- office sales volume bounces back in Q1
- average price per square foot 20% higher than in Q1 2016
- largest Q1 sale closed by TriStar Capital in Sunnyvale ($290 million)
- massive Apple Park campus in Cupertino on track for Q2 delivery
The Bay Area office market started the new year in full force, with year-over-year sales volume nearly tripling in the first quarter of 2017, and the average price per square foot holding steady over the past year. The Bay Area also fared well compared to other California markets–in terms of sales volume, it was surpassed only by Los Angeles County ($1.5 billion) and San Francisco County ($1.35 billion).
We used Yardi Matrix data to analyze all sales for office buildings larger than 50,000 square feet (see ‘Methodology’ section) to close in the Bay Area in Q1. We also looked at new office projects scheduled for completion in the second quarter of 2017, using the same data source.
Total Office Sales Volume Makes Hefty Comeback in Q1
Average Price per Square Foot Up 20% from Q1 2016
$290M Sunnyvale Deal Tops List of Largest Q1 Office Sales
The largest office sale to close in the first quarter of the year was TriStar Capital’s $290.7 million acquisition of 410, 420 and 430 N. Mary Ave. in Sunnyvale, Calif., from Rockwood Capital. The 15-acre office campus dubbed Crossroads III is fully leased to Apple Inc., and has undergone major renovations since its completion in 1990, according to the Silicon Valley Business Journal. The sale of the LEED Certified-Silver campus closed in February, funded by a $232.5 million loan held by Natixis.
What’s Next? Major Projects on Track for Q2 Delivery
Two large projects were delivered in the first quarter of 2017 in the Bay Area office market, both part of the same Santa Clara, Calif., campus. Menlo Equities finished work on buildings E and F at its Campus @ 3333 spec project in the heart of Silicon Valley, featuring 289,650 and 309,475 square feet, respectively.
The second quarter is expected to be more fruitful, with 11 large office developments totaling 4.5 million square feet scheduled for delivery in the Bay Area. The largest project to be completed in Q2 is the 2.8 million-square-foot Apple Park campus in Cupertino, Calif. Located at 10955 N. Tantau Ave., the $5 billion ‘spaceship’ campus is set to ultimately house 13,000 Apple employees and was first announced by Steve Jobs back in 2011.
- Square footage parameters – over 50,000 sq. ft.;
- Minimum amount per transaction – $5,000,000;
- Transactions recorded until April 12th, 2017;
- Some sale prices were calculated based on a ‘tax-transfer’ formula;
- We excluded ground lease, ownership stake, controlling interest and portfolio deals from our calculation of the average price per square foot;
- Data source: Yardi Matrix.