Office investment sales have been hitting a few high water marks recently in local markets, and not just in gateway cities. “Investors seeking yield have turned to fast-growing secondary cities with robust economies, such as Seattle, Denver and Charlotte,” according to the Yardi Matrix report, which points to the growing tech industry as a driver of demand for high-end office space in smaller markets.

The report cites the example of Urban Union, a recently constructed, 290,000-square-foot LEED Gold office property in Seattle that recently traded for $269 million, or about $928 per foot. Located had by Amazon's headquarters and a 600,000-square-foot Google campus, the building fetched “the highest price per square foot ever paid for an office building in Seattle,” according to Yardi Matrix.

It's not only through attracting tenant classes beyond the traditional financial and legal sectors that office is keeping up with the times. “Throughout the current cycle, a number of trends have emerged that are catalyzing the industry to pioneer new frontiers,” according to the Yardi Matrix report. “From the growing needs and desires of the Millennial cohort to the importance of energy efficiency and sustainability to providing flexibility to space users through the creation of co-working facilities, today's office buildings are taking on a new personality. Addressing these shifting needs will situate office properties well for continued growth.”

The report also features an interview with David Gilbert, president and CIO at Clarion Partners, along with an analysis of the California office markets. “This report can help everybody with a stake in office properties better understand investment prospects, shared workspaces, generational demands for working environments, new development strategies, and other key market trends,” says Jeff Adler, VP of Yardi Matrix. “Subsequent reports will offer similarly rich insight.”

SANTA BARBARA, CA—Apartments continued to post the highest sales tally among US commercial property sectors in 2016, with Real Capital Analytics reporting full-year dollar volume of $158.4 billion. However, RCA's US Capital Trends report for the first quarter of this year shows office taking a slight lead, with quarterly sales totaling $27.7 billion compared to $26.0 billion for multifamily.

A new Yardi Matrix report on the office sector—the market intelligence source's first to venture beyond multifamily—offers insights on why this may be the case. “Commercial real estate remains one of the strongest investment tools available in today's market, and the office sector is particularly attractive,” says the report, issued this past Friday. “Low interest rates on fixed-income instruments, potentially overheated equity markets and global uncertainty have continued to push demand for office real estate across many markets. For many institutional buyers looking for long-term, stable investments, the office sector offers the premier opportunity.”

The Yardi Matrix report cites growing demand for space and longer-term leases as drivers of capital from a number of sources, both foreign and domestic. “Office real estate also allows investors the opportunity to buy a single trophy or class A asset that aligns with their portfolio strategy, rather than having to amass a number of smaller industrial, hotel or retail properties,” according to the report.

For example, Singapore's sovereign wealth fund, GIC, recently plunked down nearly $1 billion, or about $640 per square foot, for a 95% stake in Deutsche Bank's headquarters at 60 Wall St., representing Q1's biggest single-asset transaction. Although arguably best known in the US for its joint-venture acquisitions of large industrial portfolios with Global Logistics Properties and the Canada Pension Plan Investment Board, GIC counts office as its biggest sector worldwide, representing nearly 40% of its commercial real estate portfolio.

Office investment sales have been hitting a few high water marks recently in local markets, and not just in gateway cities. “Investors seeking yield have turned to fast-growing secondary cities with robust economies, such as Seattle, Denver and Charlotte,” according to the Yardi Matrix report, which points to the growing tech industry as a driver of demand for high-end office space in smaller markets.

The report cites the example of Urban Union, a recently constructed, 290,000-square-foot LEED Gold office property in Seattle that recently traded for $269 million, or about $928 per foot. Located had by Amazon's headquarters and a 600,000-square-foot Google campus, the building fetched “the highest price per square foot ever paid for an office building in Seattle,” according to Yardi Matrix.

It's not only through attracting tenant classes beyond the traditional financial and legal sectors that office is keeping up with the times. “Throughout the current cycle, a number of trends have emerged that are catalyzing the industry to pioneer new frontiers,” according to the Yardi Matrix report. “From the growing needs and desires of the Millennial cohort to the importance of energy efficiency and sustainability to providing flexibility to space users through the creation of co-working facilities, today's office buildings are taking on a new personality. Addressing these shifting needs will situate office properties well for continued growth.”

The report also features an interview with David Gilbert, president and CIO at Clarion Partners, along with an analysis of the California office markets. “This report can help everybody with a stake in office properties better understand investment prospects, shared workspaces, generational demands for working environments, new development strategies, and other key market trends,” says Jeff Adler, VP of Yardi Matrix. “Subsequent reports will offer similarly rich insight.”