2019 office sales set record pricing while 2020 shows signs of slowing
Sales activity will likely remain slow as market dynamics shift dramatically due to COVID-19
June 08, 2020
Peak sales pricing by year (+$700/s.f.)
- Things look a lot different so far in 2020. A total of $0.5 billion in office investment transactions closed so far this year in the Puget Sound region, a significant drop from $2.8 billion during the same period in 2019.
- The drop in sales volume can be largely attributed to the changing dynamics due to the COVID-19 outbreak. A number of factors including uncertainty in the debt markets, difficulties pricing amidst a pandemic, and the inability to tour properties have led a number of sellers to temporarily pull assets from the market.
- Select buyers with more flexible capital remain active in the market, with an increased interest in long term, credit tenant leased properties with surety of cash flow.
- What will market conditions be post-COVID-19? Specific conditions are hard to predict, but expect pricing adjustments for value-add and core-plus assets. A number of core assets will hit the market soon and these will signal where the Seattle market is headed.
- Just how deep the impact will be remains to be seen, but industry makeup of the Seattle market puts it on solid footing because of its strong tech tenancy.