Top 10 Most Expensive Cities for Commercial Office Investment

Real Estate

transwestern
  • Top 10 Most Expensive Cities for Commercial Office Investment Top 10 Most Expensive Cities for Commercial Office Investment https://www.transwestern.com
  • transwestern.com | @Transwestern SAN FRANCISCO $571 PSF Volume: $5.04 B 71 Transactions CHICAGO Volume: $7.45 B 189 Transactions BOSTON $367 PSF Volume: $10.36 B 178 Transactions MIAMI $302 PSF MANHATTAN $903 PSF Volume: $26.58 B 140 Transactions WASHINGTON D.C. $560 PSF Volume: $4.14 B DALLAS Volume: $4.46 196 Transactions ATLANTA Volume: $4.11 B 170 Transactions LOS ANGELES $335 PSF Volume: $8.84 B 336 Transactions SAN DIEGO $273 PSF 172 Transactions AUSTIN $273 PSF SAN JOSE $401 PSF Volume: $4.56 B ORANGE COUNTY 175 Transactions SEATTLE $339 PSF Volume: $4.99 B 161 Transactions PHOENIX 155 Transactions Top 10 Most Expensive Cities Sales Price Per Square Foot Volume in Billions Number of Transactions www.transwestern.com https://twitter.com/Transwestern www.transwestern.com
  • transwestern.com | @Transwestern Top 10 U.S. Cities by Sales Price (PSF) Manhattan $903 San Francisco $571 Washington, D.C. $560 San Jose $401 Boston $367 Seattle $339 Los Angeles $335 Miami $302 Austin $275 San Diego $273 Does not include suburban locations or tertiary markets. Includes transactions over $2.5 million for 12-month period ended June 30, 2016.
  • transwestern.com | @Transwestern Top 10 U.S. Cities by Volume (Billions) Manhattan $26.58 Boston $10.36 Los Angeles $8.84 Chicago $7.45 San Francisco $5.04 Seattle $4.99 San Jose $4.56 Dallas $4.46 Washington, D.C. $4.14 Atlanta $4.11 Does not include suburban locations or tertiary markets. Includes transactions over $2.5 million for 12-month period ended June 30, 2016.
  • transwestern.com | @Transwestern Top 10 U.S. Cities by Transaction Volume Los Angeles 336 Dallas 196 Chicago 189 Boston 179 Orange County 175 San Diego 172 Manhattan 170 Atlanta 170 Seattle 161 Phoenix 155 Does not include suburban locations or tertiary markets. Includes transactions over $2.5 million for 12-month period ended June 30, 2016.
  • transwestern.com | @Transwestern Top 10 U.S. Cities Comparison VOLUME (BILLIONS) Manhattan $26.58 Boston $10.36 Los Angeles $8.84 Chicago $7.45 San Francisco $5.04 Seattle $4.99 San Jose $4.56 Dallas $4.46 Washington, D.C. $4.14 Atlanta $4.11 PRICE PER SQUARE FOOT Manhattan $903 San Francisco $571 Washington, D.C. $560 San Jose $401 Boston $367 Seattle $339 Los Angeles $335 Miami $302 Austin $275 San Diego $273 TRANSACTION VOLUME Los Angeles 336 Dallas 196 Chicago 189 Boston 179 Orange County 175 San Diego 172 Manhattan 170 Atlanta 170 Seattle 161 Phoenix 155 Does not include suburban locations or tertiary markets. Includes transactions over $2.5 million for 12-month period ended June 30, 2016.
