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California Office Sales in Cooldown Mode in Los Angeles, San Francisco
Trophy office sales declined in some California markets in recent reports, though that downward trend does not hold across all markets. Research by Yardi shows $20.3 billion worth of California office transactions closed in 2018 that were dispersed across 333 separate deals.
While the Bay Area market experienced a slight increase in the volume transacted, other California office markets have been in decline. Office sales slumped in almost all California markets, except for the Bay Area, where the sales volume recorded a 1.8% uptick, closing 2018 at $6.7 billion.
Metro L.A. topped the Bay Area in 2017 as the state’s top performing investment market with $8.1 billion traded. In 2018, their places were reversed. The Bay Area’s 2018 sales volume hit $6.8 billion on 87 deals encompassing more than 16 million square feet, according to Yardi. Metro Los Angeles had the steepest drop in total dollar volume last year, having traded only $4.9 billion, or 39.4% less than in 2017.
The Inland Empire experienced the sharpest decline in the state – 43%, with only $364 million traded in 2018, compared to the $634 million invested in the previous year. The Orange County office market recorded a rather steady performance over the past two years. Total dollar volume amassed in the 43 transactions to close last year was $2.1 billion, which was only 4% lower than 2017 sales, reports Yardi.
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