Perspectives on Solano Real Estate
By Nathan Halverson
FAIRFIELD - A lot can happen in a year.
That's what many of Solano County's leading real estate professionals talked about as they gathered at The Clubhouse at Paradise Valley Golf Course in Fairfield Thursday morning as part of the Solano Economic Development Corporation's 2006 Real Estate Round-Up.
The keynote speakers agreed the real estate market has changed significantly from a year ago when construction companies were churning out houses and people lined up to buy them, even bidding up the prices.
Discussions centered around what to do in a real estate market where costs are increasing, demand is shrinking, and inventory is getting larger. But the tone was not pessimistic. Rather the focus centered around what was next for a county expected to have the largest population growth in the Bay Area and to experience double digit economic growth in the coming decades.
"One thing is clear, this county is growing," said Pete Beucke, vice president of sales and marketing for Lennar Homes in San Francisco. Lennar Homes is developing Mare Island.
While the county is growing economically and in population size, downward pressures such as increased costs and rising interest rates are slowing things down.
"Building costs have escalated dramatically," said Jim Randolph, a senior vice president with Cornish & Carey - the brokerage firm representing The Nut Tree Village in Vacaville.
Randolph and Beucke were keynote speakers at the event along with three others. Jim Shepherd, also with Cornish & Carey, addressed the retail market such as increasing rental costs for retail space.
"The rents are definitely on the way up, and that's a good sign," Shepherd said.
Higher rental rates encourage more commercial and retail developments by offsetting increased costs.
Brooks Pedder, a managing partner with Colliers International in Fairfield, discussed business and industrial parks in Solano County.
Joseph McNeil, who manages a real estate portfolio for CalPERS valued in the billions, spoke about real estate investments. He said rates of returns on most real estate investments have been decreasing. But he suggested refocusing investments into areas such as retirement homes which can return high yields. CalPERS, which manages the pension fund for state employees, expects a return of 20 percent on investments in retirement homes, he said.
Beucke addressed residential development in the county.
"It wasn't that long ago we had people lined up outside our sales offices waiting to buy our homes," said Beucke. "We're definitely seeing the market tighten up."
Beucke said the slow down requires real estate professionals to adjust their attitudes, but the county's real estate outlook remains positive.
"We really view Solano as healthy and growing," he said.
Nathan Halverson can be reached at 427-6934 or firstname.lastname@example.org
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