This wave of new hotels with numerous retail additions, will bring revenue to the cities in the form of sales and transient occupancy tax. Ironically, the Bay Area’s economic woes may accelerate hotel demand in the Wine Country, as people take short weekend getaways rather than longer destination vacations. In summary, there are a lot of new jobs being created and a lot of “room nights” on the near horizon—which translates to a lot of new money about to hit our local economy.
The Sonoma County retail shopping centers market ended 2008 with a vacancy rate of 6.8%, a 420 basis-point increase compared to its mark of just 2.6% at the close of 2007. The average asking rental rate for shop space was $27.19 per square foot (NNN) through year-end 2008. The total gross leasable area (GLA) of all retail centers in Sonoma County,
The Marin County retail shopping centers market ended 2008 with a 6.2% vacancy rate, a moderate 220 basis-point increase compared to its mark of just 4% at the close of 2007. The average asking rental rate for shop space was $27.87 per square foot (NNN) at year-end 2008. The total gross leasable area (GLA) of all retail centers in Marin County,
Given the state of the housing industry and credit markets, is the commercial real estate office sector poised for a downhill spiral following its 2007 peak? While many believe the housing sector controls the fate of our economy, it actually accounts for only 4% of the U.S. Gross Domestic Product (USGDP).
For the second quarter of 2008, Marin County’s overall average asking rate for office space increased $0.04 from the close of first quarter 2008 to $2.79 per rentable square foot (full service) at the close of the second quarter. This increase in asking rate coincided with a minor, 10-basis-point decrease in vacancy countywide from 13.3% in the first quarter of the year to 13.2% for the second.
The Sonoma County office market experienced a slight increase in vacancy, while the average asking rate saw a subtle $0.02 decline in the second quarter of 2008. Sonoma County posted an overall vacancy rate of 24.9% at the halfway mark of the year, up from 24.1% in first quarter 2008, while its average asking rate decreased $0.02 to $1.88 per rentable square foot (full service). Class A space was 31% vacant, whereas Class B space was 15.2% vacant. The gap in asking rates among the two classes was much more narrowly defined, with Class A averaging $1.89 and Class B at $1.81.
Like most, I shudder when I hear the words “economic recession,” yet every newspaper around the country is talking about it. When will it happen? Has it already started? More important to us, will Napa County be affected?
The Sonoma County retail shopping centers market ended 2007 in a healthy state with a vacancy rate of 2.6%, equal to the vacancy rate at the end of 2006. The annual average asking rental rate for all retail centers was $29.57 per square foot (NNN) through year-end 2007.
The Marin County retail shopping centers market ended 2007 in a healthy state, with a vacancy rate of 5.2%. Vacancy was more than a full percentage point higher than year-end 2006, when it stood at 4.0%. The annual average asking rental rate was $30.21 per square foot (NNN) at year-end 2007. The total gross leasable area (GLA) of all retail centers in Marin County, excluding malls, is approximately 3.6 million square feet in 36 retail centers.
Asking Rates Rise for Office Properties as Vacancy Declines
At the end of 2007, Marin County’s office market was experiencing an increased average asking rate and decreased vacancy from the previous year. The overall average asking rate increased $0.29, or 10.7% from 2006, to $2.72 per rentable square foot (full service) at the close of 2007. This increase in asking rate coincided with a 10 basis point decrease in vacancy countywide during the same time period.
Overall, vacancy fell from 13.1% in 2006 to 13% at the completion of 2007. Marin County finished 2007 with slightly more than 1.2 million square feet of total available office space on the market, comprised of 968,355 square feet of direct space and 251,304 of sublease. Gross leasing activity was slightly down from 2006, but very comparable with its five-year historical average. Net absorption, at 219,857 square feet, however, was much improved with nearly twice the positive activity seen in 2006.
Demand Grows for Industrial Space
Industrial space is becoming difficult to find in Napa County. When the new retail and hotel development in downtown Napa is combined with the wine industry’s continuous need for agricultural land, is there any room to accommodate the growing demand from industrial users? Surprisingly, the answer is yes.
American Canyon’s Green Island Road seems to be a hot spot for industrial space. Keegan & Coppin is offering 16.8 acres of industrial-zoned land for sale near the Napa County airport. Priced just under $5.50 per square foot, this property is adjacent to a newly approved wine storage warehouse and is rail accessible. Just down the street, also on Green Island Road, Colliers International is offering 5.38 acres of industrial land for sale at $1.5 million or for lease at $10,000 per month (NNN).
Asking Rates Rise as Vacancy Declines
All signs were positive for the Sonoma County industrial market in 2007. Its average asking rate continued to steadily increase, and its vacancy rate decreased into single-digit territory as leasing activity proved to be very strong. The average asking rate in the county increased a total of $0.03, or 4%, from 2006 to $0.79 per rentable square foot (NNN) to close 2007. This asking rate increase complemented what was nearly a three percentage point decrease in overall vacancy in the county, which ultimately closed 2007 in single digits at 9.6%, its lowest vacancy rate in the past three years. Vacancy had remained between 10% and 13% since 2002 through third quarter 2007, fluctuating slightly during this time, but fourth quarter 2007 experienced a sizable, 80 basis point decrease to finally break vacancy into single digits.
