aspect of Berkeley First that has contributed to its success is that homeowners are able to finance energy-efficiency improvements through a tax assessment rather than personal debt.

Learning to work on new green homes

Learning to work on new green homes

Panama Bartholomy is on a mission to bring California new home builders and the solar technology industry together for a greener approach to homebuilding in the state. The California Energy Commission, Panama’s employer, is entrusted with creating programs that will make including solar in the homebuilding process a standard process.

How will California’s hard-hit homebuilders be able to add a new product to the amenities list when there is no data to show that buyers are willing to pay more for solar? Since most of the builders have been selling homes for less than replacement cost during the last two years, their plans for the immediate future are focused on creating smaller, more affordable homes—and solar doesn’t look like one of the “can’t live without” amenities in their purchasing departments. Panama talks today about the challenges of educating the industry and the consumer about the short- and long-term benefits of solar, and some of the changes the trades might need to make to create an affordable solar future.