$1,000 per Square Foot Pricing New Reality

That pricing of all things Bay Area real estate is out of control isn't exactly news. But two recent sales caught our eye:

A 12-unit apartment building in Palo Alto near the Stanford campus traded hands for just north of $1,000 per square foot, according to The Registry. That translates into a 2% cap rate and a 25 gross rent multiplier.

Back in the city, developer Kilroy Realty Corp sold a partial stake in two downtown San Francisco office towers for an equivalent price of $950 per square foot. According to the SF Business Times, the buyer, Norway's sovereign wealth fund, now owns 44% of 100 First Street and 303 Second Street.

With the exception of development sites where price per square foot is less reflective of in place operating income than future potential, $1,000 per square foot has historically been beyond aspirational in the world of commercial real estate in this area.

Whether that barrier gets broken with more regularity is something we'll be keeping an eye on.