Metro Volume and Pricing
Los Angeles single property office investment sales picked up notably in the second quarter of 2012. Reis reports 26 qualifying deals for $599 million at a mean price of $173 psf.* The second quarter saw the largest deal of the past 12 months. Reis reports the sale of the 472,000-square-foot Wedbush Center in Los Angeles for $132 million. The price per-square-foot was $280. April also saw the sale of the 113,000-square-foot Broadway Plaza, in Santa Monica, for $61 million ($540 psf) and the 449,881-square-foot Pacific Center Building for $60 million ($133 psf.)
Downtown leads in square feet sold, at 2 million, and transaction volume, at $319 million. The price-per-square foot here is fairly modest at $159. The highest price by far was in the Santa Monica submarket, at $509 psf, followed by Hollywood Sunset, at $295 psf.
Cap Rate Comparisons and Forecasts
The mean cap rate for second quarter sales in Los Angeles is 7.9%, petty much in line with the U.S. and West region averages. The rolling 12 month cap rate is 8.1%, still rising from the 6.4% calculated in the second quarter of 2011. Reis predicts the rolling 12 month mean will level off at about its current level for a couple of years before edging down slightly, reaching 7.7% by 2016.