In Certain Submarkets Industrial Worth More Than Class A Office Buildings
![](https://i0.wp.com/officetimes.com/wp-content/uploads/2020/02/Sutter-Square-e1582324910796-1024x532.jpg?resize=1024%2C532&ssl=1)
Our office recently sold two commercial buildings in the city of Concord, California, located about 30 miles to the East of San Francisco out in the suburbs. One was a 180,000 square foot Class A office building with six stories of subterranean parking, and full-service rental rates in the $2.65/rsf range. Walking distance to Bart, close to retail and amenities and loaded with extras like exercise and conference facilities for the tenants. It sold for only $187/rsf! Meanwhile, also in Concord our office sold an 18,000 square foot industrial building for an effective sale price of $200/rsf. Why would an industrial building sell for more per square foot than a Class A office building? The turnover cost of office product can easily run $40-70/rsf, and it can sometimes take six to twelve months or longer to locate a replacement tenant. Industrial, on the other hand, with a 2% vacancy factor leases like hot cakes and usually in on an as-is basis.