{"id":17023,"date":"2018-07-17T15:58:15","date_gmt":"2018-07-17T15:58:15","guid":{"rendered":"https:\/\/www.commercialcafe.com\/blog\/?p=17023"},"modified":"2026-04-07T14:08:58","modified_gmt":"2026-04-07T11:08:58","slug":"california-q2-2018-office-sales","status":"publish","type":"post","link":"https:\/\/www.commercialcafe.com\/blog\/california-q2-2018-office-sales\/","title":{"rendered":"California Q2 2018 Office Sales: San Francisco Sales Finally Bounce Back"},"content":{"rendered":"<h5>Executive summary:<\/h5>\n<ul>\n<li><a href=\"#Q2Overview\">Q2 overview: 85% of Q2 dollar volume amassed in L.A., San Francisco, Bay Area sales;<\/a><\/li>\n<li><a href=\"#Q2TopDeals\">Top Q2 deals: Blackstone unloads $1B worth of L.A. and Bay Area office assets;<\/a><\/li>\n<li><a href=\"#Q2LosAngeles\">Los Angeles rising office sales stopped short of the $2B mark;<\/a><\/li>\n<li><a href=\"#Q2BayArea\">Investment in Bay Area office assets dropped 37% year over year;<\/a><\/li>\n<li><a href=\"#Q2SanFrancisco\">San Francisco sales finally bounce back above the $1 billion threshold;<\/a><\/li>\n<li><a href=\"#Q2SanDiego\">San Diego rebounds from worst quarter in 5 years with 590% Y-o-Y boost in sales;<\/a><\/li>\n<li><a href=\"#Q2OrangeCounty\">Orange County investment dips below $300 million in Q2; prices drop 23% Y-o-Y;<\/a><\/li>\n<li><a href=\"#Q2Sacramento\">Sacramento office market adjusts with 73% Y-o-Y drop in sales;<\/a><\/li>\n<li><a href=\"#Q2CalifOfficePipeline\">Q2 0ffice completions concentrated in San Francisco; 14MSF to come online in Q3.<\/a><\/li>\n<\/ul>\n<h4 id=\"Q2Overview\">Q2 Overview: LA, San Francisco, Bay Area Home to 85% of Total Sales Activity<\/h4>\n<p>The transactions that closed across the <a href=\"#methodology\">seven California office markets we analyzed<\/a> totaled nearly $5 billion in sales. The quarter marked a 36% increase compared to Q1, however, the sales volume dropped 12% year-over-year.<\/p>\n<p>Investment activity on the <strong>Los Angeles<\/strong> office market consisted of 21 transactions that raked in just under $2 billion\u2014the equivalent of the sales volume recorded in\u00a0<strong>San Francisco<\/strong> and the <strong>Bay Area<\/strong>, combined. Activity on the <strong>San Diego<\/strong>\u00a0market picked up and marked a 71% increase in sales compared to Q1. In contrast, the <strong>Orange County<\/strong> and <strong>Sacramento<\/strong> markets hit the brakes, each seeing a year-over-year drop in sales of over 40%.<\/p>\n<div class=\"infogram-embed\" data-id=\"0dbc335e-e0ab-45a9-b555-cf885fbd61a1\" data-type=\"interactive\" data-title=\"Q2 2018 - California Office Markets\"><\/div>\n<p><script>!function(e,t,n,s){var i=\"InfogramEmbeds\",o=e.getElementsByTagName(t)[0],d=\/^http:\/.test(e.location)?\"http:\":\"https:\";if(\/^\\\/{2}\/.test(s)&&(s=d+s),window[i]&&window[i].initialized)window[i].process&&window[i].process();else if(!e.getElementById(n)){var a=e.createElement(t);a.async=1,a.id=n,a.src=s,o.parentNode.insertBefore(a,o)}}(document,\"script\",\"infogram-async\",\"https:\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script><\/p>\n<p>Apart from Sacramento and Orange County, which took a nose dive this past quarter, all California markets saw an uptick in prices. The sharpest increase was in the Bay Area, where average prices rose 41% year-over-year, followed by L.A.\u2019s 29% increase. San Diego&#8217;s rebound boosted prices 22% above the values recorded in Q2 2017, which remains the market\u2019s worst-performing quarter in five years. Average sale prices in San Francisco, the state\u2019s most expensive market, held relatively steady, and wrapped up Q2 in the usual mid-$500s-per-square-foot range.<\/p>\n<h4 id=\"Q2TopDeals\">Blackstone Selling Spree Continues, Equity Firm Unloads $1B Worth of LA, Bay Area Assets<\/h4>\n<p>A total of 56 office deals closed between April and June 2018 in California, for close to $5 billion. Most of the deals involved properties located in the Bay Area, Los Angeles, and San Francisco.\u00a0Four of the 10 largest transactions of the quarter were Los Angeles office properties that sold for a combined $1.2 billion. The highest price was commanded by Blackstone\u2019s 21-building Santa Monica Business Park, which was purchased by Boston Properties for $616 million.<\/p>\n<p>This was one of four California assets that Blackstone unloaded during Q2 for a combined total of just over $971 million. The selling spree also included McCaslin Park, Los Angeles, as well as the Bay Area properties at <a href=\"https:\/\/www.commercialcafe.com\/commercial-property\/us\/ca\/emeryville\/2100-powell-street\/\" target=\"_blank\" rel=\"noopener\">2100 Powell Street<\/a> in Emeryville, and the Stanford Research Park at 601 California Avenue in Palo Alto.