Redevelopment and new construction keep the office market growing.
Vacancy Rises While Asking Rates Remain Flat
With summer coming to a close, the third quarter of 2007 ended with an increase in vacancy for the Sonoma County office market, while the average asking rate remained flat. Sonoma County posted a vacancy rate of 23.2% at the close of Q3-07, up from Q2-07, while its average asking rate fell by $0.01 to $1.91 per rentable square foot (full service). Sonoma County finished third quarter 2007 with slightly more than 2.4 million square feet of total available office space on the market, comprised of 2.16 million square feet of direct space and 241,000 square feet of sublease space. Gross absorption for the quarter finished at 172,114 square feet, while the county posted a negative net absorption figure of 39,509 square feet, indicating the amount of new space added to the market during the third quarter.
Asking Rates Rise as Vacancy Declines
The third quarter of 2007 ended with Marin County's office market experiencing increased rents and decreased vacancy. The overall average asking rate increased $0.08, to $2.59 per rentable square foot (full service) to close the third quarter. This increase in its asking rate has coincided with a vacancy drop countywide. Marin County finished the third quarter 2007 with slightly more than one million square feet of total available office space on the market, comprised of 736,000 square feet of direct space and 284,000 of sublease. Leasing activity picked up during the quarter with gross absorption reporting 230,440 square feet and positive net absorption of 119,614 square feet.
Retail activity in Marin County remained strong through the first half of 2007, despite a slight increase in vacancy from 3.2% at year-end 2006 to 4.0% at the end of the second quarter of 2007. The annual average asking rental rate has increased by approximately 3% to $32.49 per square foot (NNN) with operating expenses (NNN) also increasing accordingly and consistently with inflation.
Retail activity in Sonoma County remained strong through the first half of 2007, despite a slight increase in vacancy from 2.6% at year-end 2006 to 3.0% at the end of second quarter 2007. The annual average asking rental rate increased slightly from $25.38 per square foot (NNN) at year-end 2006 to $25.73 per square foot (NNN) at the end of second quarter 2007.
The Napa Valley is known for its world-class restaurants, one-of-a-kind boutique shops and, of course, fabulous wine. Each year more than five million tourists flock the Napa Valley in search of these eminent pleasures, keeping the retail sector continuously growing. Consumers spend $2.5 million on an average day in the region, providing the engine that drives the thriving retail development business here.
The Marin County office vacancy rate dropped 1% from the end of 2004 to the current rate of 14.4%. Class A properties reported a vacancy rate of 18.3%, up from 16.6% at the end of 2005. This increase is a result of the major blocks of space vacated by large tenants such as Fair Isaacs and Lucas Arts. With a vacancy rate of 7.5%, Class B properties experienced a 6% vacancy rate decline from the end of last year.
Asking lease rates have increased from the end of 2005 in nearly all Marin submarkets. Upward pressure on asking lease rates is expected to continue throughout 2007.
Investors are clearly interested in space for food and wine establishments.
Welcome to 2007. We’re off to another great start. The interest in Napa continues, with tremendous interest from regional and national investors, retailers and office users. In the commercial arena, prices are continuing to escalate in the sales of land and buildings from American Canyon to Calistoga.
Market remains stable, with an overall office vacancy rate of 20 percent.
The Sonoma County office market experienced an overall vacancy rate of 20%, virtually unchanged from the end of 2005 despite significant new office properties entering the market. The Class A market has seen significant demand from tenants, especially in Petaluma and Rohnert Park, and reports a vacancy rate of 32%. The Class B submarket reported no change from the end of 2005 with a vacancy rate of 7.9%. Asking lease rates have experienced upward pressure in certain newer, higher-end Santa Rosa properties throughout 2006, specifically in the downtown and northeast parts of the city.
In 2005, the Marin commercial investment market experienced increased levels of activity from institutional investors with the purchase of several Class A properties by Hines West and Equity Office Properties. Since that time, institutional activity has tapered off significantly with most recent investment transactions involving individual investors as both buyers and sellers.
As 2006 wound to a close, so did an unbelievable market for commercial property. Land, buildings and retail space have all experienced higher sales and an increase in leasing prices in the past year. But by the end of 2006, the pace had slowed, providing a better market for buyers and tenants as we move forward into 2007.
Institutional investment activity was the big story of the Sonoma County commercial investment market in 2005. In 2006, most commercial investment sales have involved individual local investors. Owner/user transactions still make up the majority of commercial real estate sales, expanding the potential buyer pool and increasing buyer competition for properties.
Best Buy & Trader Joe’s Expand Presence;
Vacancy Rates Remain Low
Kohl’s and Lowe’s Highlight New Sonoma Inventory
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