North Peninsula Office Market
The region experienced its seventh consecutive quarter of negative net absorption and ended at negative 895,000 SF this quarter, bringing the yearly total to negative 2.5 million SF. It is worth noting that omitting Menlo Park net absorption numbers from the total in the fourth quarter of 2023 would have resulted in positive 20,000 SF for the region. Market-wide vacancy increased to 18.5% this quarter, up from 15.8% in the previous quarter and 12.2% one year ago. On the sublease front, vacancy counted for 6.8% of the total inventory and 36.9% of the total vacancy this quarter, compared with 4.5% of the total inventory and 28.5% of the total vacancy in the previous quarter. Market-wide availability rose to 20.5% this quarter, up from 18.9% in the previous quarter. For historical reference, availability for the region peaked at 28.6% during the dot-com bubble and 19.8% during the Global Financial Crisis.
North Peninsula Industrial Market
Market-wide R&D availability increased to 17.4% this quarter, up from 15.4% in the previous quarter. Market-wide R&D vacancy increased to 13.1%, up from 10.4% in the previous quarter. The North Peninsula’s industrial market availability rate slightly decreased in the fourth quarter of 2023 to 4.7%, down from 4.9% in the previous quarter. Market-wide vacancy decreased to 3.0%, down slightly from 3.1% in the previous quarter. The region’s R&D pipeline currently stands at 6.0 million SF of under-construction product. Of that notable ground-up construction, 9.7% is already preleased. The industrial construction pipeline remains obsolete.