\u00a0These properties came into Blackstone&#8217;s possession in 2016, when it acquired Equity Office Properties Trust for a whopping $39 billion. Blackstone is down to selling the last remaining assets in that portfolio, while EOPT (now EQ Office) has rebranded and is currently partnering with coworking space providers to &#8220;address the evolving organizational needs in workplace culture and flexibility.&#8221;<\/p>\n<div class=\"infogram-embed\" data-id=\"188630ea-55a4-4b15-8f00-048d806dade7\" data-type=\"interactive\" data-title=\"California Office Deals Q2 2018\"><\/div>\n<p><script>!function(e,t,n,s){var i=\"InfogramEmbeds\",o=e.getElementsByTagName(t)[0],d=\/^http:\/.test(e.location)?\"http:\":\"https:\";if(\/^\\\/{2}\/.test(s)&&(s=d+s),window[i]&&window[i].initialized)window[i].process&&window[i].process();else if(!e.getElementById(n)){var a=e.createElement(t);a.async=1,a.id=n,a.src=s,o.parentNode.insertBefore(a,o)}}(document,\"script\",\"infogram-async\",\"https:\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script><\/p>\n<p>Three of the 10 priciest California office acquisitions of the quarter closed in San Francisco and raked in a combined $677 million. In what was the second-largest sale of the quarter, Northwood Investors took <a href=\"https:\/\/therealdeal.com\/2018\/05\/26\/hna-sells-san-fran-office-tower-to-northwood-investors-for-300m\/\" target=\"_blank\" rel=\"nofollow noopener\">another<\/a> property off HNA Group\u2019s hands, and paid $300 million for the 346,000-square-foot, LEED Platinum-certified office tower at 123 Mission Street.<\/p>\n<p>Of the few sales to close in Orange County during Q2, one made the top 10 list\u2014Rockpoint Group paid $157 million for Phase One and Phase Two of the Summit Office Campus in Aliso Viejo, and is <a href=\"http:\/\/www.ngkf.com\/home\/media-center\/press-releases.aspx?d=11302#sthash.IDtTyljx.dpbs\" target=\"_blank\" rel=\"nofollow noopener\">planning<\/a> to reposition and rebrand the asset into an office property that is unique in the market.<\/p>\n<h4 id=\"Q2LosAngeles\">Los Angeles Office Sales Stopped Short of the $2B Mark in Q2<\/h4>\n<div id=\"attachment_17043\" style=\"width: 470px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_SantaMonicaBusinessPark_2951_Ocean_Park_cropped-compressor.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-17043\" class=\"wp-image-17043\" src=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_SantaMonicaBusinessPark_2951_Ocean_Park_cropped-compressor-591x288.jpg\" alt=\"Santa Monica Business Park, 2951 Ocean Park Blvd., Santa Monica, CA\" width=\"460\" height=\"224\" \/><\/a><p id=\"caption-attachment-17043\" class=\"wp-caption-text\"><em>Santa Monica Business Park, 2951 Ocean Park Blvd., Santa Monica, CA<\/em><\/p><\/div>\n<p>Office sales picked up a little steam during Q2, gaining higher ground after a rather slow start to the year. The Los Angeles market closed the quarter with a sales volume of just under $2 billion, inching closer towards the numbers seen in previous quarters. Although the dollar volume amassed during Q2 was 53% higher compared to Q1, sales activity was still 16% lower year-over-year.<\/p>\n<p>In terms of the average price per square foot, the <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/los-angeles\/\" target=\"_blank\" rel=\"noopener\">L.A. office market<\/a> stopped just short of the $400 threshold, and wrapped up Q1 at $397, marking a 28% year-over-year increase. Over 4.5 million square feet of inventory changed hands during the year\u2019s second quarter, 33% more than in Q1.<\/p>\n<div id=\"attachment_17044\" style=\"width: 470px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_SantaMonicaBusinessPark_3000_Ocean_Park-compressor-compressor_cropped-compressor.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-17044\" class=\" wp-image-17044\" src=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_SantaMonicaBusinessPark_3000_Ocean_Park-compressor-compressor_cropped-compressor-591x288.jpg\" alt=\"Santa Monica Business Park, 3000 Ocean Park Blvd, Santa Monica, CA\" width=\"460\" height=\"224\" \/><\/a><p id=\"caption-attachment-17044\" class=\"wp-caption-text\"><em>Santa Monica Business Park, 3000 Ocean Park Blvd, Santa Monica, CA<\/em><\/p><\/div>\n<p>The largest office acquisition in the market was completed at the start of the quarter. Boston Properties paid $616 million for the ground lease of the 1.2 million-square-foot Santa Monica Business Park, located in\u00a0<a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/los-angeles-county\/santa-monica\/sunset-park\/\" target=\"_blank\" rel=\"noopener\">Sunset Park<\/a>, in the <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/los-angeles-county\/los-angeles\/west-side-la\/\" target=\"_blank\" rel=\"noopener\">West Side Los Angeles<\/a> submarket.