October 31, 2014

Trbo’s 2014 3rd Quarter Investment Sales Report

Craig Trbovich Commercial Real Estate –

While there are many different statistics that are helpful in analyzing commercial real estate, one of the most commonly used is Sales Price per Square Foot.  It’s easy to understand and to useful in comparing market values with other sales.  So in the charts below for each product type, I have highlighted sales price per square foot since 2007 when the recent market cycle was at its peak.

Slow and steady has been the economic and commercial real estate recovery as I wrote in my recent Market Report.   Looking at the Average Sales Price per Square Foot charts below, it appears the investment sales market also took a slow and steady ride to the bottom over a 3-4 year period from the peaks of 2007-2008 to the bottom in 2010-2011.  Thinking back, it felt much more sudden because activity first came to an abrupt halt.  Then, values declined in the first couple of years of the recession, as many investors with debt on their properties were not able to sell or retain their properties as lease rates tumbled, vacancies climbed and debt amounts exceeding values.  The next stage of the decline reflect the period when more of those underwater properties had been taken back by lenders and resold in the market at significant discounts.  That process took several years to work through and is reflected as a slow and steady decline in Price per Square Foot charts.  And in 2011-2012, investment sales started the slow and steady improvement that the rest of the market and economy has been experiencing.



Industrial Warehouse Investment Sales

Industrial warehouse investment sales show a slowdown in Total Sales Number and Dollars below, however, the Average Price per SF reflects an 8% increase.  Lack of available product for sale continues to slow activity as the quarterly total square feet for sale is currently the lowest since 2005.


Industrial Investment Table


Investment Industrial Warehouse Average Sales Price Per Square Foot

Industrial Investment Sales Price psf



Office Investment Sales

Office investment sales until now have reflected lackluster interest from many investors as vacancies have continued to remain historically high.  There was a healthy increase in Total Sales, a decrease in Average Price per SF and a small decrease in Average Cap Rate.   Overall, the office market continues its slow recovery on the sales and leasing sides.  However, recent jobs and gross domestic product improvements at the national level may be creating more positive investor sentiment towards office properties.   CoStar recently published an interesting article looking at this trend (see Office Investors).


Office Investment Table


Investment Office Average Sales Price Per Square Foot

Office Investment Sales Price psf



Retail Investment Sales

Retail is having a strong year with a 50% increase in average sales price per square foot over 2013!  Demand for retail properties has been strong, and similar to the industrial market, there is little product available to meet investors’ demand.


Retail Investment Sales Table


Investment Retail Average Sales Price Per Square Foot

Retail Investment Sales Price psf

Source:  CoStar Analytics, Investment Sales (non-distressed) Over 15,000 sf.


Complimentary copies of the complete quarterly CoStar Reports are available at the following links:  Phoenix IndustrialPhoenix OfficePhoenix Retail.  For a no obligation analysis of your property, please call me at (408) 522-2799 or email at ctrbovich@cpiaz.com to “TrboCharge” your investment real estate today.



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