NAPA VALLEY INSIDER NEWSFEED
JANUARY 2017 NEWS IN REVIEW
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In looking back at 2017, I feel like many of you Im sure, immeasurable sadness and empathy for so many people and for the country. The incessant flow of natural disasters throughout the country felt like we were taken back to biblical times. It was a devastating year for California which has continued into 2018 in Southern California. Some of the States most beautiful, expensive and coveted areas have been ravaged beyond comprehension.
While there is not a lot to celebrate as so many people suffer unimaginable hardship, I can report that it was yet another strong year for luxury sales in wine country real estate. The number of Three Million Dollar plus residential sales went up from 38 to 53 in Napa County, a 39.5% increase over 2016. Sonoma County luxury sales went down from 40 to 34 a 15% decrease.
I usually give you the statistics for each town, but after studying the data I believe its misleading for two reasons. Firstly, there is an ever increasing number of confidential off market sales, and secondly, towns like Rutherford, Oakville and Angwin have so few, and sometimes no sales over one million dollars, so the percentages are skewed given that all the data is pulled from the multiple listing service. Suffice to say that the luxury market was on somewhat of a tear in 2017. For example, the highest priced residential sale with no more than 4 acres of vineyard in the history of Napa Valley was Fifteen Million dollars. That sale was in 2014. In 2017 we had another Fifteen Million dollar sale and a Seventeen Million dollar off market sale in North Napa. Residential sales over Eleven Million dollars have always been few and far between, so 2017 was a big year for luxury sales with 3 sales over Eleven Million dollars. Calistoga also broke its record of the highest residential sale of $4,425,000 with Four Seasons Hotel Calistoga Resort selling fourteen of its twenty luxurious condos for between $4,250,000 and $5,770,000. And it seems that 2018 is already off to a good start in the luxury market with two high end sales this January one over Ten Million dollars and the other over Twelve Million dollars.
Winery and vineyard sales slowed a little in 2017. There were a jaw dropping number of applications for hotel developments and hotel expansion in the first half of 2017. For a recap of the prolific list you can click here. The highly anticipated Archer Hotel in downtown Napa opened. You will note in an article below that Napa Valley hotel revenue grew by 7.8% in 2017 despite the hotel closures due to the fires. We lost seven hundred and thirty million dollars in assessed real estate values due to the October wildfires which represents a three million dollar hit to the general fund.
The Grape Report comes out in February each year to reflect the numbers for the previous year so the Napa Valley averages for 2017 are yet to be announced. I will include those numbers in my February Newsletter.
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| WINERY AND VINEYARD SALES |
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Merger and acquisition activity in the wine industry continued at a moderately strong pace by comparison to 2016. The most notable sales were Napa Valleys Shrader Cellars to Constellation Brands a 5,000 case luxury brand, best known for its $200 and up Cabernet Sauvignon sourced from Andy Beckstoffers Tokalon vineyard; Ovid Napa Valley to Silver Oak Cellars another luxury brand, selling at $300 a bottle and above; and Napas Stagecoach Vineyard to E&J Gallo an ultra-premium 600 acre vineyard stretching from Soda Canyon to Pritchard Hill.
While Gallo is honoring the vineyard contracts to ninety high end wineries, it will ultimately be using all the grapes for their premium Napa Valley brands and brands they are yet to acquire.
Chinese investment in wineries has slowed due to the Chinese Governments restrictions on US dollars leaving the country. In my experience, their investment has also slowed down because Asian buyers typically require the management and wine making teams to stay in place. The challenge with this is that most smaller to mid-size wineries are run by or overseen by their owners who do not want to stay on after the sale. So I will take this opportunity to let all my Asian followers know that I have clients who have a cult brand and are willing to sell fifty per cent of their winery, caves, significant hillside vineyard, beautiful home, guest house, trademark and inventory, and they want to keep their team in place and continue to manage the property and the business. This Offering is obviously highly confidential, but if this is something you are interested in, please call me. Meanwhile, check out my good friend and colleague, George Coopes article on 2017 Merger & Acquisitions below.
