Lots of Movement in Bay Area Commercial Real Estate

Last week I noted that the dominoes were starting to fall in the local commercial real estate market. The fun has definitely begun. Big story this week:

250 Montgomery Street in San Francisco (corner of Pine), a 16 story / 116ksqft building just traded hands at a 57% decline (from $400 / sqft to $172 / sqft). The owner, Lincoln Properties, went into default and sold the note on the building to an undisclosed buyer. The story in the San Francisco Business Times goes onto say that this transaction sets a new benchmark in valuations of San Francisco Commercial Real Estate (LINK).

As noted last week, the downstream effect of these transactions will ultimately allow rents to adjust to the new reality (down), and thus begin to fill up the mostly vacant buildings.

Why is this relevant to Sam Clar Office Furniture, the Commercial Services Group, or any other Bay Area Facilities professional? Because - the more transactions (companies moving or relocating), the more projects and opportunities for our services. Rents adjusting downward allows the building owners to increase occupancy - (e.g. more relocations). Again, this is a "painful" but necessary adjustment process.