During the first half of the year, office sales across major markets in the U.S. added up to roughly $14.8 billion with assets trading at nearly $200 per square foot. According to the latest national office report published by CommercialEdge, this total was well below the $43.7 billion in sales recorded during the same time the year before. The report noted that markets with larger supplies of property use types that were in high demand attracted significantly more attention from investors than others.

Due to demographic shifts toward a larger cohort of people aged 65 and older compared to those under 18, medical office buildings (MOB) in particular are expected to remain a highly attractive investment asset going forward. And, as advances in medical technology and treatments have helped move procedures that used to require a hospital stay to outpatient care facilities, demand for more medical office buildings is expected to grow in the coming years.

Although the MOB sector was not untouched by the slump in office sales that was predicted at the start of the year, it has seen consistent performance in terms of average sale prices. For instance, between 2017 and 2022, the average sale price fluctuated from $260 to $290 per square foot. Then, during H1 2023, prices ticked up to an average of $296 per square foot, which also marked a nearly $100 increase compared to the national average of $199 per square foot for all office buildings.

Likewise, life sciences office space also continued to perform well and drive sales activity in well-stocked markets. As of the close of June 2023, Boston was the market to see the highest sales volume with a total of nearly $1.3 billion in deals closed year-to-date.

Notably, among the markets tracked by CommercialEdge for the report, New Jersey stood out as one of the more active in terms of sales since the start of the year. Specifically, New Jersey had the fourth-highest H1 sales total ($928 million), behind Boston, Manhattan ($1.27 billion), and Los Angeles ($1.11 billion). The report estimated that many of this year’s office sales in New Jersey were due to its large concentration of pharmaceutical companies, as well as its strong lab space scene in the market.

One of the largest assets to change hands here since the start of 2022 was the former Merck headquarters campus, which was acquired by an Onyx Equities-led joint venture in February. The new owners have since announced plans to develop a new life sciences and biotechnology hub — the Northeast Science and Technology (NEST) Center — at the nearly 2-million-square-foot campus in Kenilworth, N.J.

View the full monthly CommercialEdge national office report for in-depth analysis of performance across all of the top U.S. office markets; listing and vacancy rates; sales activity; office pipeline stats; and more.

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