<\/p>\n<p>The land is owned by the Transpacific Development Co., and the ground lease <a href=\"http:\/\/ir.bostonproperties.com\/phoenix.zhtml?c=120176&amp;p=irol-newsArticle_Print&amp;ID=2344375\" target=\"_blank\" rel=\"nofollow noopener\">gives<\/a> Boston Properties the right to purchase the fee in 2028, with subsequent purchase rights every 15 years. The seller (Blackstone) had acquired the 21-building campus in 2007, as part of its $39 billion buyout of Equity Office Properties Trust, and has been selling off the last remaining assets of that purchase.\u00a0At the time of sale, the Santa Monica Business Park was reportedly 94% leased, with tenants including Snap Inc.\u2014the parent company of messaging application Snapchat\u2014Activision Blizzard, Pandora, Treyarch, and Cypress Creek Renewables.<\/p>\n<div class=\"infogram-embed\" data-id=\"4ecec039-65f0-47d8-8bf3-7698ed4c66f5\" data-type=\"interactive\" data-title=\"Q2 2018 Los Angeles\"><\/div>\n<p><script>!function(e,t,n,s){var i=\"InfogramEmbeds\",o=e.getElementsByTagName(t)[0],d=\/^http:\/.test(e.location)?\"http:\":\"https:\";if(\/^\\\/{2}\/.test(s)&&(s=d+s),window[i]&&window[i].initialized)window[i].process&&window[i].process();else if(!e.getElementById(n)){var a=e.createElement(t);a.async=1,a.id=n,a.src=s,o.parentNode.insertBefore(a,o)}}(document,\"script\",\"infogram-async\",\"https:\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script><\/p>\n<h4 id=\"Q2BayArea\">Bay Area Sales Continue Downward Trend, Drop 37% Y-o-Y<\/h4>\n<div id=\"attachment_17041\" style=\"width: 260px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_2100_Powell_Street_Emeryville_BayArea.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-17041\" class=\" wp-image-17041\" src=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_2100_Powell_Street_Emeryville_BayArea-240x300.jpg\" alt=\"office mid-rise at 2100 Powell Street, Emeryville, CA\" width=\"250\" height=\"311\" \/><\/a><p id=\"caption-attachment-17041\" class=\"wp-caption-text\"><em>2100 Powell Street, Emeryville, CA<\/em><\/p><\/div>\n<p>The downward trend seen in Bay Area office sales at the start of the year continued, as the market closed Q2 with a 37% year-over-year drop\u201411 office assets traded during Q2, for a total of $826 million.<\/p>\n<p>Average prices rested at $482 at the close of the second quarter, climbing 3% compared to Q1, and a sharp 41% year-over-year. Nearly 1.7 million square feet of <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/south-bay-peninsula\/\" target=\"_blank\" rel=\"noopener\">Bay Area office space<\/a> changed hands during this past quarter, 34% less than in Q1.<\/p>\n<p>In the largest deal to close during Q2 in the Bay Area, CBRE Global Investors paid $171 million for the Class A office tower at <a href=\"https:\/\/www.commercialcafe.com\/commercial-property\/us\/ca\/emeryville\/2100-powell-street\/\" target=\"_blank\" rel=\"noopener\">2100 Powell Street<\/a> in Emeryville. The acquisition of the 344,433-square-foot, LEED Gold-certified property at nearly $500 per square foot further cements <a href=\"https:\/\/www.eastbaytimes.com\/2018\/07\/03\/emeryville-office-tower-bought-in-hot-market-for-more-than-170-million\/\" target=\"_blank\" rel=\"nofollow noopener\">CBRE\u2019s focus<\/a> on the high potential of this East Bay submarket as one of the region\u2019s premier addresses for healthcare, life science, technology, and professional service tenants.<\/p>\n<div class=\"infogram-embed\" data-id=\"2f71e8d7-bc52-4f7e-a64d-c06645e07d1a\" data-type=\"interactive\" data-title=\"Q2 2018 Bay Area\"><\/div>\n<p><script>!function(e,t,n,s){var i=\"InfogramEmbeds\",o=e.getElementsByTagName(t)[0],d=\/^http:\/.test(e.location)?\"http:\":\"https:\";if(\/^\\\/{2}\/.test(s)&&(s=d+s),window[i]&&window[i].initialized)window[i].process&&window[i].process();else if(!e.getElementById(n)){var a=e.createElement(t);a.async=1,a.id=n,a.src=s,o.parentNode.insertBefore(a,o)}}(document,\"script\",\"infogram-async\",\"https:\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script><\/p>\n<h4 id=\"Q2SanFrancisco\">San Francisco Office Sales Finally Bounce Back, Surpass $1B<\/h4>\n<div id=\"attachment_17045\" style=\"width: 260px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_123_Mission_Street_SanFran-compressor.