Q2 2012 Los Angeles, California Office Property Sales Analysis

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Q2 2012 Los Angeles, California Office Property Sales Analysis

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.)

Top Submarkets

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.