Construction is moving forward on the Summit at Calabasas, a 70,000 square foot retail center located at Lost Hills Road and the Ventura (101) Freeway, and tenants are expected to start moving-in during 2010.

Leasing agent, Cypress Retail Group, has already inked deals with Pacific Coast Greens natural foods store, Wolf Creek Restaurant

PCCP’s investment into up-grading a four-story office building, located at 12020 Chandler Blvd. in North Hollywood – northeast of the Chandler and Laurel Canyon intersection – appears to be paying off.

The company, formerly known as Pacific Coast Capital Partners, sunk millions of dollars into painting the building and parking structure, installing new bathrooms, adding windows, upgrading landscaping, and refurbishing the lobby, elevator cabs and fire life safety systems.

The 126,151 square foot office building was ready for occupancy in April 2009. It’s already 50 percent leased and seems to be finding a niche with entertainment-type companies.

To date, PCCP has inked at least two major deals for the property. At the beginning of the year, ASI entertainment signed a 10-year, $6.5 million lease for 20,916 square feet of space. At the time of the transaction, the media research firm planned on moving into the first floor space during the third quarter of 2009.

In early December, Pilgrim Films

Harvey Schwartz has a monumental task on his hands.

Last July, the owner of 20th Century Props in North Hollywood began liquidating close to 93,000 items stored in his warehouse located in an industrial area just south of Lankershim Boulevard and Sherman Way.

He made headlines last spring when he decided to close the business, considered one of the largest prop houses in the U.S., due to what he said was decreased demand from “run-away” production, industry work slowdowns, and the flailing economy.

But three auctions later, he’s still sitting on tens of thousands of pieces of furniture, lighting fixtures and myriad odd items packed floor-to-ceiling in the 108,000 square feet warehouse. The property also has approx. 80,000 square feet of outdoor space.

“The up-coming auction should go pretty well,” said Schwartz, prior to hosting the latest sale in early December. But he estimated the sale would only move another couple thousand items. “I’ve started giving items to charity, will soon invite swap meeters in to buy stuff, and will probably end up tossing a lot in the trash.”

Clearing out quirky television and movie props is just one of the challenges of shutting down a business of this scale.

Brokers at CB Richard Ellis are also facing the not so small task of selling or leasing a large industrial property – by Valley standards that is – in a tough market.

This is the second time Schwartz has folded a business. In the 1970s he owned and operated two retail stores, one on Melrose Avenue and another on Main Street in Santa Monica. But decreased local production related to the Screen Actors Guild strike in the late 1970s hit hard, he said.

The only saving grace was filming of the science-fiction classic, “Blade Runner.” The production, which debuted in 1982, ended up spurring enough sales and rentals to sustain one of the stores for a little bit longer.

In the past few years, decreased local production tied to labor problems and companies filming out of state led Schwartz to diversify. He began a party rental business that made up for some of the lost business, but then the Economic meltdown hit.

“I lost as much as I could lose and in April decided to pull the plug,” said Schwartz.

Woodland Hills-based Great American Group conducted the first auction in July, and Schwartz worked with Super Auctions on the second and third sales. The industrial property, which he does not own, was also placed back on the market in August, he said.

David Harding, Gregory Geraci, and Barbara Emmons of CB Richard Ellis’ Universal City office are marketing the property. The 108,100 square foot building, located at 11651 Hart Street, was constructed in 1971 and is situated on a 182,516 square foot lot.

The asking price is $13,836,800, or $128 per square foot. The asking lease rate is $.65 per square foot net, according to CBRE.

“Generally this is a very good industrial property for the San Fernando Valley market,” said Harding. “However, the market is softer today, so there’s not as much lease and sale demand as a whole.”

That said, competition is limited in the Valley for this size range, because the area tends to be a smaller building market, he added. A few of its features include eight dock-high positions, 19’ to 22’ clear heights, and two separate and fenced paved yards.

Another factor possibly playing in the property’s favor is that the eastern San Fernando Valley industrial market experienced a lower vacancy rate and negative net absorption in the third quarter of 2009, compared to many other Valley markets.

Colliers International reported the eastern San Fernando Valley industrial market had negative net absorption of 9,300 square feet in Q3, and a direct vacancy rate of 2.8 percent.