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| Archer Hotel Opens in Downtown Napa |
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| The highly anticipated Archer Napa hotel opened in downtown Napa at the end of November. The Archer Napa, located at 1230 First Street, is a luxury boutique hotel offering 183 rooms. At five stories tall, it is the highest building in downtown Napa and the anchor of the First Street Napa project being developed by Todd Zapolski. The hotel includes a Charlie Palmer Steak restaurant, a rooftop pool, fitness studio and spa, along with other amenities. Tenants include Compline restaurant, wine bar and merchant, Eikos Sushi, Brown Estate, Napa Valley Jewelers and Overland Sheepskin Company. Lush, State & First by Maris Collective and Napastak will be opening this Spring. This Friday, January 26, they will open a Pop Up underneath the hotel as a sneak peek of the State & First store. The store will be open for four to six weeks and have many designer brands that cannot be found anywhere else in the valley. Once complete, First Street Napa should include forty new merchants. Zapolski predicts that First Street Napa will become the premier shopping and dining destination in the region - elevating Napa from "first-class to world-class." |
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| Demand for Napa Valley Hotels Continues to Rise |
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According to economist Robert Eyler, Ph.D. Professor of Economics at Sonoma State University, who spoke at a Morgan Stanley wealth management event last week, there should be no lingering damage to Napa Valley's wine industry and tourism as a result of the October fires. He said: This is just a very tragic hiccup in the five-to-ten-year future of where the wine industry was already headed and it will basically be washed away by next years harvest. Insurance companies, along with state and federal funds, will provide sufficient funding to rebuild in Napa County. While some wineries - particularly those on Atlas Peak and Mount Veeder suffered severe fire, Napa Valley's wine industry as a whole will not lose revenue. Most of Napa Valley was not damaged by the fires, and tourism marketing campaigns are working on conveying that message to visitors. One unknown factor is the possibility of smoke-tainted wine, and how it could impact sales if consumers believe the wine tastes smoky. I know firsthand that many winemakers did not buy grapes that they were in contract to buy if they were harvested during or after the fires. They told me the risk was too high, as smoke taint may not present until well into fermentation. |
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| October wildfires destroyed $730 million in Napa County Assessed Property Value |
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The latest numbers are that more than 1,200 structures in Napa County were either destroyed or damaged by the October wildfires, taking Seven Hundred and Thirty million dollars in assessed valueabout two percentoff the property tax rolls. This equals a Three million dollar hit to Napa County's Two Hundred and Five million dollar general fund. Other fire-related tax losses, such as hotel and sales taxes, have yet to be tallied. Future budget decisions for the county will be somewhat impacted by the wildfires, although we do not yet know which services may take a hit. The county provides a range of services from rural public safety to libraries, criminal justice, health and human services and rural road upkeep.
The latest totals show the fires in Napa County destroyed 611 homes and damaged 94 homes. The fires destroyed 22 businesses and damaged 14. Additionally, 418 outbuildings were destroyed and 62 were damaged. Of the 705 homes destroyed or damaged, county officials estimate that 279 owners were fully insured, 214 were partly insured and 38 had no insurance. Out of 169 renters, 80 had no insurance.
Although it's too soon to know the fire's full impact on property values, undamaged homes in neighborhoods with significant damage could potentially lose value.
If you take a drive along Franz Valley Road and Mountain Home Ranch Road in Calistoga, and up Atlas Peak Road and Soda Canyon Road in Napa, and Oakville Grade, you will see why it will take years for the hillsides to recover from the damage.
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| Launch of Gateway Magazine |
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In early 2017, Bill Bullock, then CEO and President of Decker Bullock Sothebys International Realty, realized his dream of changing our brokerage firms name to Golden Gate Sothebys International Realty and circling the Golden Gate Bridge. Some twelve months later, GGSIR has 425 agents in twenty offices covering the entire Bay Area from Silicon Valley to the East Bay and Marin, and then of course they have me holding fort up here in Napa Valley. Our sales increased from two billion dollars to three and half billion dollars.
Another major milestone for San Francisco Bay Areas premier real estate brokerage was the launch of their proprietary GATEWAY Magazine last October. GATEWAY brings the brokerage firms expertise center stage through rich, original content, exclusive interviews profiling leaders in the field of architecture, design, interiors, art, and features global lifestyle content, along with some of the most exquisite properties in the Sothebys International Realty network.
GATEWAY is published three times a year and has a print run of 60,000 copies per issue, with 57,500 mailed directly to high-net-worth households in the Bay Area. Thanks to Kevin Daniel Dwyer, Editor-in-Chief of GATEWAY Magazine and Creative Director of GGSIR, our firm has created a luxury item in itself, to be enjoyed by the Bay Areas most affluent, discerning audience. I hope you enjoy our latest publication released this week. Im thrilled to have Kevins article on me follow on from my favorite architect Howard Backen. You can click here to view GATEWAY Magazines media kit. |
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| In closing I wanted to share my 2018 New Year card that I sent out to family, friends and loved ones. I commissioned my Australian calligraphy teacher to produce this beautiful piece for me back in the 80s. To this day, her framed, large scale original artwork adorns my bedroom wall and is the first thing I see when I awake each morning. I wanted to share it with all of you as a reminder for us all to keep peace with our souls and others during these challenging fortunes of time. |
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 3145 Hwy 128 | Calistoga Private Calistoga Paradise This sprawling, valley floor compound offers resort-scale living, serene privacy and verdant views of surrounding vines and Calistoga's dramatic hillsides. Meticulously built in 2008, the Mediterranean-style residence evokes. more... |
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 1285 Las Posadas Road | Angwin Step back in time and into serene relaxation at this private, gated wine country estate in the Napa Valley. Perched on a level hilltop shaded by manicured Pine and Redwoods, the historic 40 acre compound has spectacular panoramic views of the valley. more... |
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Latife Hayson
707.738.4820
CalBRE# 01341252
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