San Diego Investment Sales Drop in 1H18

Investment sales volumes in San Diego declined in the first half of the year. According to new research from CBRE, total sales volumes across property types dropped 35% in the first half of the year compared to the second half of 2017 and sales volumes dropped 25% below the five-year average. While sales volumes fell, cap rates remained stable compared to the second half of 2017.

“There were a number of contributing factors, however, one key component has been the rise in interest rates,” Hunter Rowe, VP at CBRE, tells GlobeSt.com when asked about why the sales activity fell so significantly this year. “The 10-year treasury was around 2.4% late last year and has since fluctuated and risen steadily to where it is today, 3%. That said, I feel the capital markets have adjusted and buyers and sellers are coming back to the table.”

Industrial and multifamily cap rates continued to decline in the first half of the year. Multifamily cap rates fell to a record low as investors continue to pay top prices from multifamily assets with the average per-unit price reaching $271,000 in the first half of the year. That is the highest average price since 2003. Industrial cap rates also continued to decline for the second half-year in a row. Cap rates for industrial product are now at a record low as well. Office and retail cap rates, on the other hand, are less exciting. Cap rates were flat for class-B and class-C office product, while cap rates for class-A and class-AA assets increased 12 to 13 basis points. Retail cap rates rose in the first half of the year, but the average price per square foot increased 16.2%.