San Francisco Market Update: Sales Still Slow by Bay Area Standards

In February, five properties totaling 415,585 square feet of office space traded for $178 million in the Bay Area, according to CommercialEdge data. The amount is relatively similar to the market’s January activity, when $163 million in office assets were sold, totaling 928,416 square feet. The amount also marks a sharp, 79 percent decline in transaction volume year-over-year, as 2 million square feet of space traded for $833 million in February 2020.

Four of the five deals involved Silicon Valley assets located in primary suburban submarkets. The fifth transaction was a suburban San Francisco repurchase; The Wiseman Co. acquired a 30,000-square-foot, Napa property that the company had previously sold in 2003.

Investor appetite was mostly pointed at creative office and office/flex space. There was however some forward-looking interest in life science space, as one of the traded assets is slated for conversion. A joint venture between BioScience Properties and Harrison Street purchased a 67,000-square-foot building at 303 Ravendale Drive in Mountain View, with the intention to transform it into Class A life science space.

The largest sale closed in early February, when Hines acquired a 127,000-square-foot property at 5301 Patrick Henry Drive in Santa Clara, Calif., for $68 million. Apple has been the sole tenant of the one-story building since mid-2015. The location, together with a neighboring office property at 5440 Patrick Henry Drive, houses around 1,600 of the Cupertino-based company’s employees.

CommercialEdge covers 8M+ property records in the United States. View the latest CommercialEdge national monthly office report here. We included properties of 25,000+ square feet in our research.