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California’s Smaller Markets Pick Up Slack for LA, San Francisco Q1 2018 Office Sales
Commercial Café’s California Q1 2018 Office Market Report reveals a host of intriguing trends. One of the bigger ones was that smaller markets, such as Sacramento, helped to boost the state’s numbers, even as larger ones, such as San Francisco and Los Angeles, cooled off.
Sacramento posted the highest growth in dollar volume and average prices, according to Yardi’s research. Average prices in the state’s capitol reached a five-year high. Seven major deals closed for a total of $352 million, a 45% uptick compared to the previous quarter, representing a 96% increase year-over-year.
Meanwhile, the large markets didn’t fare as well. Los Angeles was down in Q1 after a hot Q4 2017, and the Bay Area’s office sales dropped below $1 billion for the first time in two years, a steep 37% decrease year-over-year. San Francisco experienced a drop of 88% in year-over-year office sales in Q1 2018.
Los Angeles was the most active California market Yardi analyzed, wrapping up Q1 with $1.3 billion in total office sales. Bay Area office sales raked in $800 million in 13 transactions.
The situation was not dour in Orange County, where prices inched above $300-per-square-foot, notes Yardi. Though the same could not be said of San Diego, where the quarter closed with the second lowest dollar volume in five years.
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