The property is getting activity, said Harding, adding it is well positioned for entertainment companies, because of its proximity to major studios, and would work well for manufacturing and distribution companies, among others.

Clearing out 20th Century’s movie and television props certainly won’t hurt the curb appeal, he said. But in the meanwhile, all of that stuff is having at least one positive effect.

“People are fascinated, and it has actually prolonged the length of some tours,” he said.

Schwartz said he’s committed to clearing and vacating the space as fast as possible. And, once he does, he has no interest in ever opening another prop business.

“I’m hoping somebody walks up and says, ‘I’ll buy the whole thing,’” said Schwartz, adding “Maybe after all this I’ll do some type of consulting work for the industry, or coaching.”

There was no shortage of commercial real estate news to cover in 2009, albeit most of it was about increasing vacancy rates, decreasing property values, and deals – with some exceptions – brokers would have laughed at in boom times.

But if I was to hone in on one of the most prominent themes of 2009, I would say it was hesitancy in the marketplace. People were paralyzed from action while they tried to make sense of the Economic chaos.

Investors and owner/users hoped the commercial real estate market would hit that ever-elusive bottom, which never happened. Sellers and property owners hoped conditions would get better. And both of these factors led to a lot of people sitting on the fence.

It’s a new year, however, and commercial real estate pros said it’s high time for buyers, sellers, landlords and tenants to get off the fence. And this may be more than just wishful thinking. The current financial climate actually supports the imperative.

Scott Lunine, who recently took over as managing director of Encino-based Investment Real Estate Associates (IREA), said the coming year is all about expanding his firm and seizing an historical opportunity.

Sellers didn’t have the motivation to move their properties in 08-09 because vacancy rates hadn’t hit a critical high and they were still making money, he said. But they’re more motivated to sell now because markets have not made the hoped-for turnaround.

“Most of my professional life has been spent in brokerage, so I’ve seen both sides of the equation,” said Lunine. “This is one of the most exciting times to be in the business since the late 1990s.”

He anticipates seller motivation will peak in the second and third quarters of 2010, and buyers are going to start snatching-up properties before the market hits the “official” bottom. The latter is a likely scenario because interest rates are at historic lows for qualified borrowers.

IREA has a track-record of selling deals from as low as $2 million to as high as $60 million. And a lot of the firm’s deals in the past two years were ones that other national companies expired. Lunine recently hired seven new agents and hopes to increase the firm’s total local workforce to 30 or 35 agents.

Roger Beck of Colliers International chalks up last year’s fence sitting to owner/users being scared to put money down on a piece of property when that cash could be used to fund operations. However, people are getting used to the current market environment, he said.

There’s still a lot of work to be done to spur deal-making. Sellers need to further reduce prices and brokers have to work extra hard to educate landlords and sellers about the market reality.

The “market reality” is that we’re likely to see a continued problem of high vacancy rates, lower property values, and more distressed commercial assets coming to market in the new year.

Many players who bought late in the game are under water and their loans are coming due. Michael Soto, analyst with Colliers International, believes the Valley is poised to see more distressed “trophy” properties hit the market in 2010.

“Every day is a different adventure ,” said Beck. “People held on hoping things would change. But (people’s attitudes) are shifting.”

Last year, Beck represented investors who were ready to buy, but only acquisitions that protected them from further market downturns. Now, with the current availability of SBA loans and lower interest rates, he strongly believes there’s a huge window of opportunity.

This gets to another factor that may have contributed to hesitancy in the marketplace in 2009: the perception that banks are not lending to businesses.

It’s not true. Banks never stopped making business loans, because it’s counter intuitive to their livelihood. They have only tightened lending criteria, and some have shied away from over-weighting their portfolios with risky real estate acquisition and development loans.

The short of it is lenders want to know borrowers are financially sound. If the numbers line-up, they’re happy to underwrite the deal. And given how flippantly some doled out money in the past, which contributed to the financial mess we’re in now, I think this is a positive step for everybody.

The same holds true for borrowers looking to renegotiate loan terms. Despite media hype about such practices, lenders are not in the charity business. If a business is flailing, heavily leveraged, and the borrower does not have a proven way of paying the debt, lenders will not give them a dime. Foreclosure is often the preferred course of action.

But back to the availability of credit.

