Eleven buildings changed hands in 2002 for an average price of $119 per sf, according to figures compiled by Helen Jobes of Austin-based Gold Eagle Investments. In 2001, 12 buildings were sold for an average of $115 per sf. Back in 1998, as occupancy rates were quickly rising, 34 buildings were sold for an average of $116 per sf. In 2000, the price per sf peaked at $145 averaged over 24 sales. The numbers are for buildings 30,000 sf and bigger.
"Everybody wanted to sell their building because they wanted to make a profit," Jobes says of the market two to four years ago. "Now people don't want to put it on the market because they don't want to take less money for it."
It's not that there aren't investors looking for properties. "There are a lot of buyers in the marketplace, but they don't want to pay too much," Jobes tells GlobeSt.com. "So some things that are on the market are staying on the market for awhile."
Jobes says the office market has reached a level of stability. "Rental rates aren't dropping like they were," she says.
The dark cloud hanging over the market is the sublease space, which accounts for almost 10% of the city's office vacancies. "What concerns me is when all this sublease space becomes direct space," Jobes says. "With very little absorption we could see rental rates go down some more."
Among the 2002 building sales, four were occupied by a single tenant with long-term leases, two were bought by users and three had low or 100% occupancy and required significant capitalization.
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