Silicon Valley

There has been very limited transaction volume in all of California but in Silicon Valley, transaction volume dropped to an all time low. A mere $9 million in office transactions traded during the first quarter of 2009 in Silicon Valley, a 98 percent drop compared with the first quarter of 2008 when $716 million was sold. The star performer was the industrial market, with $67 million traded. Still, that was down about 65 percent from a year ago. The commercial banks in California are about to start selling commercial real estate that they have foreclosed upon so transaction volume should pick up.

A vacant research and development building just closed this month in Silicon Valley. The buyer paid $111 per square foot (PSF) in June 2007 and our sources say the building closed for $47.50 PSF down 57% in two years. To get this steal the buyer had to put up a large cash deposit and close in 15 days which not many entities can do. This type sale might represent the bottom of the market.

We closely watch Silicon Valley for properties. Silicon Valley houses the worlds largest concentration of high technology companies and before this market starts to recover there will be many great deals to be made.