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-17045\" class=\" wp-image-17045\" src=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_123_Mission_Street_SanFran-compressor-240x300.jpg\" alt=\"office tower at 123 Mission Street, San Francisco, CA\" width=\"250\" height=\"313\" \/><\/a><p id=\"caption-attachment-17045\" class=\"wp-caption-text\"><em>123 Mission Street, San Francisco, CA<\/em><\/p><\/div>\n<p>Sales activity had been notably sluggish on the <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/san-francisco\/\" target=\"_blank\" rel=\"noopener\">San Francisco office market<\/a> since Q3 2017 but kicked into high gear starting this April. The quarterly sales volume reached $1.2 billion, marking a 52% growth year-over-year, and a four-fold increase compared to Q1.<\/p>\n<p>Roughly 2.2 million square feet of office inventory changed hands in San Francisco from April through June. Although prices dipped 2% compared to the previous year, San Francisco remains undisputed as California\u2019s most expensive office market, wrapping up Q2 with an average of $546 per square foot.<\/p>\n<p>The biggest deal to close in Q2 was the $300 million acquisition of the 123 Mission Street tower by Northwood, an investment firm led by former Blackstone executive John Kukral. The 29-story, LEED Platinum-certified, Class A office property was <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2018-05-29\/hna-is-said-to-sell-san-francisco-tower-to-northwood-investors\" target=\"_blank\" rel=\"nofollow noopener\">reportedly<\/a> 100% leased at the time of sale, with tenants including startup incubator RocketSpace, analytics software company New Relic, and Salesforce.\u00a0This office asset was HNA Group\u2019s first West Coast investment, <a href=\"https:\/\/therealdeal.com\/2018\/05\/26\/hna-sells-san-fran-office-tower-to-northwood-investors-for-300m\/\" target=\"_blank\" rel=\"nofollow noopener\">acquired<\/a> in August 2016 for $255 million, and is among the latest to go in the company\u2019s recent selling spree\u2014the Chinese conglomerate seeks to quickly reduce the significant debt it has accumulated while building its global portfolio.<\/p>\n<div class=\"infogram-embed\" data-id=\"339acab2-f73c-4a17-b6e6-10229491bc22\" data-type=\"interactive\" data-title=\"Q2 2018 San Francisco\"><\/div>\n<p><script>!function(e,t,n,s){var i=\"InfogramEmbeds\",o=e.getElementsByTagName(t)[0],d=\/^http:\/.test(e.location)?\"http:\":\"https:\";if(\/^\\\/{2}\/.test(s)&&(s=d+s),window[i]&&window[i].initialized)window[i].process&&window[i].process();else if(!e.getElementById(n)){var a=e.createElement(t);a.async=1,a.id=n,a.src=s,o.parentNode.insertBefore(a,o)}}(document,\"script\",\"infogram-async\",\"https:\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script><\/p>\n<h4 id=\"Q2SanDiego\">San Diego Rebounds from Worst Quarter in 5 Years<\/h4>\n<div id=\"attachment_17046\" style=\"width: 360px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_Stonercrest_9655_Granite_Ridge_Drive-compressor.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-17046\" class=\" wp-image-17046\" src=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_Stonercrest_9655_Granite_Ridge_Drive-compressor-375x300.jpg\" alt=\"Stonercrest, 9655 Granite Ridge Dr., Serra Mesa, San Diego, CA\" width=\"350\" height=\"279\" \/><\/a><p id=\"caption-attachment-17046\" class=\"wp-caption-text\"><em>Stonercrest, 9655 Granite Ridge Dr., Serra Mesa, San Diego<\/em><\/p><\/div>\n<p>Showing signs of recovery from recent sales slumps, the San Diego market wrapped up Q2 with a total of $318 million in sales in seven transactions. This marks a 72% increase compared to Q1, and a 590% growth year-over-year. Granted, this nearly six-fold increase is over Q2 2017, the market\u2019s worst quarter in the past five years, when only two assets larger than 50,000 square feet traded, for a combined total of $46 million.<\/p>\n<p>Just over 1 million square feet of office space changed hands in San Diego during Q2, more than double the inventory traded in the first three months of the year. Average prices rested at $307 per square foot, marking a 21% increase year-over-year, and an 86% boost compared to the previous quarter.