San Francisco offices see signs of recovery; former Sears HQ trades for $194M

S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.

The office market in San Francisco is seeing signs of recovery, with more property sellers now willing to take big losses and companies increasingly searching for space in the city, The Wall Street Journal reported.

Office property transactions are slowly materializing as sellers are finally caving in to the heavily discounted prices.

Office rents are being reset by the new valuations, with companies that were forced to move out of the city due to sky-high pre-pandemic rents returning.

Tenants looking for office space in San Francisco have increased 40% compared with 2022, driven by demand from the AI sector, according to the report, citing data company VTS.

However, the city is not out of the woods yet. Office vacancy rate, which now exceeds 25%, is likely to increase further as companies continue to adapt to hybrid work.

CHART OF THE WEEK: US REIT average short interest barely moves in August

⮞ The average short interest in US real estate investment trusts in August dropped by just three basis pointsdropped by just 3 basis points month over month to 3.6% of shares outstanding.

⮞ Regional mall REITs posted the biggest drop, at 60 basis points from a month ago to 4.8% of shares outstanding as of Aug. 31.

⮞ Office REITs logged the biggest gain, with a 22-basis-point increase month over month to 6.4% of shares outstanding.

Top transactions

– Compass Datacenters LLC paid $194 million for the former corporate campus of retailer Sears in Hoffman Estates, Ill., CoStar reported. The property spans 197 acres at 3333 Beverly Road.

– The Wolff Co. LLC sold the Aiya multifamily property in Gilbert, Ariz., to Olympus Property for $112 million. Aiya contains 360 units on a 16-acre site.

– Nuveen Investments Inc. acquired a 336-unit multifamily property in Vernon Hills, Ill., for roughly $103 million, The Real Deal reported, citing public records. A joint venture of Azure Partners LLC and Harbor Group International LLC sold Oaks of Vernon Hills, which is at 103 Oak Leaf Lane.

See key people moves in North American real estate.

REIT Replay: REIT share prices rise in week ended Sept. 15