  • transwestern.com | @Transwestern NATIONAL OVERVIEW àU.S. CRE investment in H1 2016 was 16% lower than previous year ‚ Due to a slowdown in entity-level and portfolio transactions à Investors have shown interest for major coastal markets and those with high barriers to entry àMarkets with sustainable job creation and industries will continue to see high demand ‚ Biotech, high-tech, education, healthcare, financial services, energy
  • transwestern.com | @Transwestern ATLANTA àHighest level of investment sales volume since 2007 àStrong rent growth due to healthy job growth and historically low levels of development àMost sales with a high price PSF have included a mixed-use component àOffers investors stable cash flow on many investments with room for value-add appreciation $4.11 BN SALES 170 TRANSACTIONS
  • transwestern.com | @Transwestern AUSTIN àStrong economic fundamentals attracting investment from regional, national and international groups àCore and value-add properties in high demand, putting upward pressure on pricing and compressing cap rates àStabilized suburban office product not attracting high interest due to the lack of up side ‚ Not trading at the same level as core and value-add assets $275 PER SF
  • transwestern.com | @Transwestern BOSTON àPrimary market drivers: higher education institutions, high barriers to entry, vibrant urban core, European feel àHigh demand for downtown, core assets with heavy investment from foreign capital àDevelopers increasing projects, locking down anchor tenants and selling upon completion àCambridge and Burlington seeing influx of foreign capital while outer circumferential 495 belt is still relatively weak for investment $10.4 BN SALES 179 TRANSACTIONS $367 PER SF
  • transwestern.com | @Transwestern CHICAGO àContinued rent growth and rock-bottom borrowing costs supporting urban and suburban investment, albeit at a slower pace àHigh value-add PSF, especially for Class A buildings à Increased interest in core-plus and value-add investments as well as Class A suburban assets due to low yield on core assets àGrowing sentiment that office market has peaked is making some sellers anxious to regain profit on assets acquired in 2006-07 $7.45 BN SALES 189 TRANSACTIONS
  • transwestern.com | @Transwestern DALLAS àDiversified economy with growth in multiple industries combined with relatively low cost of living ‚ Finance, information technology, healthcare àAttracting major companies to relocate headquarters or regional headquarters, in turn attracting ancillary businesses àEspecially attractive urbanized suburban locations with live/work/ play elements and walkability àSound office fundamentals driving up rent and lowering vacancy $4.46 BN SALES 196 TRANSACTIONS
  • transwestern.com | @Transwestern LOS ANGELES àAverage rental rates have surged past previous cycle peak àSales volume and pricing returned to levels not seen in 10 years àUsually recovers later in the CRE cycle from both a property fundamentals and investment perspective ‚ Investors turn attention to Southern California when other gateway markets see frothy office valuations àTarget for foreign investors, especially from Asia, because of familiarity and close business relationships $8.84 BN SALES 336 TRANSACTIONS $335 PER SF
  • transwestern.com | @Transwestern MANHATTAN àAverage sales value PSF has exceeded historical highs in all submarkets àCross-border investments are primary source of capital, followed by institutional, as public and REIT investment has dried up ‚ Cross-border investment has doubled since 2014, accounting for 45% of investment in 2016 àCapital coming from China, U.K., Saudi Arabia, Germany, Canada and Norway $26.6 BN SALES 170 TRANSACTIONS $903 PER SF
  • transwestern.com | @Transwestern MIAMI àSustained investor appetite prompting large and relatively solid pricing levels àFour CBD assets traded for a combined $456 million, a 6.25-year record àOne asset traded at $522 PSF ‚ Only two other assets have traded above $500 PSF since 2010 àSuburban assets are being priced and selling competitively $302 PER SF
  • transwestern.com | @Transwestern PHOENIX àUsers opting to purchase buildings rather than rent ‚ Due to low interest rates near an all-time low and lease rates continuing to rise àWhile there is some public and REIT investment, the bulk of deals include private investors 155 TRANSACTIONS
