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San Diego saw a surge in investment activity in the second half of 2017. Office investment sales reached record highs since 2H17, and industrial sales were the highest since 2003, according to a new capital markets report from CBRE. Multifamily sales were still strong in the final two quarters of the year, however, didn’t hit the peak volumes that the office and industrial sectors saw. As a result of the activity, commercial asset values hit a record high as well of $271 per square foot. All asset classes saw increases in values. Office properties traded for an average $319 per square foot; industrial properties hit $194 per square foot; and multifamily prices increased to $268 per square foot. To find out more about the investment activity in San Diego at the close of 2017, we sat down with market expert Scott Peterson, an SVP at CBRE.

GlobeSt.com: Why did the San Diego market see an increase in investment activity, especially for office product, in the second half of 2017?

Scott Peterson: At the beginning of last year and following the election, interest rates had jumped dramatically and there were a lot of questions about where the market is headed. The stock market had rallied, and investors were trying to determine if we had hit a peak again and if it was the right time to be buying. We saw a pull back in lending as a result of that as well. We had a lot of buyers waiting on the sidelines waiting to see how the tax plan would be resolved and what would happen to the 1031 exchange, property taxes and mortgage deduction levels. As the year progressed, a lot of those questions were resolved, and I think there was a mindset change in the market. There is a lot of positive momentum in the market and there is really nothing to set the market in the opposite direction. Overall, we haven’t overbuilt office product, and you have seen a lot of value-add office acquisitions. The activity in the second half of the year really came from pent-up demand. Additionally, sellers felt more comfortable bringing product to market once the new tax plan was announced.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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