The U.S. Small Business Administration (SBA) backs billions of dollars worth of loans each year. Financially sound businesses can secure 20-year fixed rate 504 loans for below market prices and with less money down than conventional loans.

“The biggest challenge is that the typical business owner doesn’t know about the program,” said Sasha Globa, senior executive VP and co-managing director of the California Statewide Certified Development Corporation.

It’s true some smaller banks have reduced their business lending, he said. But big banks such as Wells Fargo and bank of America are very actively lending. And the Obama administration is trying to extend fee reductions that recently expired for SBA loans.

“There are plenty of funds available,” said Globa, adding the best way for business owners to know if they can access the program is to get pre-qualified through a Certified Development Corporation rather than assuming they’re not eligible.

Tim Foutz, senior executive VP with NAI Capital, has a great take on what may help everybody in 2010.

He recently had a conversation with a colleague about how commercial real estate brokers are essentially self-employed and only get paid when they win.

The past year was one heck of a roller coaster ride and a lot of people had a hard time making heads or tails of the economy. Foutz said he was a sounding board for clients more often than a closer. And putting together deals is a lot more complex than it used to be.

But he has these words of advice for 2010: “I think we’re all hoping for a better year,” said Foutz. “We all have that belief of what made us successful in the past. And right now is a time to remind people of those basics.”

Staff Reporter Eric Billingsley can be reached at (818) 316-3124 or at ebillingsley@sfvbj.com.

Ash Joshi, principal of Capital Realty Solutions, Inc. in Encino, recently sold a condominium unit at the new 212,000 square foot Discovery Gateway Spectrum business Park II in Valencia.

Not a huge deal in terms of square footage, but Joshi said the sales price is what’s noteworthy.

The 3,027 square foot unit, located at 28338 Constellation Rd., sold for $450,000, or approximately $150 per square foot. Joshi said he believed the deal will “force a correction” in local commercial real estate prices.

“This sale is significant as sale activity in this market is at a virtual standstill at unrealistic prices of 20 to 30 percent above market, and a glut of inventory persists,” he said. “This price was reduced to reflect current market conditions, and the property promptly sold.”

Joshi represented seller, Christine Foley Trust, in the transaction. Tim Crissman of Crissman Commercial of Valencia represented the buyer, Comfort Cooling. The owner/user provides HVAC services, including air conditioning, heating, air purification and air filtration.

Joshi said much of the Valencia market’s inventory is priced at $200 per square foot and more. He hopes the latest transaction will encourage developers and other sellers to start budging on asking prices.

“There’s a lot of good product out there,” said Joshi, adding but the problem is that many of the owners and builders trying to get these prices are into their properties for too much money.

Discovery Gateway Spectrum Business Park II is a multi-tenant condominium business park located on Constellation Rd. in the Rye Canyon Business Park. Units range from 3,000-6,000 square feet.

The Mosaic parcel in Sherman Oaks, a 75,222 square foot, fully entitled mixed use development site located at 14121-14153 Ventura Blvd., recently was sold.

BW Brody Affiliated picked up the property in an REO sale from bank of America for $6.3 million, or $83.75 per square foot. Kevin Green, Greg Harris, and Joseph Grabiec of The Harris Group of Marcus

Last spring, developers of two new luxury condominium projects in the greater San Fernando area significantly reduced prices to boost sales. Six months later, it appears their marketing efforts are paying off.

The 100 unit Excelsior, located at the mixed-use Americana at Brand in Glendale, debuted in July/August of 2008. But only nine of the units had sold by April. So Caruso Affiliated, developer of Americana at Brand, dropped prices.

“You have to meet the market, and we had the ability to do that,” said Rick Caruso, CEO of Caruso Affiliated, at the time.

The condos were originally priced from the low $700,000s to $2.4 million, depending on size and floor plan. After the price cut entry-level units were selling in the mid $400,000 range, and all floor plans were marked down by 30 to 40 percent.

Caruso has sold an average of six units per month since the price cut. There’s only one remaining two-level townhome, and many of the floor plans have sold out. The developer has 55 units under contract and closed on two escrows. The first residents moved in during December.

“It has kind of been a snowball effect,” said Paul Kurzawa, executive vice president of operations for Caruso Affiliated. “And we’re getting even more interest from buyers who know that when they purchase they can now move in right away.”

