San Francisco Market Update: Office Sales Increase Y-o-Y

August 12, 2021

Confidence in the market's recovery is slowly building, with tech and life science space most in demand.

In June, office sales in the San Francisco-Peninsula and Bay Area markets totaled $661 million, with 1.5 million square feet of space changing hands, according to CommercialEdge data. Month-over-month, sales volume dropped by 8.6 percent, from $723 million. Suburban areas were preferred by investors in June, as 12 of the 14 transactions occurred outside the core.

Investments in tech and life sciences led activity, and the value of office sales jumped by 45 percent year-over-year—from the $454 million that traded in June 2020. Confidence in the market’s recovery is slowly building up, but for now transactions remain far below the pre-health crisis levels of 2019, when $2.1 billion in sales were recorded in the same month.

Four properties traded in the San Francisco-Peninsula office market—totaling $296 million in sales. The area was the third most expensive nationally, as prices per square foot reached $716 in the first half of the year. The only markets surpassing it were Manhattan ($1,249 per square foot) and Brooklyn ($752).

The Belmont-San Carlos submarket recorded the highest price per square foot for a transaction, at $1,087. Alexandria Real Estate Equities acquired a six-building property in San Carlos, where the biotech developer is planning a 1 million-square-foot life sciences project.

Most transactions occurred in the Bay Area—comprising the East and South Bay. Ten properties changed hands in the market, generating $364 million. The area’s price per square foot decreased to $505 in June, down 11 percent month-over-month.

The largest sale by dollar value was GI Partners’ $155 million acquisition of Mt. Eden Research Park, a six-building campus totaling 369,986 square feet and located in Hayward. The private equity firm plans to convert the entire space for life science use, as 81 percent of it is occupied by biotechnology firms.

CommercialEdge covers 8M+ property records in the United States. View the latest CommercialEdge national monthly office report here.