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North Peninsula Market Reports

North Peninsula Office Market

Average FS Asking Rent (Price/SF)             $4.85
Availability Rate(%)             10.2%
Net Absorption (SF)         273,880

The North Peninsula office market, which currently consists of 39.8 million square feet of office inventory, closed out 2018 with a very strong fourth quarter. Net absorption jumped back into positive territory, recording 273,880 square feet for the quarter and 492,376 square feet for the year. Gross absorption for the quarter was double that of the third quarter, totaling 1,496,921 square feet. Tenant demand remained steady this quarter at approximately 3.2 million square feet, with a bulk of the requirements still in the 20,000 to 49,000-square-foot range. Strong tenant demand accompanied by positive absorption and steady deal velocity are all indicators of a healthy market.

  North Peninsula Industrial Market

Average NNN Asking Rent (Price/SF)       $3.34
Availability Rate (%)         3.6%
Net Absorption (SF)  644,702

The North Peninsula R&D market recorded 723,054 square feet of net absorption this quarter, the highest mark to date. Additionally, vacancy rates decreased or remained stagnant in eight of the 10 major submarkets during the quarter, while the countywide rate decreased to 5.2%. The South San Francisco R&D market remained the most desirable submarket not only in San Mateo County but also the entire San Francisco Bay Area. Again leading with 728,856 square feet of gross absorption, the South San Francisco submarket accounted for 70.0% of the county's total recorded transaction activity of 1,041,523 square feet. The South San Francisco vacancy rate was recorded at 6.4%, down slightly from 7.0% in the previous quarter, while the asking rate was recorded at $5.35/SF, up from $5.31/SF in the previous quarter and up from $4.55/SF one year ago. The decrease in both existing and under-construction inventory combined with continued robust demand will continue to apply pressure on this submarket's rents. The North Peninsula industrial market's overall average asking rate held steady from the third quarter to end the fourth quarter at $1.50/SF, although there were increases in five of the 12 major submarkets. The industrial and warehouse new development pipeline has been non-existent for nearly 20 years. Second and third-generation buildings continue to be converted to office or demolished for residential development. Moving into 2019, the North Peninsula industrial market will continue to struggle to demonstrate growth despite the ongoing high level of demand.



North Peninsula Office Market
4Q18
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North Peninsula Industrial Market
4Q18
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