The condos range in size from 1,320 square feet to 2,632 square feet and include hardwood and travertine flooring, designer bathrooms, gourmet kitchens and luxury amenities like five-star concierge services All have two bedrooms and at least two bathrooms.

Another positive for Caruso is that Americana at Brand recently won the Gold Award in the International Council of Shopping Centers (ICSC) 2009 United States Design and Development Award Competition.

Three of Caruso’s other developments have also won ICSC awards, including The Grove, The Promenade at Westlake Village and The Commons at Calabasas.

Champion Real Estate Group, developer of The Burbank Collection mixed use facility located in downtown Burbank, is the other company that significantly reduced prices back in April.

Developers dropped condo prices by an average of 40 percent in order to sell the smallest units in the low $300,000s and larger ones for $500,000 and more. The Burbank Collection includes lofts, one, two and three bedroom units, and penthouses.

“The decision has played out well,” said Robert Champion, president of Champion Real Estate Company, adding the company has sold 65 of the 100 units at an average rate of five per month.

Champion said, prior to the Economic meltdown, about 50 percent of the units had been pre-sold. But by the end of 2008, appraisals were coming in lower than the agreed upon sales price and mortgages were falling through.

The company approached its lender, which had originally approved the sales prices, and requested to adjust prices to meet the market. The lender agreed, and Champion has marketed the properties primarily through direct mail, e-blasts and print advertising.

“We haven’t done any events to market the property, because in this market events don’t do anything…prices do,” said Champion.

Our list of the largest commercial real estate brokerages in the greater San Fernando Valley area will run on April 12. And we’re asking for help from the commercial real estate community to make sure this year’s ranking is the best and most accurate reflection of our local industry.

You may recall that last year’s list was an alphabetical directory, versus a ranked list. And we left a couple big players off. The move was controversial because many brokers use these lists for marketing purposes. And brokers were already feeling the pinch from the Economic meltdown.

Here’s what happened last year and why we’re asking for your help and cooperation.

We consulted with local firms to determine the list criteria. Then our researcher, Brian DeWolf, sent out surveys and followed-up with firms. He asked for the value of deals, number of local brokers, services offered, number of offices, and top local executive.

Many firms responded promptly. But a number of the big players did not provide information by deadline. We were also unable to resolve questions about whether some data only represented deals done in the greater San Fernando Valley area.

As business journalists we’re always trying to produce content that’s accurate and fair. Publishing a ranked list without a few of the biggest brokerage firms did not seem like an accurate reflection of our local industry. We left the unresponsive firms off because we didn’t have any information for them.

Back to this year’s issue

Brian DeWolf sent out surveys to all of the commercial brokerage firms in the Valley. If you have not received one, please contact him ASAP at 818-316-3130. The deadline for submitting information is April 2, and this is not a flexible deadline. Once the list is compiled, we’re also considering asking principals at five of the largest firms to provide some peer review.

I know the past year has been a rough one for many brokers. But this could make for one of the most interesting ranked lists to date.

DeGrinis Double Deal

Colliers International recently completed a $1.5 million sublease of 63,136 square feet of industrial space, located at 15955 Strathern St. in Van Nuys. The new tenant is Fidelity National Title Insurance Company, and Colliers represented La Brea Bakery in the deal.

Following the sublease, Colliers negotiated a five-year lease extension for La Brea Bakery for the company’s 66,333-square-foot space located at 15963 Strathern St.

Both properties are part of a larger 129,469-square-foot site owned by Prudential. The site was fully leased, with 4.5 years remaining, to La Brea Bakery for the manufacturing and distribution of its baked goods.

“La Brea Bakery was only utilizing half of the space for its operations and was looking to maximize cost efficiency, said John DeGrinis of Colliers. “We were initially hired to sublease the 63,000-square-feet of underutilized space, but after finding a great credit tenant within a short time-frame, our client decided it would be best to structure a direct lease between the landlord and Fidelity.”

DeGrinis worked on the transaction with Patrick DuRoss and Jeff Abraham of Colliers’ Encino office.

“La Brea Bakery also sought an extension to their existing lease of 66,333 square feet, so we were called on to negotiate the terms of the extension with the landlord,” said DuRoss. “In doing so, we extended their lease an additional five years. The end result of the two transactions was a savings of hundreds of thousands of dollars annually on our client’s behalf and mitigated risk associated with a sublease by structuring a direct lease with the landlord.”

