Download SF Bay Area Investment Report (Q1 2017)

Q1 2017 / Investment Market Report
San Francisco Bay Area
Q1 Investment Facts
184
Total Sales
$5.6B
Total Sales Volume
$397
Price Per SF
(Ex. Multi-Family)
5.3 %
Average Cap Rate
Partnership. Performance. Investment Overview
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.
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.
Total Deals
Price Per SF
(Exc. Multi-Family)
Price Per Unit
(Multi-Family)
Total Sales Volume
Cap Rate
184
$397
$297,176
$5,592,949,059
5.3%
Sales Volume
(By Investment Sector)
211 Main Street in San
Francisco sold for ± $293
Million($702/sf ) during Q1
2017.
7%
7%
13%
13%
37%
26%
37%
26%
17%
17%
Institutional
Public
Institutional
Public
Private
Private
$6.0
8.0%
8.0%
$5.0
$5.0
7.0%
7.0%
$4.0
$4.0
6.0%
6.0%
$3.0
5.0%
5.0%
$2.0
$2.0
4.0%
4.0%
$1.0
$1.0
3.0%
3.0%
$0.0
$0.0
$3.0
2014
2014
Office
2015
2015
Office
Industrial Industrial
Retail
Partnership. Performance. 2016
2016
Retail
Mul�-Family
Mul�-Family
2017
Foreign
Equity Fund
Equity Fund
User/Other
User/Other
Historical Cap Rate by Product Type
$6.0
Billions
Billions
Historical Total Volume by Product Type
Foreign
2017
2.0%
2.0%
2014
2014
2015
Office
2015
Office
Industrial
Industrial
Retail
2016
2016
Retail
Mul�-Family
Mul�-Family
2017
2017
avisonyoung.com
San Francisco Bay Area
Q1 2017 / Quarterly Investment Market Report
Investment Market By The Numbers
PRICE/SF
CAP RATE
14
8
16
3
29
70
13
3
1
2
12
31
10
2
7
7
12
38
37
13
24
12
53
139
$258,302,500
$75,474,000
$1,305,347,155
$219,012,500
$1,153,154,271
$3,011,290,426
$79,929,000
$27,219,500
$13,648,416
$5,675,000
$167,777,000
$294,248,916
$224,022,687
$145,762,822
$540,642,820
$500,231,292
$65,756,500
$1,476,416,121
$562,254,187
$248,456,322
$1,859,638,391
$724,918,792
$1,386,687,771
$4,781,955,463
1,493,060
444,578
1,933,124
351,066
2,575,976
6,797,804
531,269
379,770
30,766
16,460
1,096,911
2,055,176
663,171
729,910
511,857
1,078,407
201,086
3,184,431
2,687,500
1,554,258
2,475,747
1,445,933
3,873,973
12,037,411
$173
$170
$675
$624
$448
$443
$150
$72
$444
$345
$153
$143
$338
$200
$1,056
$464
$327
$464
$209
$160
$751
$501
$358
$397
7.4%
7.2%
4.8%
4.2%
6.1%
5.5%
6.2%
7.3%
6.2%
6.9%
5.4%
5.9%
4.7%
5.8%
3.2%
6.2%
5.5%
4.8%
6.2%
5.8%
4.3%
5.6%
6.0%
5.3%
SALES
DOLLAR VOLUME
TOTAL UNITS
PRICE/UNIT
CAP RATE
16
6
9
3
11
45
$136,681,000
$122,157,500
$70,340,734
$33,705,000
$448,109,363
$810,993,596
721
391
152
78
1,387
2,729
$189,571
$312,423
$462,768
$432,115
$323,078
$297,176
5.6%
4.5%
4.3%
4.5%
5.4%
5.1%
East Bay
North Bay
San Francisco
San Mateo County
Silicon Valley
Bay Area Multi-Family
DOLLAR VOLUME TOTAL SQUARE FEET
*Sales over $2.5 million
Price/SF
Historical Price Per SF/Unit
$400
$400,000
$350
$350,000
$300
$300,000
$250
$250,000
$200
$200,000
$150
$150,000
Price/Unit
SALES
East Bay
North Bay
San Francisco
San Mateo County
Silicon Valley
Bay Area Office/Flex
East Bay
North Bay
San Francisco
San Mateo County
Silicon Valley
Bay Area Industrial
East Bay
North Bay
San Francisco
San Mateo County
Silicon Valley
Bay Area Retail
East Bay
North Bay
San Francisco
San Mateo County
Silicon Valley
Bay Area Total (Excluding Multi-Family)
$100,000
$100
2010
2011
2012
2013
Price/SF (Excluding Multi-Family)
Partnership. Performance. 2014
2015
2016
2017
Price/Unit (Multi-Family)
avisonyoung.com
San Francisco Bay Area
Q1 2017 / Quarterly Investment Market Report
Top Office/Flex Sales
Property Name
211 Main St
410-430 N Mary Ave
100 Pine St
150 Spear St
700-900 Concar Dr
City
San Francisco
Sunnyvale
San Francisco
San Francisco
San Mateo
Market
San Francisco
Silicon Valley
San Francisco
San Francisco
San Mateo County
Sq.Ft.