<\/p>\n<p>In the largest deal to close in Q2, Pendulum Property Partners paid $100 million for the 336,000-square-foot Stonecrest office campus located in the Serra Mesa submarket. This marked the Irvine-based company\u2019s fifth Southern California acquisition, and its first investment in the <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/san-diego\/\" target=\"_blank\" rel=\"noopener\">San Diego office market<\/a>. At the time of sale, the campus was 93% occupied, home to both local and national tenants, including Blue Cross Blue Shield, Mercury Insurance, ACE Insurance, and Vitas Healthcare. <a href=\"https:\/\/www.bisnow.com\/san-diego\/news\/office\/pendulum-sees-better-yields-in-san-diego-office-market-than-la-or-oc-89531\" target=\"_blank\" rel=\"nofollow noopener\">According to<\/a> Pendulum founding partner Kevin Hayes, the region boasts a strong economic base, which includes technology, life science, and a significant military presence, and with better in-place yields than Orange and Los Angeles counties, it is poised for significant long-term growth.<\/p>\n<div class=\"infogram-embed\" data-id=\"28eca31a-4c6e-4d4b-b675-2e8e051ccf64\" data-type=\"interactive\" data-title=\"Q2 2018 San Diego\"><\/div>\n<p><script>!function(e,t,n,s){var i=\"InfogramEmbeds\",o=e.getElementsByTagName(t)[0],d=\/^http:\/.test(e.location)?\"http:\":\"https:\";if(\/^\\\/{2}\/.test(s)&&(s=d+s),window[i]&&window[i].initialized)window[i].process&&window[i].process();else if(!e.getElementById(n)){var a=e.createElement(t);a.async=1,a.id=n,a.src=s,o.parentNode.insertBefore(a,o)}}(document,\"script\",\"infogram-async\",\"https:\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script><\/p>\n<h4 id=\"Q2OrangeCounty\">Orange County Sales Fall Below $300M; Prices Drop 23% Y-o-Y<\/h4>\n<div id=\"attachment_17047\" style=\"width: 360px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_SummitOfficeCampus_PhaseOne-compressor.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-17047\" class=\" wp-image-17047\" src=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_SummitOfficeCampus_PhaseOne-compressor-375x300.jpg\" alt=\"Summit Office Campus - Phase One, 95 Enterprise, Aliso Viejo, CA\" width=\"350\" height=\"279\" \/><\/a><p id=\"caption-attachment-17047\" class=\"wp-caption-text\"><em>Summit Office Campus &#8211; Phase One, 95 Enterprise, Aliso Viejo<\/em><\/p><\/div>\n<p>It was a slower-than-usual quarter for the <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/orange-county\/\" target=\"_blank\" rel=\"noopener\">Orange County office market<\/a>. The $278 million sales volume marks a 24% decrease from Q1, and a 48% drop year-over-year, as well as the third quarter in five years when office investment in Orange County falls below the $300 million mark.<\/p>\n<p>Just over 1.1 million square feet of office space changed hands from April through June this year, 54% less than during Q1, and 41% less year over year. In terms of the price per square foot, the Orange County office market wrapped up the quarter with an average of $180\u2014a 23% decrease compared to Q2 2017.<\/p>\n<p>Deutsche Asset &amp; Wealth Management real estate investment trust RREEF Property Trust sold the <a href=\"https:\/\/www.commercialcafe.com\/commercial-property\/us\/ca\/aliso-viejo\/summit-office-campus-phase-one-95-101-enterprise\/\" target=\"_blank\" rel=\"noopener\">Summit Office Campus Phase One<\/a> and <a href=\"https:\/\/www.commercialcafe.com\/commercial-property\/us\/ca\/aliso-viejo\/summit-office-campus-phase-two-85-enterprise\/\" target=\"_blank\" rel=\"noopener\">Summit Office Campus Phase Two<\/a> buildings in <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/aliso-viejo\/\">Aliso Viejo<\/a> to Boston-based Rockpoint Group, for $157 million. <a href=\"http:\/\/www.ngkf.com\/home\/media-center\/press-releases.aspx?d=11302#sthash.8GOvXXrS.dpbs\" target=\"_blank\" rel=\"nofollow noopener\">According<\/a> to NKF Capital Markets (representing the seller in the deal), this was the largest Orange County office sale in six months. The multi-tenant office buildings were 79% occupied at the time of purchase, with notable tenants including Microsoft Corp., Tech Space, NuVasive, Inc., and Pacific World Corp.<\/p>\n<p>Paul Jones, executive managing director with NKF, stated that \u201cRockpoint intends to undergo a heavy reposition and re-branding on this asset in order to push market rents, drive leasing velocity and create a very unique office campus like nothing else in the submarket.\u201d<\/p>\n<div class=\"infogram-embed\" data-id=\"2e9f0da5-2fe3-4650-a273-631a5319767c\" data-type=\"interactive\" data-title=\"Q2 2018 Orange County\"><\/div>\n<p><script>!function(e,t,n,s){var i=\"InfogramEmbeds\",o=e.getElementsByTagName(t)[0],d=\/^http:\/.test(e.location)?\"http:\":\"https:\";if(\/^\\\/{2}\/.test(s)&&(s=d+s),window[i]&&window[i].initialized)window[i].process&&window[i].process();else if(!e.getElementById(n)){var a=e.createElement(t);a.async=1,a.id=n,a.src=s,o.parentNode.insertBefore(a,o)}}(document,\"script\",\"infogram-async\",\"https:\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script><\/p>\n<h4 id=\"Q2Sacramento\">Sacramento Office Market Adjusts with 73% Y-o-Y Drop in Sales<\/h4>\n<div id=\"attachment_17051\" style=\"width: 360px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_RocklinCorporatePlaza_6030.