  • transwestern.com | @Transwestern SAN DIEGO à Investors usually look to Los Angeles and Orange County first, but as those markets see higher pricing, investors look for bargains àStrong clusters in life sciences, high-tech and defense-related industries drive higher-end niche office buildings that attract buyers 172 TRANSACTIONS $273 PER SF
  • transwestern.com | @Transwestern SAN FRANCISCO àPrevailing market drivers: limited deliverable inventory, strong investor demand, immediate opportunity to capture equity growth àPricing surpassing previous recessions due to lack of inventory àMaturing investment cycle is causing velocity to taper ‚ Most investors now seeking long-term hold periods àSmaller assets along with Class B and C product are highly coveted $5.04 BN SALES $571 PER SF
  • transwestern.com | @Transwestern SAN JOSE àTraditionally not a high-volume investment market due to limited trophy assets à Increased office development pushing up values àCross-border investment has decreased during last few years àSince the dot.com era, tech firms have opted to take over existing campuses rather than build new $4.56 BN SALES $401 PER SF
  • transwestern.com | @Transwestern SEATTLE àTech companies like Amazon and Microsoft have been driving expansion but have recently slowed aggressive growth plans àResidential markets hitting historic highs ‚ Single-family homes and condos saw the best July on record in terms of transactions and on-market listings ‚ Multifamily rents are climbing 4x faster than national average àOffice development continues to surge to meet high demand $4.99 BN SALES 161 TRANSACTIONS $339 PER SF
  • transwestern.com | @Transwestern WASHINGTON, DC àComparatively, the price PSF is one of the highest in U.S. but transaction volume and total volume is quite low àHigh value due to overall stability as well as foreign and institutional capital àSeen as extremely safe and stable, due in large part to the presence of the Federal Government $4.14 BN SALES $560 PER SF
  • transwestern.com | @Transwestern Data from Real Capital Analytics and CoStar. Analysis by Transwestern Research and Capital Markets. https://www.transwestern.com/corporate/research https://www.transwestern.com/corporate/services/capitalmarkets
  • GET INVOLVED transwestern.com www.transwestern.com https://twitter.com/Transwestern https://www.facebook.com/transwestern/ https://www.linkedin.com/company/transwestern/ www.youtube.com/transwesterntv www.vimeo.com/transwestern https://www.flickr.com/photos/transwestern/albums www.pinterest.com/transwestern www.slideshare.net/transwestern https://www.transwestern.com/blog https://www.transwestern.com/rss/ www.transwestern.com
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  • Top 10 Most Expensive Cities for Commercial Office Investment Top 10 Most Expensive Cities for Commercial Office Investment https://www.transwestern.com
  • transwestern.com | @Transwestern SAN FRANCISCO $571 PSF Volume: $5.04 B 71 Transactions CHICAGO Volume: $7.45 B 189 Transactions BOSTON $367 PSF Volume: $10.36 B 178 Transactions MIAMI $302 PSF MANHATTAN $903 PSF Volume: $26.58 B 140 Transactions WASHINGTON D.C. $560 PSF Volume: $4.14 B DALLAS Volume: $4.46 196 Transactions ATLANTA Volume: $4.11 B 170 Transactions LOS ANGELES $335 PSF Volume: $8.84 B 336 Transactions SAN DIEGO $273 PSF 172 Transactions AUSTIN $273 PSF SAN JOSE $401 PSF Volume: $4.56 B ORANGE COUNTY 175 Transactions SEATTLE $339 PSF Volume: $4.99 B 161 Transactions PHOENIX 155 Transactions Top 10 Most Expensive Cities Sales Price Per Square Foot Volume in Billions Number of Transactions www.transwestern.com https://twitter.com/Transwestern www.transwestern.com
  • transwestern.com | @Transwestern Top 10 U.S. Cities by Sales Price (PSF) Manhattan $903 San Francisco $571 Washington, D.C. $560 San Jose $401 Boston $367 Seattle $339 Los Angeles $335 Miami $302 Austin $275 San Diego $273 Does not include suburban locations or tertiary markets. Includes transactions over $2.5 million for 12-month period ended June 30, 2016.
  • transwestern.com | @Transwestern Top 10 U.S. Cities by Volume (Billions) Manhattan $26.58 Boston $10.36 Los Angeles $8.84 Chicago $7.45 San Francisco $5.04 Seattle $4.99 San Jose $4.56 Dallas $4.46 Washington, D.C. $4.14 Atlanta $4.11 Does not include suburban locations or tertiary markets. Includes transactions over $2.5 million for 12-month period ended June 30, 2016.
