Q2 2012 San Jose, California Office Property Sales Analysis

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Q2 2012 San Jose, California Office Property Sales Analysis


Two recent strong quarters, the second and fourth of last year, have punctuated an otherwise sluggish period for Silicon Valley office investment. For the nine sales completed year-to-date through mid-year 2012, Reis reports a total dollar volume of only $67.7 million, just 12.0% of the total accumulated through all of last year. The average selling price and mean cap rate for the first half of 2012 were $174 psf and 8.1%, low and high, respectively, by recent norms for this market. The 12-month rolling mean cap rate per quarter-end was 7.0%, up from 6.7% a year earlier. For the second quarter alone, only $23.0 million were exchanged all told in four deals. In the largest, Real Estate Trust of Silicon Valley Community Foundation paid The Sobrato Organization $10.6 million ($152 psf ) for the 69,799-square-foot Class B/C multi-tenant property at 1290 Parkmoor Avenue, San Jose. The deal closed in April at a 7.5% cap rate.