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-17051\" class=\" wp-image-17051\" src=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_RocklinCorporatePlaza_6030-375x300.jpg\" alt=\"Rocklin Corporate Plaza, 6030 West Oaks Blvd., Rocklin\" width=\"350\" height=\"279\" \/><\/a><p id=\"caption-attachment-17051\" class=\"wp-caption-text\"><em>Rocklin Corporate Plaza, 6030 West Oaks Blvd., Rocklin<\/em><\/p><\/div>\n<p>Sales data trailing five years shows that Q2 often tends to be the slowest quarter of the year. Moreover, as the market\u2019s investment potential has grown over the past few years, sales have shown wilder fluctuations from quarter to quarter. Therefore, the 73% year-over-year drop in sales is not a drastic plunge, but more likely part of a market adjustment process.<\/p>\n<p>Roughly 470,000 square feet of office inventory changed hands in Sacramento from April through June, considerably less than the 1 million square feet traded during Q2 2017, or the 1.7 million square feet transacted in Q1. Because only three office assets equal to or larger than 50,000 square feet were sold during Q2, no reliable average sale price per square foot could be calculated.<\/p>\n<p>The largest of the three transactions to close in Sacramento in Q2 was the $43 million purchase of a two-building, 219,402-square-foot office park in <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/rocklin\/\" target=\"_blank\" rel=\"noopener\">Rocklin<\/a>, which accounted for nearly half of the total sales volume. The Rocklin Corporate Plaza buildings at 6020 West Oaks Blvd., and 6030 West Oaks Blvd., were acquired by Pappas Investments\u00a0from KBS Realty Advisors, at nearly 100% occupancy. The tenant roster is diverse and <a href=\"http:\/\/www.bizjournals.com\/sacramento\/news\/2018\/06\/12\/rocklin-corporate-center-sold-for-42-9-million.html\" target=\"_blank\" rel=\"nofollow noopener\">includes<\/a> names like Liberty Mutual Insurance, SMA Solar Technology, PG&amp;E, and Oracle.<\/p>\n<div class=\"infogram-embed\" data-id=\"0abe8a00-0ca1-46ac-b67c-4b53c2b446c3\" data-type=\"interactive\" data-title=\"Q2 2018 Sacramento\"><\/div>\n<p><script>!function(e,t,n,s){var i=\"InfogramEmbeds\",o=e.getElementsByTagName(t)[0],d=\/^http:\/.test(e.location)?\"http:\":\"https:\";if(\/^\\\/{2}\/.test(s)&&(s=d+s),window[i]&&window[i].initialized)window[i].process&&window[i].process();else if(!e.getElementById(n)){var a=e.createElement(t);a.async=1,a.id=n,a.src=s,o.parentNode.insertBefore(a,o)}}(document,\"script\",\"infogram-async\",\"https:\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script><\/p>\n<h4 id=\"Q2CalifOfficePipeline\">San Francisco Hogs the Pipeline in Q2; Half of New Projects are Biomed\/MOB<\/h4>\n<div id=\"attachment_17052\" style=\"width: 240px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_181_Fremont-compressor.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-17052\" class=\" wp-image-17052\" src=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_181_Fremont-compressor-240x300.jpg\" alt=\"office tower at 181 Fremont St., San Francisco\" width=\"230\" height=\"286\" \/><\/a><p id=\"caption-attachment-17052\" class=\"wp-caption-text\"><em>181 Fremont St., San Francisco<\/em><\/p><\/div>\n<p>San Francisco is home to 8 of the 12 new office projects that were completed during Q2 2018, accounting for 88% of the 3.6 million square feet delivered in California during the past quarter.<\/p>\n<p>Front-and-center was the long-awaited nominal completion of the <a href=\"http:\/\/www.clarkconstruction.com\/our-work\/projects\/salesforce-tower\" target=\"_blank\" rel=\"nofollow noopener\">innovative and ultra-green<\/a> 1.4 million-square-foot <a href=\"https:\/\/www.commercialcafe.com\/commercial-property\/us\/ca\/san-francisco\/salesforce-tower\/\" target=\"_blank\" rel=\"noopener\">Salesforce Tower<\/a>.<\/p>\n<p>Steps away from San Francisco\u2019s tallest edifice is <a href=\"https:\/\/www.commercialcafe.com\/commercial-property\/us\/ca\/san-francisco\/181-fremont\/\" target=\"_blank\" rel=\"noopener\">181 Fremont<\/a>, the second-largest office project to be completed during the past quarter. The mixed-use Jay Paul Co. development encompasses just over 3,000 square feet of retail on the lower floors, and about 435,000 square feet of Class A office space through floor 44 (almost entirely <a href=\"https:\/\/www.commercialcafe.com\/blog\/facebook-liked-san-francisco-181-fremont\/\" target=\"_blank\" rel=\"noopener\">leased to Facebook\u2019s Instagram division<\/a>), while the top 17 floors house 67 luxury residential units that have been <a href=\"https:\/\/www.sfchronicle.com\/bayarea\/article\/Skyscraper-at-181-Fremont-St-in-SF-offers-luxury-12908443.php\" target=\"_blank\" rel=\"nofollow noopener\">selling like hot cakes<\/a>.