S.F. office investment activity ahead of last year’s figure
San Francisco office investment activity totaled $4.9 billion year-to-date, well ahead of last year’s figure of $1.7 billion, according to Cushman & Wakefield.
There have been 18 transactions totaling 6 million square feet that have closed citywide with an average price of $740 per square foot.
The largest transaction of the third quarter was the sale of Levi’s Plaza with Jamestown purchasing the complex for $887 per square foot or $826 million. Meanwhile, co-working giant WeWork acquired its first class A office building in San Francisco, 600 California Street for approximately $912 per square foot or $331 million. Strong leasing fundamentals and buyer demand are expected to continue through the end of this year with a number of pending transactions likely to close above $1,000 per square foot.
A total of 2.4 million square feet was under construction at the end of the third quarter, with one project expected to deliver by year end: 600,000 square feet at the Chase Center in Mission Bay, which is 100 percent pre-leased to Uber.
Asking rents (citywide comparison) remain the highest in the United States. San Francisco’s citywide overall asking rent closed at a record $79.95 per square foot (up 7 percent year-over-year. The central business district class A direct asking rent was a record $87.62 per square foot, up 7.8 percent year-over-year. The south financial district has recorded a surge in its class A direct asking rent over the past year, increasing 14.9 percent to $92.65.
Vacancy continued to fall to the lowest point in this economic cycle. The citywide overall figure was just 5.3 percent at the end of the third quarter, falling 20 basis points from the second quarter and down 150 basis points from one year ago.