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Monthly Archives: November 2013

San Jose prices jumped 11% YOY in 2013, reaching 91% of their 2007 peak

With last week’s sale of a 459,000 square foot office building block in San Jose to a Brookfield Asset Management fund, Equity Office Properties has sold more than 3 million square feet of space in the last 18 months.

A company profile for Equity Office Properties, including a year-by-year investment analysis and transaction history, can be obtained through RCA’s Company Profiles.

The latest deal includes the 373,754-square foot Rio Robles office park, which consists of seven buildings, as well as the 85,585 square foot 3553 North First St., located adjacent to the Rio Robles Properties.

Ben Thypin, Director of Market Analysis for global commercial real estate research firm Real Capital Analytics, said that the sell-off isn’t surprising given a 5- to 7-year hold strategy, also stressing the abundance of institutional investor money currently looking for opportunities in core markets.

“There’s certainly a lot of demand in your market,” Thypin said.

It is without a doubt that the San Jose area has seen a strong increase this year in office investment sales activity: According to data from RCA, $2.25 billion worth of office changed hands through October, a 70 percent increase over last year. RCA’s Commercial Property Price Indices, which measures the change in commercial property prices over time based on numerous inputs, shows pricing in the San Jose area has jumped 11 percent year over year and have now reached 91 percent of their 2007 peak.

San Jose prices jumped 11% YOY in 2013, reaching 91% of their 2007 peak

With last week’s sale of a 459,000 square foot office building block in San Jose to a Brookfield Asset Management fund, Equity Office Properties has sold more than 3 million square feet of space in the last 18 months.

A company profile for Equity Office Properties, including a year-by-year investment analysis and transaction history, can be obtained through RCA’s Company Profiles.

The latest deal includes the 373,754-square foot Rio Robles office park, which consists of seven buildings, as well as the 85,585 square foot 3553 North First St., located adjacent to the Rio Robles Properties.

Ben Thypin, Director of Market Analysis for global commercial real estate research firm Real Capital Analytics, said that the sell-off isn’t surprising given a 5- to 7-year hold strategy, also stressing the abundance of institutional investor money currently looking for opportunities in core markets.

“There’s certainly a lot of demand in your market,” Thypin said.

It is without a doubt that the San Jose area has seen a strong increase this year in office investment sales activity: According to data from RCA, $2.25 billion worth of office changed hands through October, a 70 percent increase over last year. RCA’s Commercial Property Price Indices, which measures the change in commercial property prices over time based on numerous inputs, shows pricing in the San Jose area has jumped 11 percent year over year and have now reached 91 percent of their 2007 peak.

Investors Demanding Yield Look to Secondary Markets

Commercial real estate investors are moving to secondary markets and buying suburban properties as they search for higher returns in the US. Demand is increasing in these markets as well as demand for properties on the outskirts of major metropolitan areas.

According the Moody’s/RCA Commercial Property Price Indices prices for suburban offices are rising faster than downtown real estate.

Additionally, according to Real Capital Analytics data,the three-month rolling average cap rate in Manhattan (major metro) fell to a post-crash low of 4.7 percent in August 2012 from 6.4 percent in April 2010. In San Francisco (major metro), it dropped to 5.2 percent in August from almost 8 percent in July 2010, and in Houston (non-major metro) it’s at 7.2 percent after climbing as high as 9.3 percent in June 2010.

Investors Demanding Yield Look to Secondary Markets

Commercial real estate investors are moving to secondary markets and buying suburban properties as they search for higher returns in the US. Demand is increasing in these markets as well as demand for properties on the outskirts of major metropolitan areas.

According the Moody’s/RCA Commercial Property Price Indices prices for suburban offices are rising faster than downtown real estate.

Additionally, according to Real Capital Analytics data,the three-month rolling average cap rate in Manhattan (major metro) fell to a post-crash low of 4.7 percent in August 2012 from 6.4 percent in April 2010. In San Francisco (major metro), it dropped to 5.2 percent in August from almost 8 percent in July 2010, and in Houston (non-major metro) it’s at 7.2 percent after climbing as high as 9.3 percent in June 2010.