<\/p>\n<div class=\"infogram-embed\" data-id=\"4a82e7e3-5ded-445b-b6d3-d2aede63ab8e\" data-type=\"interactive\" data-title=\"California Office Completions Q2 2018\"><\/div>\n<p><script>!function(e,t,n,s){var i=\"InfogramEmbeds\",o=e.getElementsByTagName(t)[0],d=\/^http:\/.test(e.location)?\"http:\":\"https:\";if(\/^\\\/{2}\/.test(s)&&(s=d+s),window[i]&&window[i].initialized)window[i].process&&window[i].process();else if(!e.getElementById(n)){var a=e.createElement(t);a.async=1,a.id=n,a.src=s,o.parentNode.insertBefore(a,o)}}(document,\"script\",\"infogram-async\",\"https:\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script><\/p>\n<div id=\"attachment_17053\" style=\"width: 450px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_DowntownWestMedicalOffices_1122_West_Washington_Blvd_Los_Angeles-compressor.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-17053\" class=\"wp-image-17053\" src=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_DowntownWestMedicalOffices_1122_West_Washington_Blvd_Los_Angeles-compressor-493x300.jpg\" alt=\"Downtown West Medical Offices, 1122 West Washington Blvd., Los Angeles\" width=\"440\" height=\"268\" \/><\/a><p id=\"caption-attachment-17053\" class=\"wp-caption-text\"><em>Downtown West Medical Offices, 1122 West Washington Blvd., Los Angeles<\/em><\/p><\/div>\n<p>Half of the 12 new properties brought to market were pharmaceutical and bioscience R&amp;D facilities, and medical office buildings. San Diego-based life sciences company Illumina\u2019s new <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/san-mateo-county\/foster-city\/\" target=\"_blank\" rel=\"noopener\">Foster City<\/a> headquarters was developed by BioMed Realty, and is meant to boast a collegiate feel, as part of the company\u2019s <a href=\"https:\/\/www.wired.com\/story\/biotech-gets-some-silicon-valley-shine-at-illuminas-new-campus\/\" target=\"_blank\" rel=\"nofollow noopener\">strategy<\/a> to attract recent Ph.Ds. in the field. The 360,000-square-foot <a href=\"https:\/\/www.commercialcafe.com\/commercial-property\/us\/ca\/san-mateo\/illumina-at-lincoln-center\/\" target=\"_blank\" rel=\"noopener\">Illumina at Lincoln Center<\/a> is home to the company\u2019s Bay Area and San Francisco employees, and can accommodate up to 1,200 people. Incorporating a 40,000-square-foot amenity building, and two 151,000-square-foot office and R&amp;D buildings, the campus blends a mix of open collaborative workspace and natural light-filled labs, as well as an 8,000-square-foot accelerator space that Illumina offers to startups in the genomics field for six months to use its space and equipment.<\/p>\n<div id=\"attachment_17054\" style=\"width: 450px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_OC_HoagHealthCenter_04-compressor_cropped-compressor.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-17054\" class=\"wp-image-17054\" src=\"https:\/\/www.commercialcafe.com\/blog\/wp-content\/uploads\/sites\/10\/YM_OC_HoagHealthCenter_04-compressor_cropped-compressor-493x300.jpg\" alt=\"Hoag Health Center - Tustin Legacy, 15000 Kensington Park Drive, Tustin, CA\" width=\"440\" height=\"268\" \/><\/a><p id=\"caption-attachment-17054\" class=\"wp-caption-text\"><em>Hoag Health Center &#8211; Tustin Legacy, 15000 Kensington Park Drive, Tustin, CA<\/em><\/p><\/div>\n<p>The 170,523-square-foot Vertex Pharmaceuticals Research Facility in <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/san-diego\/university-city\/\" target=\"_blank\" rel=\"noopener\">University City, San Diego<\/a>, was recently completed by BNBuilders, a development company focused on creating cutting-edge facilities for companies operating in the biotech, health, and life science industries. Roughly 70% dedicated to laboratory\/research activities, the site encompasses a 1,500-square-foot Learning Lab for STEM education programs, and a 4,000-square-foot Incubator Suite for external collaboration. Moreover, the LEED Gold-certified facility <a href=\"https:\/\/www.prnewswire.com\/news-releases\/bnbuilders-completes-construction-on-vertex-pharmaceuticals-research-center-in-san-diego-300671154.html\" target=\"_blank\" rel=\"nofollow noopener\">incorporates<\/a> an innovative air circulation system designed to bring in 100% outside air.