Class A apartments was the only sector to experience more than a 1% increase in price during the quarter, and CBD office was the only sector in which rents gained more than a percentage point. The worst performance was seen in retail properties, which experienced a 0.4% decline in price.

For all of 2000, however, there were significant price and rent gains. Nationwide, CBD and suburban office rents experienced double-digit percentage gains--11.27% and 10.97%, respectively--between the fourth quarters of 1999 and 2000. Class A & B apartment rents also scored respectable gains of 6% and 6.24%, respectively.

At the regional level, California produced the largest gains in prices and rents in four of the six property sectors. The biggest gains came in the CBD and suburban office market, where rents rose 23.8% and 29.3%, respectively.

The pace of property sales appears to have cooled somewhat thus far in 2001, but acquisition activity through the fourth quarter remained robust. The INDEX compiled nearly $27.7 billion worth of property transactions nationwide during the final three months of 2000, consistent with the preceding quarter. CBD and suburban office accounted for approximately 55% of the total.

For the year, the Index compiled nearly $88 billion worth of property sales. The San Francisco Bay Area--San Francisco, Oakland and the East Bay and San Jose--was the best performer for the year. San Francisco took top honors in the suburban office category, with an annual rent gain of 69%. San Jose followed with a 60% increase. For the CBD office sector the two regions switched hats, with San Jose recording a rent gain of 48% and San Francisco recording a 45% gain. San Jose also scored the top spot in class A & B apartment rents.

As mentioned, however, Northern California struggled during the final three months of the year. The dot-com deep freeze has created significant amounts of sublease space that is lowering office rents in areas such as South of Market in San Francisco and the venture capital corridors of Silicon Valley.

In terms of CBD office rents, Oakland and the rest of the East Bay area saw the biggest rent increases during the fourth quarter as tenant sought refuge from the high prices in San Francisco and San Jose. Nationally, Houston also saw significant CBD rent increases, while Boston and Cincinnati saw the biggest suburban office rent increases.

Instant Insights /

As Expected, 4th Quarter Real Estate Market Flat

Related Stories

Recommended For You