  • transwestern.com | @Transwestern Top 10 U.S. Cities by Transaction Volume Los Angeles 336 Dallas 196 Chicago 189 Boston 179 Orange County 175 San Diego 172 Manhattan 170 Atlanta 170 Seattle 161 Phoenix 155 Does not include suburban locations or tertiary markets. Includes transactions over $2.5 million for 12-month period ended June 30, 2016.
  • transwestern.com | @Transwestern Top 10 U.S. Cities Comparison VOLUME (BILLIONS) Manhattan $26.58 Boston $10.36 Los Angeles $8.84 Chicago $7.45 San Francisco $5.04 Seattle $4.99 San Jose $4.56 Dallas $4.46 Washington, D.C. $4.14 Atlanta $4.11 PRICE PER SQUARE FOOT Manhattan $903 San Francisco $571 Washington, D.C. $560 San Jose $401 Boston $367 Seattle $339 Los Angeles $335 Miami $302 Austin $275 San Diego $273 TRANSACTION VOLUME Los Angeles 336 Dallas 196 Chicago 189 Boston 179 Orange County 175 San Diego 172 Manhattan 170 Atlanta 170 Seattle 161 Phoenix 155 Does not include suburban locations or tertiary markets. Includes transactions over $2.5 million for 12-month period ended June 30, 2016.
  • transwestern.com | @Transwestern NATIONAL OVERVIEW àU.S. CRE investment in H1 2016 was 16% lower than previous year ‚ Due to a slowdown in entity-level and portfolio transactions à Investors have shown interest for major coastal markets and those with high barriers to entry àMarkets with sustainable job creation and industries will continue to see high demand ‚ Biotech, high-tech, education, healthcare, financial services, energy
  • transwestern.com | @Transwestern ATLANTA àHighest level of investment sales volume since 2007 àStrong rent growth due to healthy job growth and historically low levels of development àMost sales with a high price PSF have included a mixed-use component àOffers investors stable cash flow on many investments with room for value-add appreciation $4.11 BN SALES 170 TRANSACTIONS
  • transwestern.com | @Transwestern AUSTIN àStrong economic fundamentals attracting investment from regional, national and international groups àCore and value-add properties in high demand, putting upward pressure on pricing and compressing cap rates àStabilized suburban office product not attracting high interest due to the lack of up side ‚ Not trading at the same level as core and value-add assets $275 PER SF
  • transwestern.com | @Transwestern BOSTON àPrimary market drivers: higher education institutions, high barriers to entry, vibrant urban core, European feel àHigh demand for downtown, core assets with heavy investment from foreign capital àDevelopers increasing projects, locking down anchor tenants and selling upon completion àCambridge and Burlington seeing influx of foreign capital while outer circumferential 495 belt is still relatively weak for investment $10.4 BN SALES 179 TRANSACTIONS $367 PER SF
  • transwestern.com | @Transwestern CHICAGO àContinued rent growth and rock-bottom borrowing costs supporting urban and suburban investment, albeit at a slower pace àHigh value-add PSF, especially for Class A buildings à Increased interest in core-plus and value-add investments as well as Class A suburban assets due to low yield on core assets àGrowing sentiment that office market has peaked is making some sellers anxious to regain profit on assets acquired in 2006-07 $7.45 BN SALES 189 TRANSACTIONS
  • transwestern.com | @Transwestern DALLAS àDiversified economy with growth in multiple industries combined with relatively low cost of living ‚ Finance, information technology, healthcare àAttracting major companies to relocate headquarters or regional headquarters, in turn attracting ancillary businesses àEspecially attractive urbanized suburban locations with live/work/ play elements and walkability àSound office fundamentals driving up rent and lowering vacancy $4.46 BN SALES 196 TRANSACTIONS
  • transwestern.com | @Transwestern LOS ANGELES àAverage rental rates have surged past previous cycle peak àSales volume and pricing returned to levels not seen in 10 years àUsually recovers later in the CRE cycle from both a property fundamentals and investment perspective ‚ Investors turn attention to Southern California when other gateway markets see frothy office valuations àTarget for foreign investors, especially from Asia, because of familiarity and close business relationships $8.84 BN SALES 336 TRANSACTIONS $335 PER SF
