Metro Volume and Pricing
Reis Transaction Analytics recorded 16 single-property office investment sales for San Diego in the second quarter of 2012, a remarkable uptick from the two recorded in the first quarter.* As noted in earlier Observer coverage, single-digit quarterly volumes have been common here since the beginning of 2009, although the last quarter of 2011 saw 13 transactions. The 16 sales resulted in a quarterly transaction volume of $136.5 million at an average price of $138 psf. So far in 2012, the top sale is still the January transaction of 117,000-square-foot Plaza Del Mar, which sold for $34 million ($291 psf).
The Mission Valley submarket took the lead in transaction volume in the last 12 months with $198 million in sales for 802,996 square feet. Sorrento Valley followed with 509,239 square feet sold for $164 million. Sorrento Valley and Kearny Mesa had near identical mean prices, reported at $321 psf.
Cap Rate Comparisons and Forecasts
With sales activity picking up so dramatically, Reis was able to obtain sufficient data to determine a mean cap rate and a 12 month rolling cap rate. The mean cap rate for the quarter is 8.4%, the rolling cap rate is 7.3%. The rolling cap rate is fairly in line with prior readings, the mean cap rate is the highest it has been since the third quarter of 2010. The high current mean cap rate indicates landlords are not pricing their assets competitively, so the current sale market may not be as strong as has been recorded earlier.