417,266
350,000
402,534
264,492
218,985
Sale Price
$292,881,810
$290,700,000
$287,500,000
$185,000,000
$179,500,000
Price/SF
$702
$831
$714
$699
$820
Buyer
Blackstone
Tristar Capital
Rockpoint Group
Walnut Hill Group
Rakuten Marketing
City
San Jose
Newark
Fremont
Fairfield
Livermore
Market
Silicon Valley
East Bay
Silicon Valley
North Bay
East Bay
Sq.Ft.
354,000
142,188
161,200
212,802
86,700
Sale Price
$36,200,000
$34,875,000
$28,200,000
$17,500,000
$15,500,000
Price/SF
$102
$245
$175
$82
$179
Buyer
Vertical Ventures LLC
Moulton Company
LBA Realty
Susan Lowenberg Rev. Trust
Dedeaux Properties
City
Daly City
San Francisco
San Francisco
San Rafael
Concord
Market
San Mateo County
San Francisco
San Francisco
North Bay
East Bay
Sq.Ft.
850,000
226,699
263,640
721,000
253,000
Sale Price
$392,204,963
$265,067,820
$250,000,000
$141,932,822
$83,934,811
Price/SF
$461
$1,169
$948
$197
$332
Buyer
Regency Centers
Regency Centers
Morgan Stanley
Merlone Geier Partners
Regency Centers
Units
409
274
286
226
189
Sale Price
$132,454,652
$88,734,902
$83,500,000
$73,190,101
$71,620,100
Price/Unit
$323,850
$323,850
$291,958
$323,850
$378,942
Top Industrial Sales
Property Name
5215-5225 Hellyer Ave
39888 Eureka Dr
44901 Industrial Dr
2012 Courage Rd
7600 Patterson Pass Rd
Top Retail Sales
Property Name
Serramonte Shopping Center*
Potrero Center*
120 Stockton St
Northgate Mall
Willows Shopping Center*
Top Multi-Family Sales
Property Name
Santa Palmia Apts*
Palma Sorrento Apts*
Verdant at Green Valley
Villa Veneto*
Village of Marineo*
City
San Jose
San Jose
Fairfield
San Jose
San Jose
Market
Silicon Valley
Silicon Valley
North Bay
Silicon Valley
Silicon Valley
Buyer
Essex Property Trust
Essex Property Trust
Abacus Capital Group
Essex Property Trust
Essex Property Trust
*Allocated
AY Investment Team
Bay Area Capital Markets Group
Property Management / Lease Administration
Laef Barnes, Vice President
415.349.3391
Tom Greenfield, CPM® LEED®, Property Manager
510.534.4700
Mac Carlsen, Financial Analyst
415.349.3390
Bryce McEfee, LEED® AP, Property Manager
916.426.3584
Nadav Kariv, Senior Associate
415.349.3392
Tom McEfee, CPM®, SVP, Management Services
916.426.3570
Kevin Klink, Vice President
415.349.3393
Lloyd Bakan, Principal
650.425.6412
Project / Construction Management
Jon Geary, Associate
650.425.6415
David Gonzales, Managing Director / Principal
415.322.5065
Todd Campbell, Vice President, Research
650.425.6412
Shannon Dupler, Manager, Financial Reporting
415.349.3399
Robert Yeagle, Market Analyst
415.322.5056
Clare Friel, Project Manager
415.349.3406
Nicole de la Rosa, Assistant Project Manager
510.254.4268
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© 2017 Avison Young [Avison Young - Northern California, Ltd.]. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem
reliable and, while thought to be correct, is not guaranteed by Avison Young.