Partnership. Performance. avisonyoung.com $397 Price Per SF (Ex. Multi-Family) 5.3 % Average Cap Rate The San Francisco Bay Area investment market continued to stay active during the first three months of 2017 after a very active 2016. The Bay Area recorded nearly $5.6 billion in total sale volume during the quarter. San Francisco witnessed over $1.9 billion from 33 trades during the quarter, the highest sale volume of any region in the Bay Area. Silicon Valley was the most active region, recording 64 trades for over $1.8 billion. The office market in the Bay Area accounted for over half of the total sale volume during the quarter, over $3.0 billion in trades. The average price per square foot for office buildings during the quarter was $443, up 27% from the Q1 2016 average. A big reason for the dramatic increase was Facebook exercising their pre-agreed purchase option at their Menlo Park headquarters from RREEF during the first quarter of 2016. In 2011, Facebook signed a 10-year lease for their 1msf+ headquarters in Menlo Park with an option to buy the office complex after 5 years for $198/sf, a bargain in today’s market. San Francisco recorded the highest average price per square foot in the Bay Area for the 15th consecutive quarter with an average price per square foot of $675 during the first quarter. Blackstone recorded the largest office sale of the quarter, acquiring 211 Main Street in San Francisco’s North Financial district from CIM Commercial for $293 million or $702/sf. The sale closed a quarter after Charles Schwab renewed on a 10-year term for the entire building. The first quarter of 2017 was once again dominated by private, domestic-based investors in the Bay Area. Private investors accounted for 46% of all trades that took place during the quarter. Tech companies continued to be active acquiring office buildings during the first quarter. In San Mateo, Rakuten Marketing purchased 700-900 Concar Dr for $180M or $820/sf. Rakuten occupies roughly 60,000 sf in the fully-leased 220,000-sf building complex. Adobe exercised its option to purchase the 285,000-sf Almaden Tower office building in San Jose that they have occupied since 2003. The Bay Area multi-family market continues to stay red hot, recording over $800M in trades during the first quarter, with an average cap rate of 5.1%. Over 2,700 multi-family units were traded during the quarter, averaging $297,000 per unit. The Bay Area retail market recorded its highest quarterly sales volume on record, totaling $1.5B in trades during the first quarter of the year with an average cap rate of 4.8%. This was largely due to Regency Centers buying Equity One during the first quarter of the year. Bay Area industrial sales were slow during the first quarter, recording just under $300M in trades, down 73% from Q1 2016. Expect the investment market in the San Francisco Bay Area to stay active throughout the rest of 2017 due to strong demand as investors continue to steer away from the volatile global equity and commodity markets and invest in real estate where more stable returns are available. Investment Overview Q1 2017 / Investment Market Report San Francisco Bay Area Q1 Investment Facts 184 Total Sales $5.6B Total Sales Volume
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Partnership. Performance. avisonyoung.com
$397Price Per SF
(Ex. Multi-Family)
5.3 %Average Cap Rate
The San Francisco Bay Area investment market continued to stay active during the first three months of 2017 after a very active 2016. The Bay Area recorded nearly $5.6 billion in total sale volume during the quarter. San Francisco witnessed over $1.9 billion from 33 trades during the quarter, the highest sale volume of any region in the Bay Area. Silicon Valley was the most active region, recording 64 trades for over $1.8 billion.
The office market in the Bay Area accounted for over half of the total sale volume during the quarter, over $3.0 billion in trades. The average price per square foot for office buildings during the quarter was $443, up 27% from the Q1 2016 average. A big reason for the dramatic increase was Facebook exercising their pre-agreed purchase option at their Menlo Park headquarters from RREEF during the first quarter of 2016. In 2011, Facebook signed a 10-year lease for their 1msf+ headquarters in Menlo Park with an option to buy the office complex after 5 years for $198/sf, a bargain in today’s market. San Francisco recorded the highest average price per square foot in the Bay Area for the 15th consecutive quarter with an average price per square foot of $675 during the first quarter. Blackstone recorded the largest office sale of the quarter, acquiring 211 Main Street in San Francisco’s North Financial district from CIM Commercial for $293 million or $702/sf. The sale closed a quarter after Charles Schwab renewed on a 10-year term for the entire building.
The first quarter of 2017 was once again dominated by private, domestic-based investors in the Bay Area. Private investors accounted for 46% of all trades that took place during the quarter. Tech companies continued to be active acquiring office buildings during the first quarter. In San Mateo, Rakuten Marketing purchased 700-900 Concar Dr for $180M or $820/sf. Rakuten occupies roughly 60,000 sf in the fully-leased 220,000-sf building complex. Adobe exercised its option to purchase the 285,000-sf Almaden Tower office building in San Jose that they have occupied since 2003.
The Bay Area multi-family market continues to stay red hot, recording over $800M in trades during the first quarter, with an average cap rate of 5.1%. Over 2,700 multi-family units were traded during the quarter, averaging $297,000 per unit. The Bay Area retail market recorded its highest quarterly sales volume on record, totaling $1.5B in trades during the first quarter of the year with an average cap rate of 4.8%. This was largely due to Regency Centers buying Equity One during the first quarter of the year. Bay Area industrial sales were slow during the first quarter, recording just under $300M in trades, down 73% from Q1 2016.
Expect the investment market in the San Francisco Bay Area to stay active throughout the rest of 2017 due to strong demand as investors continue to steer away from the volatile global equity and commodity markets and invest in real estate where more stable returns are available.
Investment Overview
Q1 2017 / Investment Market Report
San Francisco Bay Area
Q1 Investment Facts
184Total Sales
$5.6BTotal Sales Volume
Partnership. Performance. avisonyoung.com
San Francisco Bay Area Q1 2017 / Quarterly Investment Market Report
Investment Snapshot
Investment activity is expected to slow down in 2017 compared to the past couple of years due to a gradual increase in interest rates throughout the year but the Bay Area continues to be very attractive location to investors in the U.S. and around the world.
Historical Total Volume by Product Type Historical Cap Rate by Product Type
Sales Volume (By Investment Sector)
Total Deals
184
Price Per SF (Exc. Multi-Family)
$397
Price Per Unit (Multi-Family)
$297,176
Cap Rate
5.3%
Total Sales Volume
$5,592,949,059
211 Main Street in San Francisco sold for ± $293 Million($702/sf ) during Q1 2017.
