Posted by: BayAreaComRE | December 22, 2009

Office Prices Fall to 2002 Levels

Low transaction volume and low rents have depressed office sale prices in the home stretch of 2009, but there are indications the pain will subside and a bottom will be realized in 2010. The most significant figure notes the latest recession has wiped out the growth after the dot.com bust, dating back to 2002.

Moody’s publishes this index quarterly, in conjunction with MIT Center for Real Estate and Real Estate Analytics, LLC.

Since prices peaked in October 2007, commercial properties on a whole have decreased 42.9%, but office saw some of the sharpest declines of all commercial properties in the top MSA’s (metropolitan statistical area) – 19.3% decline in prices in the 3rd Quarter.

According to the report, San Francisco saw a 27% decline from 1 year earlier. The two notable transactions in downtown San Francisco, 250 Montgomery and 333 Bush, traded for significantly lower than their previous prices – consistent with this special report by Moody’s and REAL. In 2009, Argonaut Private Equity Group bought 250 Montgomery for 57% less than Lincoln Properties bought it in 2006, see article in SF Business Times.

The low number of buildings being traded may indicate a bottom nearing in 2010. “The relatively tight range of transaction volume we’ve seen over the past year may mean that we have reached our bottom in terms of sales per month.”

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Responses

  1. […] covered their last report, which showed prices dropping to 2002 levels in the 3rd Quarter. Check out our previous story here. The pain has basically slowed its pace, with monthly declines as much as 7%, and the bright spot […]


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