Real Estate Reporter- Silicon Valley Business Journal
Google Inc.’s ravenous appetite for office space continued to fuel the region’s commercial real estate sales in the second quarter, contributing to a total of $940.3 million of office properties changing hands. That’s up 14 percent from a year ago, according to the latest numbers from New York research firm Real Capital Analytics.
A slew of pricey deals pushed the price per square foot to a record $394, RCA said, while cap rates — a measure of yield that typically goes down as prices go up — compressed to about 5.7 percent.
“That means there’s more competition for these transactions,” said Ben Thypin, director of market analysis for Real Capital Analytics. “Whether you’re looking at cap rates or price per square foot, the San Jose metro area is pretty hot.”
The San Jose area’s strong sales activity comes as the broader national market also experiences a recovery. U.S. office transaction volume was $23.73 billion in Q2, up about 25 percent year over year and the eighth straight quarter of year-over-year increases.
But San Jose’s numbers were enough to propel the metro area to the No. 7 slot on Real Capital Analytics’ Top 40 U.S. office markets, slotting in between Chicago and Dallas. San Francisco hit No. 3, with $4.2 billion in deals. Manhattan and Los Angeles came in at Nos. 1 and 2, respectively.
San Jose’s showing on the list is its highest performance in years, Thypin said.
“The fact that over the past 12 months through Q2 there’s been $3.6 billion in transactions is the most in a 12-month period since the end of 2007,” he said.
And quarterly sales volume is the most since the third quarter of 2007, except for a massive jump in Q4 of 2013.
Nathan Donato-Weinstein covers commercial real estate and transportation for the Silicon Valley Business Journal.