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North Peninsula Market Reports

North Peninsula Office Market

Average FS Asking Rent (Price/SF)            $4.88
Availability Rate(%)             9.9%
Net Absorption (SF)         -19,558

The North Peninsula market ended the third quarter of 2018 with a vacancy rate of 9.9%, down from 10.2% in the previous quarter and 11.1% one year ago. The market continues to show robust activity along the Caltrain Corridor and the associated downtown markets. The lack of large-block availabilities on the Caltrain Corridor has forced large users to look at the existing inventory off the rail. Ownership groups off the Caltrain Corridor that have direct Caltrain Shuttles, outdoor amenity space, and walkability to food vendors are seeing the bulk of the activity from the large users. While market fundamentals remained strong, overall net absorption for the county was recorded at negative 19,558 square feet. This was caused by several new spaces coming to the market. The shared workspace provider startup WeWork completed the largest lease of the quarter for the four-story, 95,980-square foot Class A building at 400-450 Concar Drive in San Mateo, eventually putting 75,242 square feet of that occupied space on the market for sublease. Further south, Oracle put 48,678 square feet of direct space on the market at 301 Island Parkway in Belmont.

  North Peninsula Industrial Market

Average NNN Asking Rent (Price/SF)       $3.33
Availability Rate (%)         3.9%
Net Absorption (SF) -137,168

The San Mateo County industrial market ended the third quarter of 2018 with an overall vacancy of 2.6%, up slightly from 2.5% in the previous quarter. Seven out of the 12 major submarkets are below the countywide overall vacancy, highlighted by Daly City, Millbrae and now Menlo Park, none of which currently possess available industrial space. Four out of the 12 major submarkets recorded overall rent increases this quarter, again led by Redwood City with a 10.1% jump to $2.29/SF, up from $2.02/SF in the previous quarter. South San Francisco again led the market with 189,390 square feet of gross absorption, while the San Carlos market recorded the second highest at 167,416 square feet. The R&D market's deal velocity continued its upward trend, as 747,613 square feet of gross absorption was posted in the third quarter. South San Francisco accounted for 80.0% of this total as well as nine of the quarter's top 10 R&D lease transactions. Despite the uptick in leasing activity, the San Mateo R&D market ended the third quarter of 2018 with a vacancy rate of 6.2%, up from 3.2% in the previous quarter. Negative 25,265 square feet of absorption was also recorded this quarter compared with 540,308 square feet of positive absorption in the second quarter.



North Peninsula Office Market
3Q18
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North Peninsula Industrial Market Report
3Q18
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