Hans Miller and Kathryn Snyder of Orion Realty Group, and Cushman and Wakefield represented Fidelity National Title Insurance Company. The landlord was represented in-house in both the direct lease with Fidelity and the 66,333-square-foot lease extension with La Brea Bakery.

Industrial

Bob Hoyer of Delphi Business Properties represented the seller of a 21,202 square foot industrial space located at 9007 Lankershin. The building is located on approx. 36,000 square feet of land. Stone-Miller represented the buyer, Rescue Mission Alliance. The property sold for $1.65 million, or approx. $77.50 per square foot, according to Hoyer.

Tim Foutz of NAI Capital’s Encino office and Rick Hollman of The Hollman Company represented Newman-Nordhoff Industrial, LLC in the sale of an 11,268 square foot industrial building in Northridge Business Center. Bulls Investments, LLC purchased the property, located at 19843 Nordhoff Street in Northridge. The transaction value was not disclosed. The buyer was represented by TOLD Partners, Inc.

Home sales in the San Fernando Valley are indeed up from this time last year, said Todd Jones of Rodeo Realty. But agents, the ones who’ve stuck around at least, are working three times as hard for a third of the money to clean up the flood of distressed properties on the market, he said.

“You have to work hard and you have to work smart,” said Jones, who represents buyers of residential real estate owned (REO), short sale, and foreclosed properties. “This market is not for the faint of heart.”

Combined single family and condo closed escrows in the San Fernando Valley were 1,259 in August, according to the latest data from Southland Regional Association of Realtors, up from 1,181 a year ago, but down from 1,322 in July. The majority of closed escrows occurred in the $200,000 to $450,000 price range.

While there’s some up-tick in traditional sales and sales of higher priced homes, foreclosures, short sales, and REOs continue to drive the numbers, say industry experts. And it takes a lot of know-how and patience to close these deals.

“Agents doing well right now are the ones who understand the system,” said Jim Link, CEO of Southland Regional Association of Realtors.

On the buyer side, 30-40 percent of Jones’ clients are looking to scoop up one of these distressed properties. They often fall into the non-investor category and are families trying to break into a formerly inaccessible market.

“Challenging” is an understatement for what it takes for the average buyer to close one of these sales, he said.

Buyers who have 20 percent down and proof of funds are consistently getting beat out in bidding wars with cash-flush investors. FHA loans rarely fly. Prices are often far from a steal. And the condition of some REO properties is so bad that you walk in and quickly walk out because of the stench.

The words “Not an REO and not a short sale” are quickly becoming a selling point for many homes in the Valley, said Jones.

About 75 percent of homes on the market in the $400,000 and less category are considered distressed assets, said Jones. And working with REO agents is far from a warm and fuzzy experience.

Institutions these agents represent are making cut and dry business decisions versus taking a people oriented approach. “Time (referring to buyers being quick to the punch on bidding) is your biggest asset,” said Jones. “But it sure takes the joy out of buying a home.”

On the other side of the equation are agents who specialize in listing distressed properties. They have the un-enviable job of representing anxious corporate lenders trying to minimize their losses as much as possible.

Winnie Davis of Coldwell Banker Quality Properties specializes in listing REO properties in the San Fernando Valley. Her company is the agent, and eyes and ears, for lender/sellers such as bank of America and Freddie Mac.

“This job is not for everyone,” said Davis, adding working for lenders requires technical expertise and going through an extensive application and interview process. “I have the passion to do it, but it’s very challenging.”

An REO listing company must set aside an out-of-pocket budget to maintain the distressed properties. Some REO homes are in good condition while others are stripped of air conditioning units, light fixtures and other easy-to-grab items. Clients also require quick turnaround times.

Receiving up to 50 offers on a property is not uncommon for homes in the $350,000 and less category, she said. And cash transactions are the most likely to go through.

Davis works 12-16 hours per day and has a team of professionals to make the sales happen. A representative of the company also goes to court on behalf of clients in cases of unlawful detainers.

Her company receives a traditional commission on sales a week to 10 days after closing. But all out-of-pocket expenses for repairs and other property maintenance must get approved in advance and are not reimbursed for up to 90 days.

