PS Business Parks pays $520 million for 18 South Bay and East Bay business parks

I had leased an office from PS Business Parks and impressed with their management. They have started to buy bay area office and industrial complexes. Should a regular investor take advantages of depressed pricing in bay area now as well? 

------------  From Mercury News on 12/21/2011

Making a half-billion-dollar bet the Bay Area economy is rebounding, a realty firm Tuesday bought 18 business parks in the East Bay and South Bay in what's believed to be the biggest property purchase in the Bay Area this year.

PS Business Parks said Tuesday it paid $520 million for a portfolio of research, industrial and warehouse complexes in nine Bay Area cities. The seller in the deal was RREEF America REIT II.

"This portfolio acquisition significantly enhances PS Business Park's presence in Northern California, providing a strong concentration of parks in markets that are poised for continued recovery," said Joseph Russell, CEO of Glendale-based PS Business.

The properties total 5.3 million square feet -- roughly the combined size of Sunvalley Shopping Center in Concord, Valley Fair mall in San Jose, Broadway Plaza in Walnut Creek and Stanford Shopping Center in Palo Alto.

"This is the largest transaction we're aware of in the Bay Area this year," said John Yandle, a senior vice president in the Santa Clara office of Cornish & Carey Commercial Newmark Knight Frank, a commercial realty firm. "There is nothing that would beat a half a billion dollars."

The business parks that PS bought are located in San Jose, Oakland, Hayward, Fremont, Milpitas, Santa Clara, Sunnyvale, Concord and San Leandro. They typically consist of buildings with multiple tenants, with an office in the front and manufacturing, research and warehouse space in the rear of the buildings.

The properties have a combined occupancy level of 82 percent. The buyer believes it can profit from leasing the properties because of their location in key sections of the Bay Area. It expects rents to rise in the coming years.

"The economic strength and stability" of these markets, Russell said, "will provide opportunities to create value from this unique opportunity."

Local realty brokers predicted that PS won't have to combat a big surge in newly constructed projects that would compete against the newly acquired portfolio.

"It's a smart purchase," Yandle said. "There is not that much of this type of space left in the area."

So far this year, the Bay Area has added 47,500 jobs. That's four times as many as the 10,700 new jobs the region created during the first 11 months of 2010.

"We are having healthy growth in social networking, Internet companies, software companies, and that is contributing to job growth in the Bay Area," said Ed Hofer, a senior vice president with Colliers International, a realty firm.

And the South Bay is leading that growth. During the 12 months that ended in October, the South Bay job market expanded by 3.2 percent -- the fastest rate of growth among major urban centers in the United States.

"The Bay Area is not going away," Hofer said. "It is going to have a strong economy into the future."