<\/p>\n<p>The Orange County market welcomed the <a href=\"https:\/\/www.commercialcafe.com\/commercial-property\/us\/ca\/tustin\/hoag-health-center-tustin-legacy\/\" target=\"_blank\" rel=\"noopener\">Hoag Health Center medical offices at Tustin Legacy<\/a>, the Downtown West Medical Offices in <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/los-angeles-county\/los-angeles\/central-la\/\" target=\"_blank\" rel=\"noopener\">Central L.A.<\/a> were completed in April, and the Skyport Medical Offices were brought to the North San Jose submarket in May.<\/p>\n<div class=\"infogram-embed\" data-id=\"4f81e7c2-0327-40fe-b7d4-74c284aaf346\" data-type=\"interactive\" data-title=\"California Office Pipeline Q3 2018\"><\/div>\n<p><script>!function(e,t,n,s){var i=\"InfogramEmbeds\",o=e.getElementsByTagName(t)[0],d=\/^http:\/.test(e.location)?\"http:\":\"https:\";if(\/^\\\/{2}\/.test(s)&&(s=d+s),window[i]&&window[i].initialized)window[i].process&&window[i].process();else if(!e.getElementById(n)){var a=e.createElement(t);a.async=1,a.id=n,a.src=s,o.parentNode.insertBefore(a,o)}}(document,\"script\",\"infogram-async\",\"https:\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script><br \/>\nRoughly 13.4 million square feet of new office space is expected to be completed in California during Q3 2018. The main delivery arena, with about 6.7 million square feet of new developments set to come online, will be the Bay Area, home to notable projects such as the\u00a0Apple Park in Cupertino, the Moffett Towers II Building 1 and Building 2, and the Moffett Place \u2013 1190 Bordeaux in <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/santa-clara-county\/sunnyvale\/\" target=\"_blank\" rel=\"noopener\">Sunnyvale<\/a>, as well as phase one of the Assembly at North First in <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/santa-clara-county\/san-jose\/\" target=\"_blank\" rel=\"noopener\">San Jose<\/a>, and the newest Stanford Research Park facility in <a href=\"https:\/\/www.commercialcafe.com\/office\/us\/ca\/santa-clara-county\/palo-alto\/\" target=\"_blank\" rel=\"noopener\">Palo Alto<\/a>. The historic Spruce Goose hangar rehabilitation\u00a0is also set to come online in Q3, and is one of the best adaptive reuse projects of the past decade in L.A.<\/p>\n<h5 id=\"methodology\"><em>Methodology<\/em><\/h5>\n<p><em>For this report, we relied on Yardi Matrix data to analyze all office transactions to close in the Bay Area, Inland Empire, Los Angeles, Orange County, Sacramento, San Diego and San Francisco markets during the second quarter of 2018 (April through June), and we selected only those carrying price tags equal to or larger than $5 million each. Our research, based on sales data recorded up until <strong>July 5th, 2018<\/strong>, includes completed office buildings that are equal to or larger than 50,000 square feet. Regarding mixed-use assets, only properties including over 50% office space were considered. Portfolio deals were counted as single transactions, while distressed sales were excluded altogether. To ensure that the trends and comparisons presented in our report are valid, we also excluded \u2018ownership stake,\u2019 \u2018ground lease,\u2019 \u2018controlling interest,\u2019 \u2018portfolio\u2019 and \u2018undisclosed\u2019 deals from our calculation of the average price per square foot. No sales of office properties equal to or larger than 50,000 square feet were recorded in the Inland Empire in Q2 2018.<\/em><\/p>\n<p><em>Although we have made every effort to ensure the accuracy, timeliness and completeness of the information included in this report, the data is provided \u201cas is\u201d and neither CommercialCafe nor Yardi Matrix can guarantee that the information provided herein is exhaustive.<\/em><\/p>\n<p><em>Property images courtesy of Yardi Matrix.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Executive summary: Q2 overview: 85% of Q2 dollar volume amassed in L.A., San Francisco, Bay Area sales; Top Q2 deals: Blackstone unloads $1B worth of L.A. and Bay Area office assets; Los Angeles rising office sales stopped short of the $2B mark; Investment in Bay Area office assets dropped 37% year over year; San Francisco&hellip;<\/p>\n","protected":false},"author":48,"featured_media":17025,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false},"categories":[37,42,38,39],"tags":[],"class_list":["post-17023","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-real-estate-news","category-market-reports","category-deals","category-office","wpautop"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v24.6) - 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