Google Expands Real Estate Portfolio; $4.4billion in acquisitions since 2001

Google Inc., owner of the world’s most popular search engine, is expanding its office space. In 2010, they made headlines paying $1.8 billion cash for 111 Eighth Avenue, an office building in New York City.

In 2011, Google purchased 15 buildings in Silicon Valley and they have continued to expand in that area. Recently,Chief Financial Officer Patrick Pichette said Google made additional property purchases in Mountain View and nearby Palo Alto in the third quarter “ahead of our needs.” The five acquisitions with 665,000 square feet cost about $319 million, according to global commercial real estate information and data firm Real Capital Analytics Inc.

Google Expands Real Estate Portfolio; $4.4billion in acquisitions since 2001

Google Inc., owner of the world’s most popular search engine, is expanding its office space. In 2010, they made headlines paying $1.8 billion cash for 111 Eighth Avenue, an office building in New York City.

In 2011, Google purchased 15 buildings in Silicon Valley and they have continued to expand in that area. Recently,Chief Financial Officer Patrick Pichette said Google made additional property purchases in Mountain View and nearby Palo Alto in the third quarter “ahead of our needs.” The five acquisitions with 665,000 square feet cost about $319 million, according to global commercial real estate information and data firm Real Capital Analytics Inc.

Office Cap Rates for Prime Assets Near All-Time Low; Volume Exceeds $65B in Q3

Here is a recap of Michael Bull’s Commercial Real Estate Show,a U.S. commercial real estate sales and advisory firm headquartered in Atlanta, featuring RCA Managing Director, Dan Fasulo. The episode, Multi-Family Market Update, was aired on October 31st, 2013.

Through October 15th, office investment sales volume already totaled about $65 billion nationwide vs. $81 billion in 2012, Dan Fasulo, Managing Director of Real Capital Analytics, tells Michael Bull. Office sales should finish 10 percent to 20 percent greater year over year given that the fourth quarter is historically the most active quarter for office transactions, he added.

Active buyers are as diverse as they were at the height of the market. Everyone, from institutional investors to private investors, [is] back with a vengeance. Additionally, both public and private REITs have re-entered the market.

Financing is even available for secondary markets and transitional assets that were starved for capital during the last few years, Fasulo said. “We have to figure out how to keep the CMBS channel open because it is really helping the market be as healthy as it can be,” he added.

In prime locations, good properties are seeing cap rates as low as 4 percent, Fasulo said. “For prime, core assets, cap rates are at or near all-time lows again, and certain properties are trading at levels where the yields don’t appeal to the broad spectrum of the investment community,” he added.

To listen to the full episode, click here.

Office Cap Rates for Prime Assets Near All-Time Low; Volume Exceeds $65B in Q3

Here is a recap of Michael Bull’s Commercial Real Estate Show,a U.S. commercial real estate sales and advisory firm headquartered in Atlanta, featuring RCA Managing Director, Dan Fasulo. The episode, Multi-Family Market Update, was aired on October 31st, 2013.

Through October 15th, office investment sales volume already totaled about $65 billion nationwide vs. $81 billion in 2012, Dan Fasulo, Managing Director of Real Capital Analytics, tells Michael Bull. Office sales should finish 10 percent to 20 percent greater year over year given that the fourth quarter is historically the most active quarter for office transactions, he added.

Active buyers are as diverse as they were at the height of the market. Everyone, from institutional investors to private investors, [is] back with a vengeance. Additionally, both public and private REITs have re-entered the market.

Financing is even available for secondary markets and transitional assets that were starved for capital during the last few years, Fasulo said. “We have to figure out how to keep the CMBS channel open because it is really helping the market be as healthy as it can be,” he added.

In prime locations, good properties are seeing cap rates as low as 4 percent, Fasulo said. “For prime, core assets, cap rates are at or near all-time lows again, and certain properties are trading at levels where the yields don’t appeal to the broad spectrum of the investment community,” he added.

To listen to the full episode, click here.