Davis said market data right now is incredibly confusing, because it shows an increase in sales and home values. However, she does not believe the residential market has hit bottom because more foreclosed properties are poised to come on the market.

But challenges, out-of-pocket expenses, and long work days aside, Davis said she’s glad there are signs of recovery and happy to play a part in cleaning up the residential real estate mess. “I’ve been in business a long time, and I like the challenge. I enjoy helping bring things to a close.”

Zaya Younan is convinced many office real estate markets in the U.S. have hit bottom. And he’s wasting no time shifting Woodland Hills-based Younan Properties back into acquisition mode, which may involve tapping public markets.

“There’s evidence the recession is leveling and deterioration slowing down,” said Younan. “The economy is still weak and fragile. But now it’s like a patient in a hospital being able to move around again. And I expect positive trends in office.”

Younan said the company has spent the past two years strengthening its infrastructure. It increased its head count by 10 percent, including hiring many former Arden Realty executives. Most recently he brought on Robert Peddicord, Arden’s former COO.

The company is currently studying market opportunities in Dallas, Houston, Chicago, San Fernando Valley, West Los Angeles, San Francisco, and Seattle. And Younan anticipates announcing a significant pipeline of acquisitions in the third quarter of 2010.

“We have strengthened our infrastructure to prepare us for the next stage of growth, which we believe is a once in a lifetime opportunity,” said Younan. “It’s a good market for companies that are well capitalized to acquire assets.”

Younan Properties, which he founded in 2002, is a privately held real estate investment and asset management company that acquires and manages Class A office properties in top office markets nationwide.

Its portfolio includes more than 11 million square feet of space valued at more than a billion dollars. And the company employs 150.

From 2002 to 2006, Younan focused largely on acquiring and managing assets in Southern California, including the San Fernando Valley. But the market heated up and cap rates compressed, so the company sold its local assets and focused on markets such as Texas.

Younan Properties now has office buildings in Dallas, Houston, Chicago, Phoenix and the Valley. Two prominent properties in Dallas are the 50-story Thanksgiving Tower and 34-story KPMG Center.

“Texas is a very powerful state, and more importantly it’s located in the center of the country where companies can ship product,” said Younan, adding in a short period of time, the company became one of the largest office owners in Dallas and beyond.

Focusing on Texas and elsewhere allowed it to continue growing while the bottom fell out of California’s commercial real estate market, he said. But California’s strained commercial real estate market is precisely why the company is back to acquiring locally.

In the past two years it slowed acquisition activity nationally. But two deals were done right here in the Valley. One was the WarnerView Corporate Center located at 5959 Topanga Canyon Blvd. in Woodland Hills.

The Valley is not a big office market for the types of properties the company typically acquires – Class A office with 100,000 square feet or more, he said. But there are a few assets the company is interested in, primarily in Encino and Woodland Hills.

“We feel the Valley, Southern California and parts of Northern California were severely impacted and the industry has bottomed,” said Younan. Many investors are waiting for a fire sale to happen, he added, but frankly, the latter is not likely.

If current macro-Economic indicators continue in a positive direction, Younan predicts a significant shift in demand for office and retail in Q2 2010.

Historically, Younan funded growth from internal sources and a small percentage of outside investments. And loose credit markets made it possible to leverage that money. But that strategy is no longer viable, he said, given today’s tight credit markets.

So the company is pursuing a lower cost source of capital for expansion: public market financing, he said. All options are on the table such as doing an initial public offering, becoming a real estate investment trust (REIT), merger and/or acquisition, and others, he said.

Younan is convinced the company is well positioned for such a move, because of all of the work it has done beefing up its executive team and infrastructure, acquiring and managing assets nationally, and showing a track record of results.

Some of the former Arden Realty executives now working for Younan include: Robert Peddicord, chief operating officer; Andres Gavinet, chief financial officer; and Terry Smolich, VP of Human Resources.

At one point, Arden was a publicly-traded REIT and one of the largest office owners and operators in Southern California. General Electric acquired the company in 2006.

“In order to qualify for public financing, you need to be a great operator,” said Younan. “We’re in some of the top 10 office markets, a national company, and we can gauge the best time to invest in certain markets.”

The Ryland Group, Inc. has declared a first-quarter dividend of three cents per share, payable April 30 to common stock shareholders of record as of April 15.

