Monday, January 14, 2019

Office properties traded at a strong clip in 2018

Natalie Kostelni Reporter Philadelphia Business Journal
Suburban office sales in 2018 totaled $863.6 million, which was nearly double the $447.4 million laid out to buy office buildings in Philadelphia’s Central Business District.

That’s in contrast to 2017 when office properties totaling $929 million traded in the CBD compared with $864 million in the suburbs. What the 2017 figures show is that suburban office sales were gaining on downtown transactions in terms of dollar volume and that trend was solidified last year.

The commercial real estate investment market was healthy last year across the region. A total of $1.6 billion in 18 office transactions valued at $25 million or more were recorded for the Philadelphia suburbs and Center City combined. Other data, which calculates properties sold that were 25,000 square feet and greater regardless of the transactional amount, showed 92 transactions totaling $1.8 billion were logged last year throughout the region. That outstripped 2017 when 47 deals totaling $1.5 billion were completed.

Sales on a price per square-foot basis also improved.  data show the average office sale price was $180 a square foot compared with $173 a square foot. The occupancy of the properties sold averaged 93 percent, according to Real Capital, and proved money was flowing into lower risk, stable assets. 

While the suburbs experienced the most sales by dollar volume, three suburban submarkets ruled. King of Prussia, Malvern and Conshohocken were the top markets to get investor attention, according to the research. Those three markets accounted for $777 million in sales, according to Real Capital. In Conshohocken, Eight Tower Bridge and 161 Washington St. were among those properties that traded while several properties put up for sale by Liberty Property Trust in Malvern and King of Prussia also sold.
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