  • transwestern.com | @Transwestern MANHATTAN àAverage sales value PSF has exceeded historical highs in all submarkets àCross-border investments are primary source of capital, followed by institutional, as public and REIT investment has dried up ‚ Cross-border investment has doubled since 2014, accounting for 45% of investment in 2016 àCapital coming from China, U.K., Saudi Arabia, Germany, Canada and Norway $26.6 BN SALES 170 TRANSACTIONS $903 PER SF
  • transwestern.com | @Transwestern MIAMI àSustained investor appetite prompting large and relatively solid pricing levels àFour CBD assets traded for a combined $456 million, a 6.25-year record àOne asset traded at $522 PSF ‚ Only two other assets have traded above $500 PSF since 2010 àSuburban assets are being priced and selling competitively $302 PER SF
  • transwestern.com | @Transwestern PHOENIX àUsers opting to purchase buildings rather than rent ‚ Due to low interest rates near an all-time low and lease rates continuing to rise àWhile there is some public and REIT investment, the bulk of deals include private investors 155 TRANSACTIONS
  • transwestern.com | @Transwestern SAN DIEGO à Investors usually look to Los Angeles and Orange County first, but as those markets see higher pricing, investors look for bargains àStrong clusters in life sciences, high-tech and defense-related industries drive higher-end niche office buildings that attract buyers 172 TRANSACTIONS $273 PER SF
  • transwestern.com | @Transwestern SAN FRANCISCO àPrevailing market drivers: limited deliverable inventory, strong investor demand, immediate opportunity to capture equity growth àPricing surpassing previous recessions due to lack of inventory àMaturing investment cycle is causing velocity to taper ‚ Most investors now seeking long-term hold periods àSmaller assets along with Class B and C product are highly coveted $5.04 BN SALES $571 PER SF
  • transwestern.com | @Transwestern SAN JOSE àTraditionally not a high-volume investment market due to limited trophy assets à Increased office development pushing up values àCross-border investment has decreased during last few years àSince the dot.com era, tech firms have opted to take over existing campuses rather than build new $4.56 BN SALES $401 PER SF
  • transwestern.com | @Transwestern SEATTLE àTech companies like Amazon and Microsoft have been driving expansion but have recently slowed aggressive growth plans àResidential markets hitting historic highs ‚ Single-family homes and condos saw the best July on record in terms of transactions and on-market listings ‚ Multifamily rents are climbing 4x faster than national average àOffice development continues to surge to meet high demand $4.99 BN SALES 161 TRANSACTIONS $339 PER SF
  • transwestern.com | @Transwestern WASHINGTON, DC àComparatively, the price PSF is one of the highest in U.S. but transaction volume and total volume is quite low àHigh value due to overall stability as well as foreign and institutional capital àSeen as extremely safe and stable, due in large part to the presence of the Federal Government $4.14 BN SALES $560 PER SF
  • transwestern.com | @Transwestern Data from Real Capital Analytics and CoStar. Analysis by Transwestern Research and Capital Markets. https://www.transwestern.com/corporate/research https://www.transwestern.com/corporate/services/capitalmarkets
  • GET INVOLVED transwestern.com www.transwestern.com https://twitter.com/Transwestern https://www.facebook.com/transwestern/ https://www.linkedin.com/company/transwestern/ www.youtube.com/transwesterntv www.vimeo.com/transwestern https://www.flickr.com/photos/transwestern/albums www.pinterest.com/transwestern www.slideshare.net/transwestern https://www.transwestern.com/blog https://www.transwestern.com/rss/ www.transwestern.com
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