Headquartered in Calabasas, Ryland is one of the nation’s largest homebuilders and a mortgage-finance company.

A couple months back I wrote about how real estate pros in the greater San Fernando Valley believe 2010 is the year that all of the supposed “money sitting on the sidelines” will start flowing back into the market.

Brokers and other professionals predicted investors, potential investors and owner-users will tire of waiting for the market to hit bottom and start acquiring commercial properties sooner rather than later.

Granted, we’re only a couple months into 2010 and a lot can, and most likely will, change over the next 10 months. But I’m hearing grumblings that the predicted end to fence sitting hasn’t quite hit yet. Some properties are only getting activity once they’ve hit the market as an REO.

And judging by some of the other deals I’ve been tracking, the grumblings seem to be spot on. Significant industrial and office sale and lease transactions in the Valley are few and far between. A lot of the sales action, thus far, seems to be in the multi-family sector.

So in an effort to at least keep the smaller deals coming, and give a dose of inspiration to would-be investors and owner/users still sitting on the sidelines, I recently spoke with Grant Cardone, a real estate investor, sales expert, author and motivational speaker of sorts.

He said right now, not two or four months from now, is the time for small guys to jump in. It’s a critical window where a well-placed investment can turn into a fortune in the future.

But, small time investors and owner/users need to toss out the old “get rich quick” mentality.

“It’s a moment for the guys who’ve always wanted to be in real estate to go to family and friends and do it,” said Cardone, adding there’s very little new construction going on right now and there will be a shortage of certain types of commercial properties in the future.

Multi-family is a great place for the small guy to start, because everybody needs a place to live. And with home foreclosure rates still being in the scary zone, demand for rentals should continue to rise.

Cardone makes the point that many people have bought into the myth that buying a home, the one that you live in, is an investment. “Single family has never been an investment,” he said. “It’s a myth perpetuated on the middle class.”

The point is to put your money into something that makes you money.

It’s probably best for new real estate investors to skip the REO sales. The properties are often problematic and the newbie is going to be competing with a lot of other investors who can easily outbid them.

Cardone recommends singling out a property with a great location and cash flow and proactively approaching the current owner and letting them know you are a serious buyer.

If you can only raise a small amount of cash, leverage it and start by investing in a four-plex.

After getting the hang of managing that property and making a profit, you can move onto larger properties. The more units you own, the less vacancies will be a major blow to your profit.

“This is not an overnight deal and about flipping,” said Cardone. “It’s about hard work, picking the right spots, focusing and duplicating. Start as big as you can and hire a broker.”

Small time investors can expect positive cash flow in the first month, but should expect to spend three to five years with a property, he added. The real estate bubble was caused by a lot of people going in for a quick fix, and some got their heads handed to them.

“Real estate was not the problem,” said Cardone, “it was people’s motivation.”

Another opportunity is purchasing office space in the 4,000 to 5,000 category, because bigger investors often overlook these properties. With many people losing jobs at larger companies, there’s going to be a push in the future for people running their own small businesses, said Cardone.

However, with credit markets still tight and many property owners holding on as long as they can, all of Cardone’s statements should not lead small time investors to think buying right now is easy.

“Anybody looking to buy needs to fine tune their sales skills,” he said. “Go out and talk to the banks and sellers.” And do your homework.

NoHo Multi-Family Deals

A 44-unit apartment community called Simpson Avenue Apartments recently sold for $5.8 million or $131,818 per unit, according to CoStar. The 60,750 square foot complex, located at 7526 Simpson Ave. in North Hollywood was 80.4 percent improved and sits on a 28,009 square foot lot.

Melinda Russell of Hendricks & Partners represented the buyer, 8353 Cedros Partners, and seller, 7526 Simpson Avenue Apartments. CBRE Capital Markets Inc. provided $4.32 million in financing. The complex was built in 1990.

J&B Asset Management purchased the Terraces at Toluca for $6.41 million, or approx. $200,312 per unit, in a 1031 exchange, according to CoStar Group. The two-story, 32-unit, 37,446 square foot apartment complex is located at 10834 Blix St. in North Hollywood. Latitude Management Real Estate Investors was the seller. Dean Zander of Hendricks & Partners was the only broker involved in the transaction.