CRE Rebounds Robustly From Downturn

SAN FRANCISCO–It is widely accepted that residential and commercial real estate values move in unison. As with national real estate markets, the San Francisco market was hit across the board during the recession. Home prices declined 15% in 2008 and office rents in the city plummeted 34% that same year, according to Zillow and CompStak, respectively. However, while home sale prices took more than 30 months to recover from the downturn, the commercial market had only two flat quarters before re-establishing positive gains.

Between 2004 and 2007, median home sale prices had climbed to $822,000 and average office rents hit a peak of $43 per square foot. As the economy contracted, the real estate market declined with it. Median home sale prices fell for 1.5 years from late 2007 until 2009. Home prices then held steady, between $670,000 and $700,000, until mid-2011, before beginning the climb back up. Today the average home price in San Francisco stands at $984,500, 55% above its 2008 low and well above its pre-recession peak.